More people in Nigeria and Sub-Saharan Africa (SSA) are expected to fall into extreme poverty following the impact of the Russia-Ukraine war.
According to the World Bank in a report titled “Global Economic Prospects” released on Friday, the dire situation is attributed to the impact of the conflict – now in its fourth month – on the commodity market, supply chains, inflation, and financial conditions, which have intensified the slowdown in economic growth.
The Washington-based bank further explained that the possibility of high global inflation could eventually result in tightened monetary policy in advanced countries which might lead to financial stress on emerging markets and developing economies.
The report added that growth in the SSA is projected to slow to 3.7 per cent this year, reflecting forecast downgrades of over 60 per cent of regional economies. Price pressures, partly induced by Russia’s invasion of Ukraine, are sharply reducing food affordability and real incomes across the regions.
The World Bank report reads: “More people in SSA are expected to fall into extreme poverty, especially in countries reliant on imports of food, and fuel. Fiscal space is narrowing further as the government ramps up spending on subsidies, support to farmers, and in some countries, security. However, the impact of the war will vary across countries, as elevated commodity prices will help soften the damaging effects of high inflation in some large commodity exporters”.
The report also quoted the World Bank President, David Malpass as saying that the world was facing the deepest global recession since World War II.
He said: “The global economy is facing high inflation and slow growth at the same time. Even if a global recession is averted, the pain of stagflation could persist for several years – unless major supply increases are set in motion”.
Among the risks to the forecast, prolonged disruptions to food supply across the region could significantly increase poverty, hunger, and malnutrition, while persistent inflation could ignite stagflation risks and further limit policy space to support recoveries. An elevated cost of living could increase the risk of social unrest, especially in low-income countries.
On how the global economic situation could worsen the poverty level in Nigeria, an Associate Professor of Economics at Pan Atlantic University, Dr Olalekan Aworinde said the Russia-Ukraine war would reduce the disposable income of Nigerians, which would, in turn, affect the standard of living.
Aworinde said: “Ukraine is one of the largest producers of wheat in the world and the Russian war invasion will affect the demand and supply of wheat and once the major producers of this agricultural material cannot export the goods, that implies that demand is greater than supply and that will result in a hike in price. Once prices increase, knowing fully well the disposable income of the consumer is constant it means the purchasing power will fall. And if the purchasing power falls, it will affect the standard of living and once it affects the standard of living it means these individuals will go into absolute poverty”.
He added that in terms of the structure of the Nigerian economy as a “monocultural economy, meaning that we only produce oil and we cannot eat oil.
“So Nigeria is mainly an import-dependent country and that means when you are bringing in the goods and it’s expensive imported inflation and the implication is that general prices of goods will increase leading to a continuous inflation”.
Credit: Sunday PUNCH