Dear Subscriber,
Re: Too many baffling events
There’s so much happening in the world and in Nigeria, it’s hard to keep up. In the global mix, the Kremlin and Zelensky are still tugging it out with no truce in sight. It also seems like COVID-19 is clawing its way back into China. Meanwhile, higher global oil and natural gas prices are plunging Europe into darkness while leaving other countries in inflationary distress. Inflation is at 40-year highs in advanced economies like the US (8.5%) and the UK (9.4%).
Exchange rate crisis is stoking inflation in Nigeria
Nigeria on the other hand is battling multiple socioeconomic shocks – insecurity, energy supply crunch, poverty, climate change, inflation, and exchange rate volatility. Recently, the naira began a free fall that made it exceed the N700/$ psychological line, before appreciating to N650/$ and later depreciating to N680/$. Some even say the naira is jinxed and expect a sharp plunge in value to N1000/$ soon. Sadly, this fall could even be greater as we continue to practice the multiple exchange rate system that is highly distortionary. This will fuel the fire of arbitrage, speculative activities, and heightened inflationary surge.
Energy Supply Crunch and Climate Change Adaptation
Globally, Nigeria is one of the top-ranking countries with the lowest electricity supply per capita. With the number of persons without access to national grid in Nigeria estimated at 91.94million, the current surge in diesel price is increasing the risk of widening energy poverty net in Nigeria. It is estimated that, at least, 24million Nigerians who are vulnerable to energy poverty will slide into the energy poverty trap by the end of 2023. Also, the global campaign for shift away from fossil fuel to alternative energy is raising more concerns about the capacity of Nigeria and other African countries to finance the required investment for climate adaptation and mitigation.
In this edition of the FDC Bi-monthly publication, the FDC Think-Tank analyses these issues, their implications on the economy and also provided several other interesting public policy discussions.
Enjoy your read!
