November 22, 2023

Rising inflation and low economic growth in Nigeria will push a further 2.8 million people into poverty by 2023’s end, the World Bank has disclosed. This is based on a report titled, ‘Macro Poverty Outlook: Country-by-country Analysis and Projections for the Developing World,’ released recently. The Washington-based bank said, “By the end of 2023, the rise in inflation and low economic growth will have contributed to an increase of 2.8 million people in poverty (y-o-y), a 0.4 percentage points bump to 37.5 per cent of the population.” It noted that Nigeria’s high inflation reached a17 17-year high of 24.1 percent (y-o-y) in July 2023, partly reflecting surging food prices and the temporary impact of the removal of the fuel subsidy. It stated that a cumulative 725 basis points hike in the monetary policy rate since May 2022 has had little effect on reining in inflation due to clogged transmission channels, also weakened by direct credit allocation by the central bank, and the continued monetization of the fiscal deficit. The global bank further declared that federal fiscal deficit has risen to 63 per cent higher between January and May 2023 than in the same period in 2022, due to increasing interest payments, higher capital spending ahead of the elections, and the continuous large cost of the fuel subsidy. The impact of this is set to spike public debt to 45 per cent of GDP and keep debt service above total revenue in 2023. It said. “The fiscal financing need and the devaluation of the naira are expected to push the public debt to 45 per cent of GDP and keep the debt service above total revenues in 2023. “The current account balance (CAB) recorded a surplus of 2.2 per cent of GDP in Q1 2023, driven by lower imports and income outflows. However, the small CAB surpluses and capital flows since 2022 have been insufficient to increase foreign reserves, as oil export FX flows to CBN contracted, likely as a result of the direct crude sale-direct fuel purchase arrangements.” The Bretton Woods Institution further predicted that future economic growth in the country will depend on the continued implementation of macro-fiscal and inclusive structural reforms. It stated the current reforms of the government will boost economic growth to an average of 3.4 per cent in 2023-2025. It also expects inflation to begin to moderate by 2024. The World Bank added, “The share of Nigerians living below the international poverty line is expected to peak in 2024 at 38.8 per cent before beginning a gradual decline, as inflation cools down and economic growth picks up. Targeted measures, including cash transfers, could mitigate short-term adjustment costs to the poor and vulnerable and mitigate their risk of falling into intergenerational poverty traps.” Earlier in June, the bank disclosed that inflation pushed an estimated four million people into poverty between January and May 2023. Inflation has since risen to 27.33 per cent as of October 2023.

The Minister of Works, David Umahi, has revealed that the government needs $35bn to kick start the construction of concrete roads nationwide.

He also stated that the moribund Ajaokuta steel company will provide 16 per cent of the steel material needed for the construction of Nigeria’s roads in concrete pavement.

This far-reaching resolution was the crux of discussion when the works minister met with the Minister of Steel Development, Shuaib Audu, at the ministry’s headquarters in Abuja.

The Chief Press Secretary to the minister, Orji Uchenna, in a statement on Tuesday said, the meeting underscored the imperative of coordination, cooperation, and coherence in the execution of the Federal Government’s action plans for national development.

The minister noted that the funding which would be gotten through a partnership with a commercial bank will be assented to by the federal executive council.

Umahi said, “How do we reactivate the Ajaokuta Steel. We are going into the concrete road, in this concrete road, about 16 per cent of it is from Steel while 30 per cent is cement. We need a lot of money to start but we decided to face it and God has given us an idea.

“We need about $35 billion to start. If we start waiting for FG it might become difficult. We analyzed the Return on Investment and the profit we could have made, part of it will go to bank interest. We are looking at a partnership with a commercial bank but Federal Executive Council has to endorse it. If this could be done, it means Mr President is living up to his words and this is going to be possible.”

According to the statement, the ministers resolved to synergise and strategise on steps to tap into the opportunities in the Ajaokuta Steel Plant for the development of road infrastructure in Nigeria.

He said that tapping into the opportunities in the steel industry would create jobs and wealth for Nigerians and encourage global market industrialisation.

The former Ebonyi State governor also assured the steel minister of his support to enhance the potentialities of the Ajaokuta Steel Plant.

The Minister continued, “One of the renewed hope agendas of Mr President is to think outside the box, Mr President inherited a large chunk of debt from the past administration, the beauty about it is that he is not complaining, he knew how the country was before he took the job and how it is. The good thing is that if you have passion for something God will give you an idea.”

Earlier in his remark, the minister of Steel Development emphasised the importance of the initiative and expressed hope that it would provide the needed economic boost for the nation, generate revenue and provide thousands of direct jobs for skilled and non-skilled technicians and hundreds of thousands of unskilled jobs in Nigeria stressing that, “We are to achieve three things, one to create job opportunity for Nigerians as a whole, two, to ensure that the corridor around the North Central Zone and the Ajaokuta-Warri axis is busy with activities and thirdly, the plant has been inactive for close to four decades and we are here to restart the plant within the shortest possible time.”