PwC warns Tinubu’s economic policies may lead to a drop in living standards, higher poverty

PricewaterhouseCoopers (PwC), a multinational consulting firm, has said the various reforms initiated by President Bola Tinubu’s administration has hurt businesses and households due to shocks such as inflation, naira devaluation, and rising interest rates.

The firm stated this in its recently released Economic Outlook for June 2024.

It, however, projected the economy to grow at 2.9% this year.

President Tinubu had initiated some policies which include the floating of the naira and the removal of fuel subsidy.

However, the reforms have reportedly brought untold hardship to Nigerians and impacted businesses negatively.

PwC said for households, the shocks necessitated by the reforms have negatively impacted consumption, savings, and investments in households possibly leading to a drop in the standard of living and an increase in poverty.

The report read: “The Impact of pressure points on households may lead to a decrease in standard of living and higher Poverty levels.”

It also noted that naira devaluation, inflation and the rise in interest rates have led to an increase in import input prices which passes through to domestic price increases for businesses.

The result of this, according to the report, was a reduction in margins, a decrease in revenue, an increase in the cost of funds, and others.

READ ALSO: PwC forecasts 29% decline in Nigeria’s inflation rate by year-end

“The impact of pressure points on businesses may lead to a decrease in reinvestment and/or corporate 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 took effect despite foreign exchange market reforms by the CBN to achieve price discovery and attract liquidity to the market.

“The Monetary Policy Rate (MPR) was raised by 775 basis points between May 2023 and 2024 to address rising inflation.

“Although the rise in MPR may attract more Investors to the fixed-income market due to higher yields, it has negatively impacted Borrowing costs for businesses,” the report added.

On the positive, it noted that reforms brought positive outcomes in terms of government revenue, improvement in credit ratings, exports, and capital importation.

By: Babajide Okeowo

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