High inflation driven by soaring food prices has pushed seven million Nigerians into poverty, the World Bank said.
In a new report, it commended Nigeria for buttressing its economy from fallout from the coronavirus pandemic but called for urgent measures to brake inflation and protect livelihoods.
A major crude exporter, Africa’s largest and most populous economy again slipped into a recession in late 2020 hurt by lower oil prices and the pandemic, but unexpectedly emerged from the slump in February.
In May, year-on-year inflation dipped to 17.93 percent, just below the four-year high of 18.17 percent registered in March, according to the National Bureau of Statistics.
The food price increase in May was at 22.28 percent.
“Food prices accounted for over 60% of the total increase in inflation. Rising prices have pushed an estimated 7 million Nigerians below the poverty line in 2020 alone,” its report published on Tuesday said.
The World Poverty Clock, which uses UN, IMF and World Bank data to monitor progress against poverty, reports Nigeria had 41 percent of its population or nearly 87 million people living in extreme poverty on less than $1.90 per day.
The World Bank report applauded government reforms to offset the crisis and help recovery, including cost-cutting and adjustments to energy subsidies, but those measures needed to be sustained.
“Nigeria faces interlinked challenges in relation to inflation, limited job opportunities, and insecurity,” said Shubham Chaudhuri, the World Bank Country Director for Nigeria.
“While the government has made efforts to reduce the effect of these by advancing long-delayed policy reforms, it is clear that these reforms will have to be sustained and deepened.”
Nigeria needs urgently to reduce inflation by promoting inclusive growth and job creation and helping small and medium businesses gain access to finance, it said.
The COVID-19 pandemic and the oil price crash have hammered Nigeria’s economy, which gets 90 percent of foreign exchange earnings from petroleum exports, pushing it into its second recession in four years.
As well as inflation, a rise in joblessness has left a third of Nigeria’s workforce unemployed at the end of 2020, according to the statistics office.