Rising global commodity prices – A major challenge for SSA & Nigeria
As the global economy reels from the Russian-Ukraine war, the prevailing humanitarian, energy and food crisis is having a debilitating impact on the Sub-Saharan region and Nigeria. The IMF is projecting that the impact of higher food and energy prices on Africa will be huge.
For Nigeria in particular, the price of imported food commodities especially wheat and maize will rise. Since the crisis, the global price of wheat has spiked by 39.75%. This price surge coupled with exchange rate pressures on the Naira is expected to push the price of a bag of flour from the current level of N22,000 towards N27,000-N30,000 in the next quarter. In addition, the spike in the global price of maize will have a knock-on effect on the price of substitutes like beans and yam. It will also increase smuggling across Nigeria’s porous borders, negatively affecting customs and excise revenue as well as the fiscal consolidation of the Federal government.
The general increase in price level is forcing most Central banks to go into another cycle of tightening by increasing interest rates. The Federal Reserve is poised to increase policy rate by 0.25%p.a. on March 15. This has significant implications for developing economies like Nigeria, who has a substantial level of commercial debts.
Rising youth unemployment and crime rates in Nigeria
‘The young shall grow’, the old slogan for Yobe state reflects Nigeria’s youthful population (53.8% of total population and a median age of 18 years). However, this growing cadre of Nigerians are mostly underemployed or unemployed. Currently, youth unemployment rate stands at 42.5%. Little wonder the crime rate in the country is alarming, as murder, armed robbery, kidnapping and terrorism, have taken center stage, causing loss of lives and economic setbacks. There is a need for government at all levels, the international community and other stakeholders to embark on massive job creation programs and get youths off the streets. This will not only improve the social wellbeing of the citizens but also bolster economic growth and development.
In this edition of the FDC monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy.
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