• Tuesday, April 23, 2024
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Business leaders outline five risks facing Nigeria in 2024

Economic crisis: Triple blow for Nigerian families

The World Economic Forum (WEF), an independent international organisation, has identified the top five risks that Nigeria could face in 2024.

In its latest 2024 Global Risk Report, it listed economic downturn, energy supply shortage, unemployment, public debt and inflation as the five risks for Africa’s biggest economy.

The report surveyed over 11,000 business leaders in 113 economies to know the risks that pose the most severe threat to each country over the next two years.

“The cost-of-living crisis remains a major concern in the outlook for 2024. The economic risks of inflation and economic downturn are also notable new entrants to the top 10 risk rankings over the two years,” it said.

It added that although a “softer landing” appears to be prevailing for now, the near-term outlook remains highly uncertain.

Last year for consumers in Nigeria has been challenging as a result of the cash scarcity, removal of the petrol subsidy and naira devaluation.

The general inflation rate which has been in double digits since 2016, increased consistently for the eleventh straight month in November. This has weakened the purchasing power of cash-strapped Nigerians, put a strain on disposable incomes among households and impacted the operations of many businesses.

According to the NBS, headline inflation to 28.2 percent in November, hitting an 18-year high from 27.33 percent in October.

Rising inflation in Africa’s most populous nation has pushed an additional 14 million Nigerians into poverty in 2023, according to the latest Nigeria Development Update report by the World Bank.

This means that the number of poor people rose to 104 million from 89.8 million at the start of the year

Nigeria’s unemployment rate rose to 4.2 percent for the first time in the second quarter of 2023 since the NBS adopted a new methodology for the country’s labour force.

The latest Nigeria Labour Force Survey shows the unemployment rate rose from 4.1 percent in the first quarter of 2023. It stood at 5.3 percent in the fourth quarter of last year.

Data from the Manufacturers Association of Nigeria showed that the number of jobs lost in the manufacturing sector rose by 108.7 percent to 3,567 in the first half of this year, the highest in three years from 1,709 in the same period of 2022.

The number of jobs created in the sector declined by 32.8 percent to 6,428 from 9,559 in H1 2022.

“If interest rates remain relatively high for longer, small- and medium-sized enterprises and heavily indebted countries will be particularly exposed to debt distress,” authors of the WEF report said.

They noted that economic uncertainty will weigh heavily across most markets, but capital will be the costliest for the most vulnerable countries.

“The convergence of technological advances and geopolitical dynamics will likely create a new set of winners and losers across advanced and developing economies alike.

“If commercial incentives and geopolitical imperatives, rather than public interest, remain the primary drivers of the development of artificial intelligence and other frontier technologies, the digital gap between high- and low-income countries will drive a stark disparity in the distribution of related benefits and risks,” the report said.

The WEF said the vulnerable countries and communities would be left further behind, digitally isolated from turbocharged AI breakthroughs impacting economic productivity, finance, climate, education, and healthcare, as well as related job creation.