2022: 133 million poor Nigerians, inflation, currency problems, other economic setbacks

IN 2022,133 Nigerians were pushed into different categories of poverty, suffering deprivations in food, shelter and healthcare services, a report released by the National Bureau of Statistics (NBS) in October stated.

The rise in the multidimensional poverty level was despite Buhari administration’s mantra to lift 100 million people out of poverty.

Also, 2022 witnessed a record double-digit inflation figure of 21.48 per cent in November,  according to NBS reports, with currency problems that resulted in more distress for businesses and investors.


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With inflation surging from 15.6 per cent in January 2022 to 21.48 per cent in November, the people’s earnings could not but be drastically affected and standard of living getting worse.

Informed analysts say a combination of weak leadership decisions and poor policy choices of the monetary and fiscal authorities contributed in putting more Nigerians into economic distress.

Some analysts who spoke with The ICIR said the incoming administration government must find a pathway to a long-term growth trajectory.

From the World Bank was a report that Nigeria’s economic growth slowed on the back of declining oil output and moderating non-oil activity.

In the bank’s December 2022 report titled, ‘Nigeria’s Choice,’ its Country Director for Nigeria, Shubham Chauduri, stated, “It is urgent to address the key drivers of this decoupling and make reforms to strengthen Nigeria’s macro-fiscal framework.

“Nigeria has a choice to implement critical macroeconomic and structural reforms that can reduce crisis vulnerabilities and increase growth. Doing so will lift per capita incomes, sustainably reduce poverty and deliver better life outcomes for many Nigerians.

“Urgent business-unusual choices are needed to avoid a scenario in which up to 80 million working-age Nigerians do not have a full-time job by 2030 and up to 23 million more Nigerians could be living in extreme poverty.”

President Buhari: promised to lift 100 million people out of poverty but failed to

President Muhammadu Buhari had been, in his 2022 New Year message, effusive about his intention to secure the country and address its socio-economic challenges.

But insecurity and socio-economic conditions have since deteriorated. Budget deficits have ballooned to nearly 5 per cent of the gross domestic product, more than the 3 per cent recommended by the Fiscal Responsibility Act of 2007.

Also Nigeria’s abysmal revenue generation of about 9 per cent of the GDP, over 40 per cent of Buhari’s 2023 budget, is expected to be financed by surging debts.

Experts’ concerns and suggestions

Industry watchers hold that Nigerian economic managers lack proper implementation of even its policies.

“As at January this year, headline inflation was 15.60 per cent and rose to a peak of 21.47 per cent in November 2022. Meanwhile, food inflation consistently outpaced headline inflation and core inflation during the year,” the Executive Director, Centre for Promotion of Private Enterprise, Muda Yusuf, told The ICIR.

Yusuf: urges Federal government to boost productivity if it must drive growth

“For the basket of goods and services consumed by the average Nigerian, costs have accelerated by between 50 per cent and 100 per cent in 2022,” Yusuf added.

The inflationary situation was the worst in recent history and the impact on citizens and the SMEs was very devastating.

The World Bank pointed out the inflationary surge as a major concern.

It said, “Inflation has surged to 21.1 per cent year-on-year in October 2022, pushing as many as five million more Nigerians into poverty since the start of 2022.

“Fiscal pressures have intensified, exacerbated by the soaring cost of petrol subsidy, which will likely exceed N5 trillion.”

Despite higher oil export revenues, official reserves have fallen, and the currency market is severely distorted, undermining the business environment and investment.

The weaknesses in the macroeconomic policy framework are suppressing growth and making Nigeria more vulnerable to shocks.

Yusuf urged the Federal government to address rising inflation, stressing that “the monetary and fiscal authorities need to boost productivity in the economy to drive growth, stem depreciation of the naira, and address the illiquidity in the foreign exchange market.”

He warned Nigeria’s economic managers to minimise the monetisation of fiscal deficit.

“CBN financing of deficit should be strictly limited to the statutory threshold spelt out in the CBN Act,” he said.

Some other economic watchers say that continuous application of quantitative easing (lending to the government money that is not attached to value by the CBN) has created problems for the economy.

Kelvin Emmanuel, an economist, said lending the Federal government huge sums not backed by value as against what is prescribed by the Fiscal Responsibility Act pushes Nigeria into economic distress.

Emmanuel is worried on how Ways and Means violation by CBN impacts economy negatively

“The situation where the Federal government depends on the CBN as the lender of last resort to lend it money through quantitative easing has been severally violated through the Ways and Means Act of the CBN. The limit says 5 per cent of the previous year revenue of the previous accounting year, which is between $450-$500 million. The CBN has lent the Federal government many times more than this in violation of this Act,” Emmanuel said.

2022 data shows rising debt should worry Nigerians

According to the Debt Management Office (DMO), Nigeria’s total debt stock by the end of the third quarter of 2022 (Q3 2022) was N44.06 trillion, suggesting that the debt size increased by N1.21 trillion, from N42.85 at the end of the second quarter.

