Nigeria‘s Economy”/>BANK Dunia has warned of a further spike in the price of Premium Motor Spirit (petrol). The problem is, increasing petrol prices could jeopardize Nigeria’s already precarious economic recovery after fuel subsidies were removed. This was revealed in a report in the October edition of Africa’s Pulse.
In May 2023, President Bola Tinubu officially stated that petrol subsidies would no longer be provided. Since then, prices have shot up from N175 per liter to over N1,000 nationwide.
The report notes that, although the inflationary impact stemming from the weakening naira in the early months of this year and the removal of petrol subsidies in the second half of 2023 appears to be gradually easing, a further increase in petrol prices by 40%-45% in September could reverse this deflationary trend.
As macroeconomic and fiscal reforms begin, the Nigerian economy is expected to grow by 3.3% in 2024 and 3.6% in 2025-2026. According to the data, inflation slowed to 33.4% in July and 32.2% in August after peaking at 34.2% year-on-year in June 2024. This highlights that greater growth rates in 2025 should be the result of consolidation of these policies.
The paper also notes that by 2024, the naira has become one of the worst performing currencies in Sub-Saharan Africa. By the end of August 2024, the naira had lost more than 43% of its value for the year. That makes it one of the weakest currencies in the region along with the South Sudanese pound and the Ethiopian birr.
Delays in disbursement of foreign exchange by Nigeria’s central bank, surge in demand for US dollars on the black market, and lack of dollar inflows were factors that contributed to this depreciation.
Legit.ng reports that Nigeria’s ability to sustain key reforms for at least 15 years will determine its course towards economic transformation. That’s according to Indermit Gill, senior vice president of the World Bank Group.
Speaking on Monday (14/10) at the 30th Nigerian Economic Summit in Abuja, the official stressed the need for consistent policy implementation and political commitment to resolve long-standing structural problems in the country that hinder long-term growth and development. This warning comes amid increasing public dissatisfaction following the removal of fuel subsidies and the unification of various countries’ exchange rates. (Z-2)
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