by Khadijat Kareem

Inflation has constantly been on the increase, the most recent publication by NBS shows that Nigeria’s headline inflation hit a 17-year high at 20.52% showing a year-on-year increase of 3.52% and a month-on-month increase of 1.77%.

The rising inflation rate has in turn affected the purchasing power of consumers and also affected the Naira value. Long-term cash flows and fixed assets perform poorly when inflation is rising, thereby reducing the present value of future returns on investment.

Inflation hinders the prediction of the certainty of prices of goods and services in the future, and the uncertainty of future rates of inflation/prices of goods and services discourages potential investors and reduces the efficiency of investments.

Private Investment in Nigeria Contributed 11.2% of the Total GDP in 2022.

Private investments in Nigeria range from goods and services to bonds, assets, and bonds owned by private individuals. Private investment increases the rate of capital formation, increases production capacity, and training of labour, and overall, boosts the economy.

Nigeria has not recorded an increase in private investment as private investment has continued to decline from 2020 till date, a decline driven by the impact of COVID-19, economic recession, and majorly inflation. The decrease in private investment might lead to monopoly, lack of competitiveness, lower living standards due to lower remittances of households, and a less productive economy in the long run.

Continue reading: https://www.dataphyte.com/latest-reports/economy/nigerias-inflation-continues-to-rise-as-private-investment-decreases/

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