Nigerian economy will grow at a slower pace in 2023 than projected six months ago, the World Bank says.
Low oil production, foreign exchange restrictions, high living costs, and insecurity will slow growth to 2.8% from 2.9% predicted in January, the bank said.
The forecast translates to growth in income for each citizen (per capita) of only 0.4% — far slower than that needed to make significant gains in fighting extreme poverty.
“The surest way to reduce poverty and spread prosperity is through employment—and slower growth makes job creation a lot harder,” World Bank Group president Ajay Banga said in the group’s latest Global Economic Prospects released Tuesday. The bank warned that global growth had slowed sharply and the risk of financial stress in emerging market and developing economies is intensifying amid elevated global interest rates.
“It’s important to keep in mind that growth forecasts are not destiny. We have an opportunity to turn the tide, but it will take us all working together,” Mr Banga said.
– Bleak economy
Growth in Nigeria fell in the first three months in 2023 as oil output remained lower than normal, and the non-oil lost momentum amid high inflation, foreign exchange shortages, and shortages of banknotes caused by currency redesign.
Inflation is expected to rise further after new President Bola Tinubu scrapped fuel subsidy last week, causing petrol and transportation prices to almost triple.
The government says it plans to unify exchange rates to attract investment. Foreign direct investment into Nigeria plunged to $469 million in 2022 from a high of $4.7 billion in 2008, according to the National Bureau of Statistics.
“With continued structural challenges in the oil sector expected to keep oil production below the average of the last five years, growth is projected to be driven mainly by the non-oil sector,” the Bank said of the Nigerian situation.
It projects that getting financing for businesses and investments will remain a problem due to higher borrowing costs, lower oil production and prices, and persistent fiscal and external pressures amid weak domestic revenue mobilization.
– Sub-Saharan Africa
Growth in Sub-Saharan Africa is expected to slow from 3.7% in 2022 to 3.2% this year.
Over half of the 2023 downgrade is attributable to an abrupt slowdown in South Africa, which is projected to slow sharply to 0.3% amid widespread power outages.
The three largest economies in Sub-Saharan Africa—Nigeria, South Africa, and Angola – are projected to grow by about 2.1% annually over 2023-24.
Angola is projected to weaken to 2.6% this year—a 0.2 percentage point downgrade—as lower oil prices and falling oil production reduce export and fiscal revenues.
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