At the disaggregation level, external debt stood at N17.15 trillion (38.87 per cent of total debt), while domestic debt stood at N26.92 trillion (68.01 per cent of total debt).

The domestic debt comprises Federal Government debt of N21.55 trillion, and states’ (including the Federal Capital Territory) debts of N5.36 trillion.

The debt portfolio excludes the Ways and Means provided by the CBN, suggesting that the total debt stock presented by DMO is understated. The increase in the debt stock in the period under review was driven mainly by new borrowings by the Federal government to part-finance the deficit in the 2022 Appropriation Act.

According to a report from a research outfit, the Centre for the Studies of African Economies (CSAE), the high proportion of domestic debt suggested that the domestic financial market remains the primary source of borrowing for the government.

The CSAE explained, “This might result in the crowding-out effect, as government reduces funds available for private investors to borrow. Increased debt indicates that debt service would increase in the future, as well as tax payments.”

The research outfit advised the government to explore other innovative financing options like public-private partnerships to finance infrastructural projects. Also, the government, the Centre mentioned, needed to strengthen its revenue base by digitalizing the tax payment process and improving efficiency in tax collection.

Multiple exchange rates, subsidy problems, fuel scarcity

Another major problems that confronted the country in the outgoing year are multiple exchange rates, and the rising fuel subsidy question, with its attendant fuel scarcity and long queues in major cities.

On the exchange rate issue, economic watchers maintain that the gap between the official and parallel markets gives room for round-tripping.

The World Bank, on April 21, 2022, warned the Nigerian government on the dangers of keeping petrol subsidies and maintaining multiple exchange rates.

The Washington-based lender said Nigeria should be wary of spending its resources on subsidies amid global economic shocks.

The president of the World Bank group, David Malpass, stressed at the International Monetary Fund (IMF) spring meetings in Washington DC on Thursday, April 21, 2022 that keeping subsidies and multiple exchange rates would have a huge cost deficit to the economy.

World Bank headquarters in Zurich, Switzerland
World Bank headquarters in Zurich, Switzerland

Malpass said that subsidies benefit the rich more, while expressing a concern that Nigeria would starve itself of funds for infrastructural development if it kept up with unsustainable subsidies.

He said, “We have encouraged the Nigerian government to re-think subsidies and multiple exchange rate systems in its foreign exchange management. Multiple exchange rate system is complicated and not as effective as it would be on a stable exchange rate.”

He encouraged Nigerian authorities to work towards having a stable exchange rate, which he stressed would encourage fiscal discipline and increase investment inflows into the country.

“Nigeria trade inflows are distorted with multiple exchange rates, but a stable exchange rate will improve it. Businesses and investment inflows will grow Nigerian economy alongside a stable exchange rate,” he said.

Apart from the World Bank, many analysts had warned the government over dangers of keeping the “unsustainable” subsidy.

A former chairman of the Major Oil Marketers Association of Nigeria, (MOMAN), Adetunji Oyebanji, told THE ICIR that subsidy is a misplaced priority by the government and a diversion of funds meant for infrastructure.

Oyebanji said, “There is no argument to justify subsidy payment, because we are spending away the funds for our infrastructural development. Labour does not have any justifiable reason to cow government to keep subsidies.”

Subsidy payments for the fiscal year of 2022 have seen the Nigerian government pass a supplementary budget of N4 trillion to that effect.

Government efforts, experts’ advice

The Minister of Finance, Zainab Ahmed, said the government was making frantic efforts to address Nigeria’s economic concern.

Ahmed said, “On inflation, it’s a very serious situation where Nigeria’s inflation is now 23 per cent. The inflation in Nigeria has a number of components, one of them is imported inflation. Occurrences in other countries also affect Nigeria. For example, the war in Ukraine and Russia has an impact on Nigeria in the sense that some of the inputs for food production are affected. Also the decisions taken by the central banks in USA and Europe on monetary tightening also have an impact on their own level of inflation that also affects our country.



    “But in Nigeria, we also have food inflation, and because of the high cost of diesel, we find this showing up in food prices. So when farmers produce their goods and they have to transport them to the market, the increasing cost of transportation is impacting the food prices. What the central bank is doing is continuing to monitor inflation by money tightening and mopping up liquidity.

    “On the side of the government, the President has authorized the National Food Security Council, and we have held a meeting on how some support will be provided. The committee will be meeting again in the next couple of days to provide recommendations to Mr. President.”

    A professor of Law at Baze University in Abuja and social critique, Sam Amadi, told The ICIR that anyone who wins next year’s election must strive to renew Nigerians’ hope in the economy.

    “It is about steering the country on the path of long-term growth trajectory, devoid of the knee-jerk interventions that have become proxies to political jobbers, without proferring the needed solutions,” Amadi said.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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