ABUJA, June 15 (Reuters) - Nigerian economic growth has resumed after the COVID shock but is lagging the rest of sub-Saharan Africa, with food inflation, heightened insecurity and stalled reforms slowing growth and increasing poverty, the World Bank said on Tuesday.
Presenting its six-monthly update on development in Africa's most populous country, the organisation gave a GDP growth forecast for Nigeria of 1.9% in 2021 and 2.1% in 2022, compared with 3.4% this year and 4.0% next year for sub-Saharan Africa.
Lead economist for Nigeria Marco Hernandez said inflation, especially in food prices, was exacerbating poverty and food insecurity. Food accounted for almost 70% of Nigeria's total increase in inflation over the past year.
He said the COVID-induced crisis was expected to push over 11 million Nigerians into poverty by 2022, taking the total number of people classified as poor in the country to over 100 million. The total population is estimated at 200 million.
The World Bank expects the Nigerian inflation rate in 2021 to be 16.5%. The forecast for sub-Saharan Africa, excluding Nigeria, is 5.9%.
Hernandez said increased insecurity across the nation -- ranging from mass abductions at schools, kidnappings for ransom, armed conflict between herdsmen and farmers, armed robberies and various insurgencies -- was a drag on growth and job creation.
He said it was critical for the government to maintain reform momentum, but that some important reforms had stalled.
He cited petrol subsidies, which have recently returned after the government had established a market-based pricing mechanism, and electricity tariff reform, an area where planned adjustments to bring prices in line with costs have been paused.
Hernandez said Nigeria had the largest number of people without access to electricity in the world, and that electricity subsidies benefited mainly richer households. Only 22% of the poorest households have access to electricity, while 82% of the richest are able to access power.
Reuters
Wednesday, June 16, 2021
Surging inflation in Nigeria fuels crime wave, says World Bank
Surging inflation is undermining the recovery of Africa’s biggest economy, pushing 7 million Nigerians into poverty and encouraging criminality as rising prices deplete already meager incomes, according to the World Bank.
In its Nigeria Development Update report, the Washington-based lender projects economic growth of 1.8% this year, compared with a previous estimate of 1.2%. But it warned that without deep reforms, the economy will continue to grow slower than the pace of population expansion of about 2.6% a year.
That, coupled with rising unemployment and inflation, is leading more Nigerians into criminal enterprises to make up for lost earnings in the continent’s top oil producer. A surge in insecurity over the past two years has further slowed economic activity and left more people unemployed, fueling a vicious cycle of violence and criminality, the lender said.
“While you have many people going into the informal sector and hustling, criminal activity has become one of the options to get by,” the World Bank’s country director for Nigeria, Shubham Chaudhuri, said in an interview. “In the context of rising inflation, that means a further deterioration of the purchasing power and livelihood of many Nigerians.”
Chaudhuri reiterated that the government must develop a sustainable economic-recovery plan before the bank can release a $1.5 billion loan initially discussed more than a year ago.
While inflation eased slightly for the second straight month to 17.9% in May, it remains at near four-year highs with food-price growth at more than 20% year-on-year. The World Bank sees inflation at an average of 16.5% this year and remaining above the 9% top of the target band until at least 2023.
Little Credibility
The World Bank challenged the central bank’s position that high inflation stems primarily from supply constraints, citing tight exchange-rate controls and expansive monetary policy as key drivers of price growth.
“Policy decisions related to exchange rate, trade and monetary and fiscal factors are driving inflation, especially during 2021, more so than exogenous factors related to conflict and weather shocks,” said Marco Hernandez, the World Bank’s chief economist for the country.
The lack of a credible monetary anchor is keeping inflation elevated, with the central bank trying to achieve too many goals, such as controlling price increases, promoting economic growth and keeping a stable exchange rate, according to the report.
Although the central bank took the right step in unifying the official exchange rate with one used by investors and exporters, the exchange rate is not yet reflective of market forces, the World Bank said.
The central bank should aim for greater flexibility by reestablishing a dollar interbank market, effectively allowing banks to trade currency on their own behalf to increase liquidity and move toward a single rate, the bank said.
By Alonso Soto
Monday, June 14, 2021
Jack Dorsey Tweets Support For Nigerian Bitcoin Adoption
CEO of Twitter, Jack Dorsey, has been signaling his support for Nigerian bitcoin adoption through a series of tweets over the weekend.
