At an event organized by the Department of Economics, University of Ibadan, Economists voiced concerns over increasing inflation and the likelihood of a recession confronting the global economy. They emphasized on the need to come up with proactive measures, as they are sacrosanct to addressing economic shocks. The stakeholders who raised concerns about the threat of recession include the Chief Economic Adviser to the President, Professor Doyin Salami, the World Bank, the Central Bank of Nigeria and the University of Ibadan.
The rising inflation is an emerging consequence of the COVID-19 pandemic and the fallout from the Russia-Ukraine war on the Nigerian economy. In the previous week, a report revealed that the Eurozone is slipping into recession with surveys portraying a deepening cost of living crisis and gloomy outlook. It was also stressed that Nigeria’s Social Accounting Matrix (SAM), a broad and economy-wide database which is responsible for recording every transaction between the economic agents has become obsolete.
Nigeria’s domestic challenges are being worsened by the Russia-Ukraine war.
Assembled at the Stakeholders Dissemination Workshop on the Fiscal Impacts of COVID-19 Pandemic and Lessons for the Future in Abuja, Prof. Salami stated that the trillions of dollars that has been spent by governments is the cause bringing about a rapid inflationary pressure and economic lockdown. In his words, it is also as a result of different reactions to shock from the pandemic and the war in Ukraine. For Nigeria, its domestic challenges have been exacerbated due to the Russia-Ukraine war and the COVID-19 pandemic, fostering current economic woes affecting the country.
It is now apparent that there is a need of rebalancing by Central Bank’s and fiscal authorities to the responses to COVID-19, because the world now prioritizes inflation with some parts of the world’s economy already in recession. However, with support from the Partnership for Economic Policy (PEP) based in Nairobi Kenya, a team of economic experts – Lulit Mitik Beyene, Adeola Adenikinju, Bernard Decaluwe, Oluwasola Omoju, and Abiola Akande – recently finished a study on the ‘Impacts and Adjustment Responses to Economic Recovery from COVID-19 Pandemic.
Domestic resource mobilization will maintain the pace of gov expenditure.
Adenikinju, head of the Department of Economics at the University of Ibadan, referred to the 2006 accounting matrix of Nigeria as obsolete due to changes in the economy. Amidst relating the rising inflation in the world to the direct spending in a bid to lessen the impacts of the COVID-19 pandemic, the economic expert further stated that there is a possibility that the pandemic would have disproportionate impacts on informal non-agricultural sectors where women are excessively represented.
The economist added that the steady and effective rollout of the COVID-19 vaccine is significantly needed for the reduction of the expanding gender gap in Nigeria. Saying that if it was effectively done, women and girls could get relieved by the vaccine from disproportionately bearing the care burden and as a result, increase their mobility. This is because of the essentiality of domestic resource mobilization if Nigeria is to keep treading at its current pace of government expenditure.
Inflation rates have increased dramatically since December.
Nigeria’s inflation rate from January to July 2022, has risen by over 400 basis points from 15.63 percent which was recorded in December 2021 to 19.64 percent. Dr. Samer Matta, Senior Economist for Nigeria at the World bank, also affirmed that more than 100 million Nigerians have been driven into poverty while millions of students are out of school. Having said that, he emphasized on the importance of planning a futuristic education policy.
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