The World Bank has listed a series of macroeconomic policy missteps executed by fiscal and monetary authorities between 2015 and 2023 that pushed Nigeria’s inflation to a 28-year high.
In its latest edition of the Nigeria Development Update (NDU), the global lender explained that prior to 2015, Nigeria had a single-digit inflation rate which is in the same range as other emerging economies.
According to the Bank, these macroeconomic missteps include- Ways and Means financing of fiscal deficits by the Central Bank of Nigeria (CBN), granting of large credits at subsidised rates to households and businesses also by Nigeria’s apex bank, banning of access to FX for importation of over 900 products, cost of maintaining an overvalued exchange rate and unbudgeted fiscal deficits.
The World Bank further noted that the huge Ways and Means advanced by the CBN resulted in large cash in circulation which weakened confidence in the Naira and contributed to the spike in inflation even before the reforms in the foreign exchange and energy sector kicked in. Nigeria’s inflation peaked at a 28-year high of 24.19% in June 2024- marking 19 months of consistent increase.
