In a recent report released by the World Bank, concerns have been raised about the sluggish economic growth in Nigeria and its inability to address the pressing issue of extreme poverty in the country. The bank has maintained its economic growth forecast for Nigeria at 2.8% for the year 2023, but highlighted several challenges that could hinder progress, including high inflation, foreign exchange shortages, and a scarcity of banknotes resulting from currency redesign.
The Global Development Prospect report for June 2023, issued by the World Bank, sheds light on the state of Nigeria’s economy and the wider Sub-Saharan Africa region. The bank revised its economic growth projection for Sub-Saharan Africa to 3.2% for 2023, down from the previous estimate of 3.4% provided in the April World Economic Outlook. Moreover, global economic growth is expected to slow down to 2.1% in 2023, with financial risks casting a shadow over future prospects.
The World Bank’s report stated, “Following a growth rate of 3.1% last year, the global economy is set to experience a significant slowdown to 2.1% in 2023 due to ongoing tightening of monetary policies aimed at curbing high inflation. A tepid recovery is anticipated in 2024, with a projected growth rate of 2.4%.”
Regarding Sub-Saharan Africa, the report noted that economic growth in the region has been decelerating due to various country-specific challenges and external economic headwinds. The three largest economies in the region, namely Nigeria, South Africa, and Angola, experienced a decline in growth to 2.8% in 2022, which further weakened in the first half of this year. Angola and Nigeria, being the leading oil producers in Sub-Saharan Africa, encountered stalled growth momentum due to lower energy prices and stagnant oil production.
Nigeria’s non-oil sector, which was expected to rebound after the pandemic, cooled earlier this year due to persistent high inflation, foreign exchange shortages, and a scarcity of banknotes resulting from currency redesign. The growth outlook for Sub-Saharan Africa is projected to decline further to 3.2% in 2023 before picking up to 3.9% in 2024. However, the recovery in South Africa is anticipated to slow down to 0.3% this year, primarily due to widespread power outages that have heavily impacted economic activity and contributed to the persistence of inflation.
The report also highlighted that Nigeria’s economic growth is expected to remain marginally above population growth, falling far short of what is necessary to make significant strides in reducing extreme poverty in the country. The downgrades in economic outlook extend beyond the major regional economies, with elevated costs of living constraining private consumption and tighter policies impeding an increase in investment across several countries.
The combination of heightened domestic vulnerabilities, challenging global financial conditions, and weak global growth is expected to hamper the pace of recovery across various economies. As Nigeria and other countries in Sub-Saharan Africa grapple with these issues, it becomes imperative for policymakers and stakeholders to implement effective strategies and reforms to bolster economic growth and alleviate poverty in the region.
Comments are closed.