The Bretton Woods institution said this in its latest Nigeria Development Update (NDU) released on Thursday.
In the report titled ‘Nigeria’s Choice’, the bank said the country’s inflation has worsened since 2020, eroding the purchasing power of Nigerians and increasing poverty.
“The World Bank estimates that between 2020 and 2021, inflation pushed about eight million more Nigerians below the poverty line, increasing the total number of poor people to about 90 million.
“Higher inflation in 2022 is estimated to have pushed an additional five million Nigerians into poverty between January and September 2022, mainly through higher prices of local staples, such as rice, bread, yam, and wheat, especially in non-rural areas.”
GROWTH FORECAST: FROM 3.8% TO 3.1%
The World Bank also reduced Nigeria’s 2022 growth forecast to 3.1 percent from a previous forecast of 3.8 percent.
This, the bank explained, is due to Nigeria’s slow economic growth amid declining oil output and reduced non-oil activity.
According to the bank, Nigeria’s fiscal pressures have intensified, exacerbated by the soaring cost of the petrol subsidy which will likely exceed N5 trillion this year.
“Despite higher oil export revenues, official reserves have fallen, and the currency market is severely distorted, undermining the business environment and investment,” the World Bank said.
“The weaknesses in the macroeconomic policy framework are suppressing growth and making Nigeria more vulnerable to shocks.”
“Nigeria’s economic growth has slowed on the back of declining oil output and moderating non-oil activity.
“Real gross domestic product (GDP) rose by 3.1 percent year-on-year (y-o-y) in the first three quarters of 2022, little more than the annual population growth of 2.6 percent.
“Nigeria’s growth performance, and its fiscal and external buffers, have decoupled from high oil prices, and macroeconomic vulnerabilities have increased.”
‘NIGERIA MUST MAKE URGENT CHOICES’
To reduce its vulnerability to crisis and improve its potential, the World Bank said Nigeria has to make urgent choices.
The bank recommended reform choices that Nigeria can make in three key areas.
“Restoring macroeconomic stability through measures to reduce the domestic and external imbalances. This will require a coordinated mix of exchange rate, trade, monetary, and fiscal policies, notably including adopting a single, market-responsive exchange rate, eliminating the petrol subsidy, and increasing oil and non-oil revenues,” the bank said.
“Boosting private sector development and competitiveness by eliminating structural constraints that hinder productivity; and
“Expanding social protection to protect the poor and most vulnerable.”
Alex Sienaert, World Bank lead economist for Nigeria and co-author of the report, said: “Previous episodes of reform progress and high growth, such as in the 2000s, show that Nigeria’s economy can turn around quickly, and its tremendous economic potential that could be unleashed is well-known.
“If Nigeria chooses to make reforms that stabilize its macro-fiscal policy settings and support investment, this would be transformative for 80 million poor Nigerians, for Nigeria as a whole, and for Africa.”
Shubham Chaudhuri, World Bank country director for Nigeria, advised the country to make “business-unusual choices” to avoid a scenario in which up to 80 million working-age Nigerians do not have full-time jobs by 2030 — and up to 23 million more Nigerians could be living in extreme poverty.
