The World Bank warned that Nigeria’s incoming administration will confront weak economic growth and significant policy challenges this year. In its latest Africa’s Pulse report for April 2023, released on Wednesday, the bank projected a 2.8 percent growth rate for Nigeria in 2023—down from the 2.9 percent forecast in the Global Economic Prospects report published in January.
The report described the 2023 growth recovery as “still fragile” because oil production remains subdued and the new government faces numerous policy hurdles. It highlighted several factors that could cause Nigeria’s economy to underperform, including a weaker local currency, foreign‑exchange scarcity, and rising inflation. Long‑term growth is also lagging due to deteriorating performance in both non‑oil activities and oil production.
Oil output did increase in late 2022 thanks to improved security that curbed oil theft, yet production still falls short of the OPEC+ quota. Meanwhile, non‑oil sectors such as agriculture and industry have been hampered by sharply higher energy and raw‑material costs, which are amplified by a depreciating naira in the foreign‑exchange market.
The World Bank also criticized the Central Bank of Nigeria’s cashless policy, noting that demonetisation efforts that began in mid‑December have weighed on economic activity. The Stanbic IBTC Bank’s Purchasing Managers’ Index fell to 44.7 in February 2023 from 53.5 in January 2022, reflecting a sharp decline in business output and new orders due to cash shortages.
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