The World Bank has said Nigeria’s rising inflation rate could push an additional one million people below the poverty line by the end of 2022. The leading multilateral financial institution said that would be in addition to the six million previously projected.
According to the current World Bank Nigeria Development Update (NDU), Nigeria is in a paradoxical situation: growth prospects have improved compared to six months earlier, but inflationary and fiscal pressures have increased significantly, leaving the economy much more fragile (NDU).
In the report, titled “The Continuing Urgency of Business Unusual,” Investors King observed that Nigeria’s inflation rate was one of the highest in the world before the Ukraine war. The bank predicted inflation is expected to rise even further given the surge in the price of global gasoline and food prices.
This, World Bank said would likely push an extra one million Nigerians into poverty by the end of 2022, bringing the total projected Nigerians to slide below the poverty line in 2022 to 7 million.
The newest issue of the NDU emphasizes that inflationary pressures would be exacerbated by fiscal challenges Nigeria will face this year as a result of the rising cost of fuel subsidies at a time when oil production is declining. As a result, Nigeria is unlikely to gain fiscally from the windfall opportunity provided by higher global oil prices for the first time since its return to democracy, and alone among major oil exporters.
Shubham Chaudhuri, World Bank Country Director for Nigeria, said “When we launched our previous Nigeria Development Update in November 2021, we estimated that Nigeria could stand to lose more than 3 trillion Naira in revenues in 2022 because the proceeds from crude oil sales, instead of going to the federation account, would be used to cover the rising cost of gasoline subsidies that mostly benefit the rich. Sadly, that projection turned out to be optimistic.
“With oil prices going up significantly, and with it, the price of imported gasoline, we now estimate that the foregone revenues as a result of gasoline subsidies will be closer to 5 trillion Naira in 2022. And that 5 trillion is urgently needed to cushion ordinary Nigerians from the crushing effect of double-digit increases in the cost of basic commodities, to invest in Nigeria’s children and youth, and in the infrastructure needed for private businesses small and large to flourish, grow and create jobs,” she added.