Economy Roundup: Inflation soars as 63% of Nigeria’s population becomes multidimensionally poor

Welcome to Nairametrics’ Weekly Macroeconomy Roundup. It’s time to look back at some of the top economic news stories for the week ending November 19.

Let’s start…

Shocking figures from the NBS

At the beginning of the week, the National Bureau of Statistics (NBS) released two reports that left many Nigerians worried. The first was the report of the Consumer Price Index (CPI) which showed that the inflation rate rose to 21.09% in October.

The increase in the composite index was due to the increase in the core and the rate of food inflation during the period under review.

Talking about the rate of food inflation in Nigeria, it increased to 23.72% in October which represents an increase of 5.39% compared to the rate recorded in October 2021 (18.34%). This increase is driven by a significant increase in the prices of food staples.

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The increase in food price inflation comes in the wake of nationwide floods that destroyed 400,000 hectares of farmland. Analysts predict that the damage could increase food prices.

The NBS CPI report also showed that inflation in Nigeria increased to 16.8% in October 2022 from 16.4% in September. Nairametrics reported that this is the highest rate since March 2017 when the rate stood at 18.9%.

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An earlier report from the NBS showed that Nigerians are paying more for petrol, kerosene, and diesel as of Q3/2022. For example, the price of petrol increased from N189.46 a liter in August 2022 to N191.65 liter in September 2022.

Finally in inflation news, Nigeria’s healthcare inflation rate rose to a record high of 17.4% in October 2022 from 16.9% in September. This is the highest rate recorded since February 2009, thirteen years ago.

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Note that the CPI health index is an index used to measure changes in the cost of health services in a country.

More on rising consumer spending…

Nairametrics reported that Nigerian households spent N57.1 trillion in the first six months of the year, representing a monthly average of N9.51 billion in living expenses.

This is based on data from the NBS which further showed that household expenditure during the review period increased by 14.4% from N49.89 trillion recorded in the corresponding period of 2021.

As expected, Nigerians have been complaining about the rising costs. Last week, they expressed concern that prices would continue to rise despite the recent gains recorded by the naira against the dollar.

Recall that at the beginning of the week, the naira recovered surprisingly to N680/$ after reaching an all-time low of N900/$. Black market traders say the sudden improvement is a dampening of demand and increased inflows of FX into the market.

Now, let’s move on to the second shocking NBS report. It is a statement about 133 million Nigerians who are poor in many ways. What this means is that 63% of Nigerians are very poor. That is worrying.

The trend is such that 72% of poor Nigerians are concentrated in rural areas compared to 42% of such people in urban areas.

Providing solutions

The Fiscal Policy Partner and African Tax Leader at PwC Nigeria, Mr Taiwo Oyedele, has advised the Nigerian government to change its current strategy to reduce poverty which includes giving benefits to the poor. According to Oyedele, the current plan is likely to drive more people into poverty instead of lifting them out of it.

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He explained that to lift Nigerians out of poverty, governments at all levels must shift their resources to addressing poverty levels by building health facilities, schools, and access to farms. He said all these should be prioritized over the construction of airports and flyers.

The Nigerian government launched the National Poverty Dashboard Situation Room last week. Nairametrics reported that the project was launched by the Minister of State for Budget and National Planning, Clem Agba, who launched the project.

According to him, the need for a hub of poverty data and social information is to build various elements where policy discussions can be held, mentioning that the hub will be used as a tool to better understand the situation of poverty in Nigeria.

The Nigerian government said it would soon start implementing it Vision 2050 report soon, in an effort to increase the country’s Gross Domestic Product (GDP) to $33,000.

The Minister of Finance, Zainab Ahmed, who disclosed this at the 28th Nigerian Economic Summit (NES) in Abuja, added that Nigeria’s Agenda 2050 will succeed Vision 2020.

Various data from the Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) have shown that Nigeria’s public debt is estimated at $151.3 billion as of June 2022. Interestingly, most of Nigeria’s creditors are Nigerians.

State and federal governments owe a combination of domestic and foreign debt. Domestic debt is made up of FGN bonds, treasury bills, and recently, the CBN’s Ways and Means. In the external context, Nigeria is indebted to countries (two debts) and various institutions such as the World Bank, the IMF, and the African Development Bank.

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Speaking on public debt, the Debt Management Office (DMO) said it has raised the sum of N269.15 billion from the November 2022 issuance of the FGN Savings Bond on behalf of the state government, as enrollment reached 152.9%.

The November instrument, which was issued in three installments, saw a total subscription of N344.01 billion against the initial offering of N225 billion, representing a subscription rate of 152.9%.

Another 30,973 RSA holders changed their pension fund managers in the third quarter of 2022, according to Nairametrics findings. The change represents an increase of 109% compared to the 14,821 owners who changed in the previous quarter.

The number of RSA transfers carried out in Q3 2022 is the highest number in a quarter recorded since the opening of the transfer window in November 2020. Total transfers hit 109,522 since the beginning.

Data from the monthly oil market report (MOMR) from the Organization of the Petroleum Exporting Countries (OPEC) indicated that Nigeria has retained its position as the third largest producer of crude oil in Africa by October 2022.

The report also showed that Algeria took the top spot as the largest producer of crude oil in Africa in October, followed by Angola.

The exchange rate between the naira and the US dollar appreciated by 1.27% to close at N780/$1 on Friday, 18th November 2022 from N790/$1 recorded on Thursday.

Likewise, the naira strengthened against the US dollar on Friday in the cryptocurrency peer-to-peer market, closing at N780/$1, representing an appreciation of 1.05% compared to the N788.28/$1 recorded in the previous trading session. .


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