PricewaterhouseCoopers (PwC), a multinational consulting firm, says various reforms initiated by President Bola Tinubu’s government have hurt businesses and households due to shocks such as inflation, naira devaluation and rising interest rates.
The company stated this in its recently released Economic Outlook for June 2024.
However, they project the economy will grow by 2.9% this year.
President Tinubu has initiated several policies including floating the naira and removing fuel subsidies.
However, the reforms have reportedly brought untold hardship to Nigerians and negatively impacted businesses.
PwC said for households, the shocks caused by the reforms have had a negative impact on household consumption, savings and investment which may have led to lower living standards and increased poverty.
The report says: “The impact of pressure points on households can lead to lower living standards and higher levels of poverty.”
The report also notes that the devaluation of the naira, inflation and rising interest rates have led to an increase in the prices of imported inputs which in turn has resulted in an increase in domestic prices for businesses.
The result of this, according to the report, is a decrease in margins, a decrease in income, an increase in cost of funds, etc.
READ ALSO: PwC forecasts a 29% drop in Nigeria’s inflation rate by the end of the year
“The impact of pressure points on businesses could lead to reduced reinvestment and/or exits from the industry.
“The Naira depreciated against the dollar by 67.8% from an average of ₦461.1 in May 2023 to ₦1,433.8 in May 2024. The depreciation occurred despite foreign exchange market reforms by the CBN to achieve price discovery and attract liquidity to the market .
“The Monetary Policy Interest Rate (MPR) was raised by 775 basis points between May 2023 and 2024 to address rising inflation.
“While the increase in MPR may attract more Investors to the fixed income market due to higher yields, it has a negative impact on the cost of Borrowing for businesses,” the report added.
On the positive side, the reforms brought positive results in terms of government revenue, improved credit ratings, exports and capital imports.
By: Babajide Okeowo
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