Dorse is one of the big celebrity names in the crypto community. As a result, his tweets on crypto pick up a lot of interest, no matter how cryptic or simple they are.
He began his series of tweets simply with a single Nigerian flag. This happened a day after the government announced it would ban Twitter in the country. The ban came into effect as a result of Twitter deleting tweets by President Buhari.
Nigerian Bitcoin tweets
Later the same day, Dorsey published another tweet showing the Nigerian flag “shaking hands” with bitcoin.
This was followed by him tweeting, “The people of Nigeria will lead #bitcoin.”
This was a quote tweet over an open letter by United States footaball player Russell Okung to the Nigerian President.
Okung published the open letter in Bitcoin Magazine. In it, he urged the Nigerian government to accept a national bitcoin standard. In the article he wrote:
“Soon every nation will be faced with this decision, but those who seize the present moment proactively as we have just witnessed in El Salvador, will enjoy significant advantages globally for generations to come."
Finally, Dorsey’s last tweet on the subject was a graphic showing Africa leading in peer-to-peer bitcoin trading volume growth for 2021.
This is not the first time the Square CEO has shown interest in crypto and Africa. In 2019, after visiting Ghana, Ethiopia, South Africa, and Nigeria, Dorsey said he planned to move to a country on the continent for a few months in 2020.
However, he reconsidered the move as the COVID-19 pandemic picked up.
Nigeria and cryptocurrency
In 2020, Nigeria became the second-biggest bitcoin trader in the world. However, the government’s relationship with cryptocurrencies has been unstable.
In September 2020, the Nigerian Securities and Exchanges Commission announced a historic regulatory framework recognizing crypto assets as securities. However, this doesn’t mean that crypto is fully recognized. This is due to the central bank’s positionbeing in direct opposition.
In early 2021, the Central Bank of Nigeria (CBN) reaffirmed its order to all financial institutions. This warned them to stop providing on and off-ramp crypto services. This caused issues for centralized exchanges operating in the country.
By Leila Stein
Related stories: Why Bitcoin has been so successful in Nigeria
Video - Nigeria's booming investment in cryptocurrency continues despite ban
Nigeria’s Twitter ban leaves some businesses in the lurch
Lagos-based entrepreneur Ogechi Egemonu was selling more than 500,000 naira ($1,219) worth of watches, shoes and handbags on Twitter per week.
Now, with the site suspended by the Nigerian government, Egemonu does not know how she will cope.
“Social media is where I eat,” she told Reuters. “I depend on social media for my livelihood.”
Scores of small and medium-sized businesses across Africa’s most populous nation – and largest economy – are reeling from the indefinite suspension of the social media site.
Nigeria announced the suspension on June 4, days after the platform removed a post from President Muhammadu Buhari that threatened to punish regional separatists. Most telecommunications sites have since blocked access.
NOI Polls estimates that 39.6 million Nigerians use Twitter – 20% of them for business advertisement and 18% to look for employment. Experts warn its lack of ready availability – it is accessible using Virtual Private Networks that mask location – could ripple across the economy.
“The ban has significant collateral damage,” said Muda Yusuf, director general of the Lagos Chamber of Commerce, who said that a “sizeable number of citizens” use Twitter to make a living.
REVENUE LOSS
Parliament’s minority caucus warned the suspension was costing Nigerians “billions of naira on a daily basis.”
Dumebi Iyeke, a research analyst with the Financial Derivatives Company, said it would hit young Nigerians – among whom there is a 45% unemployment rate – the hardest.
“We are looking at a potential loss in their revenue,” Iyeke said, adding that it could further lower living standards amid high inflation.
Information Minister Lai Mohammed last week said that all social media sites must register a local entity and get a license to operate. He cited complaints over lost money as proof that the ban was effective, but said other sites are still available.
($1 = 410.0900 naira)
By Nneka Chile
(Additional reporting by Alexis Akwagyiram and Libby George in Lagos. Writing by Libby George;Editing by Elaine Hardcastle)
Related stories: Biden Administration Calls On Nigeria To Reverse Twitter Ban
Trump congratulates Nigeria for Twitter ban, says more countries should do the sameFriday, June 11, 2021
Video - Lagos considers waterways to ease traffic gridlock
The traffic problems in Nigeria's largest city have been growing as fast as its population. Lagos's residents describe long, uncomfortable hours sitting on gridlocked roads. Now, the government is looking at waterways as a potential solution. Al Jazeera's Ahmed Idris reports from Lagos, Nigeria.
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