More economic hardship may hit Nigerians in coming months, PwC projects

Foremost consulting firm, PricewaterhouseCoopers (PwC), has projected that Nigerians may have to contend with worsening economic realities in the coming months.

Nigerians are currently going through a torrid economic period due to ballooning inflation caused by the removal of fuel subsidies and foreign exchange rate reforms by President Bola Tinubu.

Though the federal government has proposed various palliative interventions to cushion the effect of these policies, it appears to be at sea on how to proceed with implementations as Nigerians continue to be negatively impacted.

Tinubu also pledged the government's commitment to an upward review of minimum wage, among other measures targeted at stopping the economic bleeding.

However, in its latest ‘Nigeria Economic Outlook’ report, PwC noted that wage adjustment may not be made simultaneously and proportionately.

The firm also predicted that the recent economic reforms by the government may trigger an increase in the higher cost of doing business and lower revenue for Nigerian businesses.

It added that the continued inflationary growth and rise in the cost of living may slow real economic growth in the medium term.

The report read in part, “Consumer spending may be adversely impacted by the elevated inflation rate (food 25.3 per cent and core inflation 20.3 per cent rates.) and fuel price (140 per cent increase after subsidy removal).

“Business revenues may decline in the short-term, mainly due to direct impact input costs and reduction in disposable incomes.

“Rise in energy, food, transportation, and import costs may dampen consumer spending on non-discretionary items.”

However, the firm said reforms in the financial sector, particularly the liberalisation of the foreign exchange market, could gradually attract foreign investments and boost capital inflows in the long term.

PwC foresees in the short run investors' disposition to adopt the wait-and-see approach which may be a result of the absence of further reforms to strengthen business and economic fundamentals.

It read further, “Inflation is expected to rise in the short to medium term.

“Consumers are expected to be pressured by higher prices, causing demand to slow down.

“Wage adjustments unlikely to be adjusted simultaneously and proportionately.”