Latest news with #NigeriaDevelopmentUpdate
Arabian Post
13-05-2025
- Business
- Arabian Post
Nigeria's Economic Surge Overshadowed by Soaring Inflation and Widening Poverty
Nigeria's economy expanded by 4.6% year-on-year in the fourth quarter of 2024, marking its fastest growth in a decade, according to the World Bank. This surge was propelled by fiscal reforms and a rebound in the oil and services sectors. However, the growth coincided with a sharp rise in inflation and a significant increase in poverty levels, underscoring the complex challenges facing Africa's largest economy. The World Bank's latest Nigeria Development Update attributes the economic acceleration to President Bola Tinubu's administration's policy measures, including the removal of petrol subsidies, currency devaluation, and enhanced tax administration. These reforms contributed to a reduction in the fiscal deficit from 5.4% of GDP in 2023 to 3% in 2024 and bolstered foreign exchange reserves to over $37 billion. Despite these macroeconomic improvements, the country's inflation rate escalated to 34.2% in June 2024, driven by higher fuel prices and a depreciating naira. The inflation rate slightly eased to 32.7% by September but remained among the highest globally. The World Bank projects that inflation will average 31.7% in 2024, with a gradual decline expected in subsequent years. The economic reforms have had a profound impact on the population, with the World Bank reporting that 129 million Nigerians, or 56% of the population, are now living in poverty. This represents a significant increase from 40.1% in 2018. The rise in poverty is attributed to the erosion of purchasing power due to inflation and the limited effectiveness of social safety nets. Urban areas, traditionally more economically resilient, have also been affected. The proportion of urban dwellers living in poverty rose from 18% in 2018 to 31.3% in 2024. The World Bank notes that employment alone is no longer sufficient to escape poverty, as many jobs do not provide adequate income to meet basic needs. The removal of fuel subsidies, while improving fiscal health, has led to increased transportation and production costs, further exacerbating inflationary pressures. The naira's depreciation, by 43% year-to-date by the end of August 2024, has made imported goods more expensive, compounding the cost-of-living crisis. In response to the economic challenges, the Central Bank of Nigeria has tightened monetary policy to curb inflation. However, the effectiveness of these measures is limited by structural issues, including a narrow tax base and reliance on oil revenues. The World Bank emphasizes the need for continued fiscal discipline and targeted social interventions to mitigate the adverse effects of the reforms. Expanding cash transfer programs and strengthening social safety nets are recommended to support vulnerable populations during the transition.
Yahoo
13-05-2025
- Business
- Yahoo
Nigeria sees highest growth in 10 years — World Bank report
Nigeria's gross domestic product (GDP) grew by 3.4% in 2024, the World Bank said in a new report published Monday. That's the highest rate of growth since 2014, excluding the 2021-2022 COVID-19 rebound, the bank said. The acceleration in Nigeria's GDP growth was driven mainly by a continued oil and gas sector recovery and strong growth in the tech and finance industries, according to the latest Nigeria Development Update. [NEWS] The latest edition of the #Nigeria Development Update 'Building Momentum for Inclusive Growth', released today, indicates that Nigeria's macroeconomic situation is improving as a result of sustained reforms: — World Bank Nigeria (@WBG_Nigeria) May 12, 2025 The World Bank expects the rate of growth of Nigeria's economy to slightly increase in 2025 to 3.7%. At the same time, the country's agriculture sector showed slow growth, the bank warned, because of insecurity in the Middle Belt and high input costs. The Middle Belt refers to a broad sweep of 14 states across the center of Nigeria. Hundreds of thousands of hectares of farmland have been abandoned there because of ongoing violent clashes, often between farmers and nomadic herdsmen. At a presentation of its report in the capital Abuja, the World Bank praised government reforms in Africa's largest economy. President Bola Tinubu implemented a broad swath of economic reforms after winning the 2023 elections. These include ending costly petrol subsidies, slashing electricity allowances and twice devaluing the naira currency. A recent report by the International Monetary Fund (IMF) on Nigeria also praised the reforms and issued a warning about high levels of poverty. Tinubu recently justified his reforms, stressing that he made what he called "tough decision" so that Nigeria could grow. "We are gradually seeing the light at the end of the tunnel," Tinubu said on Friday. But the reforms have come at a cost for many ordinary Nigerians, who are facing the worst cost-of-living crisis in a nearly 30 years, according to Human Rights Watch. Successive years of rising inflation and surges in food prices have seen poverty soar in the West African nation — although some key staples have become cheaper in the past few months. Nearly half of all Nigerians lived in poverty in 2024, the World Bank update found, making Nigeria home to the world's second-largest poor population after India. The 2024 Global Hunger Index ranks Nigeria 110th out of 127 countries. Nearly a third of its children are stunted because of chronic undernutrition. While inflation is expected to fall over the course of this year, it is still forecast to remain high at an average of 22.1%, the World Bank said. "Labor incomes have not kept up with inflation, depleting the purchasing power of Nigerians. Poverty has deepened and broadened, especially among urban Nigerians," it said. There is a need for the economy to generate more and better jobs at scale and reduce poverty, the bank noted, especially if it wants to reach its goal of achieving a $1 trillion (€900 billion) economy by 2030. Edity by: Alex Berry
