NIGERIA’S INFLATION AND THE UNEMPLOYMENT RATE REMAINS HIGH DESPITE THE ECONOMY’S RECOVERY FROM THE RECESSION AMID THE COVID-19 PANDEMIC IMPACT
Nigeria has experienced the macroeconomic impact of the collapse in international oil prices, which caused the nation to slip into recession in Q3 2020. The gross domestic product (GDP) contracted by -3.62% (yearon-year) in Q3 2020, making a full-blown recession and second consecutive contraction from -6.10% recorded in Q2 2020. Further, the rebounding of the economy in Q3 2020, reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 2020 in response to the COVID-19 pandemic (Nairametrics, 22/11/2020). The Nigeria gross domestic product (GDP) advanced 0.51% YOY in the Q1 of 2021, slightly faster than a 0.11% rise in the previous quarter, making it the second consecutive quarterly growth since Nigeria’s economy dipped into recession in the Q3 of 2020, helped by easing COVID-19 restrictions and higher oil prices (Trading Economics, 24/05/2021). The GDP growth for 2021 is expected to be positive and the economy is expected to expand by 1.3%, and up to 2.3% in 2021 (CBN Economic Report, 2020).
Although Nigeria’s economy is gradually recovering from the negative effects of the COVID-19 pandemic, unemployment and inflation have remained high with the receding number of confirmed cases and the lifting of COVID-19 restrictions. Nigeria’s total unemployment rate rose to 33.30% in Q1 2021 from 27.10% in Q2 2020, and of the population, unemployed youth accounted for 53.4% in Q1 2021 from 40.8% in Q1 2020 (Trading Economics).
In addition, the World Bank says over 11 million or more Nigerians may lose their jobs due to the high inflation rate, and an estimated 7 million Nigerians may have been pushed below the poverty line in 2020 due to rising prices alone without considering the direct impacts of COVID-19 (The Cable, 15,06/2021).
THE INFLATION AND CONSUMER PRICE INDEX (CPI) RATE REMAINED HIGH DURING PANDEMIC
The country’s annual inflation rate continues to rise from 12.34% in April 2020 to 15.75% in December 2020 and reaching the peak of 18.17% in March 2021 from 16.47% reported in January 2021, making it the highest inflation rate since April 2017. The inflation rate also pushed food inflation to 22.95% at the end of Q1 of 2021. Nigeria’s annual inflation rate dropped for four consecutive months after reaching a peak of 18.17% in March to 17.38% in July from 17.75% in June 2021, amid a slight slowdown in prices of food & non-alcoholic beverages (21.03% vs 22.72% in April). The annual core inflation rate, which excludes the prices of agricultural produce, hit 13.72% in July from 12.7% in April (Trading Economics 16/07/2021). On the other hand, the Consumer price index (CPI) rose to 387.50 points in July 2021 from 318.40 points in April of 2020 (Trading Economics). Similarly, Core Consumer Prices (CCP) increased to 338.91 points in July 2021 from 2898.98 points in April of 2020 (Trading Economics ). To regulate the inflation and multi-exchange rates operating in the parallel market, the Central Bank of Nigeria is halting the sales of dollars to exchange bureaus among other policies that could help restore the integrity of the Naira (Reuters 27/07/2021)
COVID-19 EPIDEMIC OVERVIEW AND VACCINATION PROGRAM
On February 27, 2020, the Federal Ministry of Health confirmed the first COVID-19 case in Lagos State, Nigeria, making the country the third country in Africa to recognize an imported COVID-19 case after Egypt and Algeria, it was not until the 18th of April 2020 that the first case in the Northeast states of Borno, Adamawa, and Yobe, since the first index case was confirmed in Borno State. The epidemiology of COVID-19 in Nigeria has since evolved, between February 27, 2020, and July 18, 2021, a total of 2,420,863 persons have been tested for COVID-19 in Nigeria, of which 169,518 (7.0%) were confirmed as being infected with SARS-CoV-2 by RT-PCR. A total of 2,127 deaths have been recorded among the confirmed COVID-19 cases, resulting in an observed case fatality ratio (CFR) of approximately 1.3% (NCDC, 19/07/2021).