The Managing Director of Financial Derivatives Company Limited, Mr. Bismarck Rewane, said Nigeria’s gross domestic product was increasing and the rate of inflation was falling, but more people were living below the poverty line.
Rewane, a member of the Presidential Economic Advisory Council, said so during this month’s edition of the LBS Breakfast Session in his presentation, a copy of which was obtained by our correspondent on Wednesday.
The economic expert asked what he described as five tough questions for Nigerian policymakers.
He said, “Good news and angry people! Why? (Why is GDP increasing and income levels decreasing?). Beans 122.22 percent, pepper 100 percent, flour 61.54 percent but inflation down! Wow! what is the truth?
“The best hedge against inflation?” Real estate / stocks / bitcoin or precious metals? Will the naira collapse to N600 / $ as BDCs scramble? Will the PIA (Petroleum Industry Act) improve things for us? 1. Gasoline 2. Insecurity 3. New investments.
The National Bureau of Statistics recently said the country’s GDP grew 5.01 percent in the second quarter of this year from 0.51 percent in the first quarter while inflation fell to 17.38 percent in July compared to 17.75 percent in June.
Rewane noted that in the second quarter, out of 46 activities, 34 expanded, eight slowed and four contracted.
He said: “The fastest growing sectors have been the most affected by the [COVID-19] to close. They are elastic to employment and have the potential to increase productivity.
“Real GDP (2.7%) remains lower than potential GDP (8.3%). Economy still in a recession gap. The population (3.2%) is growing faster than the GDP.
Citing data from the World Bank, Rewane said that seven million Nigerians fell into extreme poverty in 2020, adding: “Nigeria remains the poverty capital of the world: 93.9 million people now live below the poverty line. poverty line “.
According to him, people are angry because socio-economic conditions have deteriorated.
He said: “Youth unemployment is rapidly approaching 45 percent. Poverty index, 50.68 percent. Nigeria [is] a hunger alert hot spot, according to FAO and WFP. Over 18,000 Nigerian asylum seekers. Increased brain drain in the health sector (for example, around 500 doctors move to Saudi Arabia).
“The positive GDP growth has not yet had a significant impact on socio-economic conditions. Strategic investment and increased stimulation in elastic sectors for employment and elimination of leakages (misaligned exchange rates and subsidies) necessary to achieve sustained economic recovery and inclusive growth.
Rewane noted that the allocation of special drawing rights of $ 3.35 billion to the country by the International Monetary Fund would provide a 10 percent cushion to external reserves.
He said: “Growing concerns about debt sustainability suggest that Nigeria is falling quickly into the debt trap. Poor financial management practices and limited income to further exacerbate the debt problem. Domestic debt is also on the rise.
Rewane also noted that federal government borrowing through Ways & Means advances increased 595.5 percent to N15.51 billion in five years.
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