The World Bank projects an inflation shock to push about 15 million more Nigerians into poverty between 2020 and 2022.
The Washington-based bank said this in its latest Nigeria Development Update report, titled, “The Continuing Urgency of Business Unusual.” Although the World Bank says it projects inflation in 2022 to be 15.5%, Nigeria’s inflation rate as of May. This year was 17.71%, which is higher than the World Bank’s projection.
However, according to the bank, inflationary pressures in the country are driven by certain policy distortions. “Policy distortions compounded inflationary pressure, in particular (i) lack of flexible foreign exchange management, (ii) trade restrictions, and (iii) conflicting monetary policy goals”. It further disclosed that global supply shocks exacerbated inflationary pressures and increased the urgency.
They also stated the financing of the fiscal deficit and trade restrictions imposed by the Central Bank of Nigeria.
The bank also said that poverty might become entrenched in certain Nigerian households, particularly in rural areas in the north.
Certain reforms in combating poverty were recommended, which include fiscal, trade, and exchange-rate policy that could help diversify the economy; invigorate structural transformation; and create good, productive jobs, especially wage jobs.
The World Bank also warned that many non-poor Nigerians were only one minor shock away from falling into poverty
According to the lender, the issues of climate or conflict can induce such a shock. Which could further threaten Nigeria’s poverty reduction efforts.