Even as Nigeria battles worsening inflation and epileptic power generation and supply among other challenges stifling its economy, the United Nations has expressed optimism that the nation would gradually come out of its shackles.
While admitting that the country is presently not doing well economically, the global organisation likened Nigeria’s problems to its failure to generate and supply sufficient power and that skyrocketing prices of items.
Notwithstanding, UN predicted that Nigerian economy will grow to three per cent this year because the country has improved seriously on its commodities trade and dynamic consumer goods and services markets.
The organization, in a report entitled: ‘The World Economic Situation and Prospects 2023’ and produced by the UN Department of Economic and Social Affairs, in collaboration with the United Nations Conference on Trade and Development, said rising inflation and electricity supply challenges were affecting the economy negatively.
Other five United Nations regional commissions that jointly made the report included the Economic Commission for Africa, Economic Commission for Europe, Economic Commission for Latin America and the Caribbean, Economic and Social Commission for Asia and the Pacific and Economic and Social Commission for Western Asia.
The organization, in its prediction, states that aggregate economic growth will weaken to 3.8 per cent in this year from the 4.1 per cent it was last year in Africa owing to reduced investments and worsening export level.
UN disclosed that high inflation witnessed in 2022 owing to pickup will become normalized in 2023.
The agency said the share of African countries experiencing double-digit inflation jumped to 40 per cent last year because of truncation in supply chain and the aftermath of the war in Ukraine, which made essential food and energy items more expensive.
According to the UN, tackling high prices of items and exchange rate pressure will demand that about two-thirds of African countries increase their domestic policy interest rates in 2022.
It noted that most countries will likely further increase rates this year in parallel with the projected monetary stance of the Federal Reserve in the United States and the European Central Bank.
The New York-headquartered agency maintained that fiscal positions across Africa have collapsed as governments sought to protect lives and livelihoods during the pandemic with average public debt rising to over 60 per cent of GDP and likely to remain as such in 2023.
UN said that African countries wil battle with principal repayment of about $11bn on Eurobonds by 2024 because of weaker currencies.
According to the agency, even though some large African economies experience lower levels of public debt on average, they will continue to have high and rising debt-servicing costs.
It said couple of African countries would experience challenges in servicing and rolling over a large level of debt in 2024 when major repayment of about $11bn on Eurobonds will be due as a result of higher interest rates, weaker currencies against the dollar and lower capital inflows.
