…But insists petrol should sell N750 per litre
Sluggish growth and rising inflation in Africa’s biggest economy have pushed an additional 24 million Nigerians into poverty within five years, according to the World Bank.
This was revealed in its latest ‘Nigeria Development Update report for December 2023′, yesterday.
The report said: “Sluggish growth and rising inflation have increased poverty from 40 percent in 2018 to 46% in 2023, pushing an additional 24 million people below the national poverty line”.
It said the number of poor rose from 79 million in 2018 to 104 million in 2023, with urban poor – more exposed to inflation – increasing from 13 to 20 million. Meanwhile, poor people in rural areas increased from 67 to 84 million. “In the medium-term, the recent reforms will reverse this trend through higher growth and lower inflation, but to a limited extent, with poverty rates decreasing from 46% in 2024 to 44% in 2026”, it added.
According to the international organisation, reforms are expected to undo the increases in poverty seen in recent years from 2024 onward, albeit only marginally and slowly.
Recall that in May, President Bola Tinubu scrapped a costly but popular petrol subsidy and lifted currency controls in June, which he said was to save the country from going under. But his actions have worsened inflation in double-digits and at the highest level in 18 years. The rising inflationary pressures have weakened the purchasing power of consumers, even as businesses grapple with higher operating costs.
The removal of the petrol subsidy tripled the petrol price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise transportation fares.
However, the Bank noted that the Federal Government may still be paying fuel subsidies considering that the country’s fuel price of N650 is currently not cost-reflective.
The Bank’s Lead Economist for Nigeria, Alex Sienaert, disclosed this during his presentation of the Nigeria Development Update, December 2023 edition, titled: ‘Turning The Corner (from reforms and renewed hope, to results)’, yesterday, in Abuja.
During the hybrid event, he said that fuel should cost N750 per litre, according to today’s official exchange rate, saying: “If we estimate what is the cost reflective of retail PMS price of the would-be and assume that importation is done at the official FX rate, it does seem that petrol prices are not fully adjusting to market conditions so that hints at the partial return of the subsidy.
“Of course, the liberalisation is happening with the parallel rates, the main supplier. The price would be even higher. These are just estimates, to give you a sense of what cost-reflective pricing most likely looks like. We think the petrol price should be around N750 per litre; more than the N650 per litre currently paid by Nigerians”.
He emphasised that to ensure the Government reaps the rewards of its audacious reforms, the bank advises it to take further actions.
