IBADAN, Nigeria – Feb. 19, 2024: Demonstrators hold placards during a protest against the hike in price and hard living conditions in Ibadan on February 19, 2024.
Samuel Alabi | Afp | Getty Images
Nigeria is battling to contain a historic currency crisis and soaring inflation, with the International Monetary Fund on Monday warning that almost one in 10 people are facing food insecurity.
Inflation hit an annual 29.9% in January, driven by soaring food prices that have triggered a cost-of-living crisis in Africa’s largest economy. The naira currency, meanwhile, plunged to an all-time low of around 1,600 against the U.S. dollar in late February.
President Bola Tinubu’s government came to power in May 2023, inheriting a highly precarious economic situation, characterized by anemic growth, rising inflation, low revenue collection and import-export imbalances that had accumulated over many years.
His administration promptly launched a raft of economic reforms aimed at liberalizing the economy, such as the removal of fuel subsidies and the relaxation of currency controls.
Though welcomed by foreign investors, the short-term impact has been an uncorking of the various macroeconomic issues that had been artificially contained by the interventionist policies.
LAGOS, Nigeria – Sept. 25, 2023: Street currency dealers at a market in Lagos, Nigeria.
Bloomberg | Bloomberg | Getty Images
IMF staff completed a mission to Nigeria in February and noted on Monday that although economic growth reached 2.8% in 2023, this falls slightly short of the level needed to support the country’s rapid population growth.
“Improved oil production and an expected better harvest in the second half of the year are positive for 2024 GDP growth, which is projected to reach 3.2 percent, although high inflation, naira weakness, and policy tightening will provide headwinds,” the Washington, D.C.-based organization said in its report on the country.
“With about 8 percent of Nigerians deemed food insecure,…
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