A new report has detailed how the economic reforms of the President Bola Tinubu administration are negatively impacting household consumption, savings and investments.
Accounting firm, PricewaterhouseCoopers (PwC) in its Economic Outlook for June 2024, highlighted the negative impact of the reforms on businesses and households due to shocks such as; inflation, naira devaluation, and rising interest rates.
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 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 stated.
For households, the report stated that shocks necessitated by the reforms have negatively impacted consumption, savings and investments in households possibly leading to a decrease in the standard of living and an increase in poverty.
According to the report, “The Impact of pressure points on households may lead to a decrease in standard of living and higher Poverty levels.”
It further note 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, which result, according to the report, is a reduction in margins, a decrease in revenue, an increase in the cost of funds and others.
“The impact of pressure points on businesses may lead to a decrease in reinvestment and/or corporate exits from the industry,” it added.
