According to the United Nations Conference on Trade and Development (UNCTAD), the Nigerian economy has been crippled by a shortage of cash, which has affected the informal sector the most. The UNCTAD also stated that the continued decline of oil production is expected to have an impact on the country’s finances in 2023.
The information was contained in the ‘Trade and Development Report Update; Global Trends and Prospects (April 2023)’ produced by the United Nations Conference on Trade and Development.
UNCTAD pointed out that many African economies are at risk of stagflation in 2023, with half of African countries recording double-digit inflation in early 2023.
The report noted that many of these inflation spikes were due to the continuing depreciation of several African currencies, often following a loss of between 10-30% of their value against the dollar. Public debt, which in many cases stands at levels not seen since the early 2000s, is also a concern across the continent.
The agency further warned that many African economies are approaching a maturity wall as maturities on international bonds issued in the previous decade peak in 2024 and will remain elevated for the next decade, with most governments unable to tap international capital markets to roll over maturing debts.
UNCTAD noted that risks remain tilted to the downside, with the rising domestic cost of living and deteriorating security situations in many parts of the continent remaining a key concern. Over 116 million African people are currently in acute food insecurity, according to the latest projections of WFP and FAO.
The UN recently revealed that the Nigerian economy is expected to grow by 3% in 2023 due to its commodities trade and consumer goods and services markets. However, the shortage of cash and the continuing decline of oil production pose significant threats to the country’s finances.
The report also highlighted that the general African economy is projected to expand by 2.5%, which is a drop from last year and insufficient to curtail poverty levels on the continent. Weaker external demand and tighter financial conditions were noted as contributing factors to the decrease in projected economic growth.