The World Bank has disclosed that sluggish economic growth and rising inflation in Nigeria have led to an additional 24 million people falling into poverty over the past five years. According to the Nigeria Development Update report, the number of poor Nigerians has increased from 79 million in 2018 to 104 million in 2023. The report highlights the impact of inflation on the poor and vulnerable, emphasizing the need for targeted cash transfers and a holistic approach to reducing inflation. The removal of petrol subsidies and currency controls has contributed to inflationary pressures.
Key Points:
- The World Bank revealed that slow economic growth and rising inflation in Nigeria have resulted in an additional 24 million people falling into poverty over the last five years.
- Data from the bank showed that poverty in Nigeria increased from 40% in 2018 to 46% in 2023, pushing the number of poor Nigerians from 79 million to 104 million.
- The urban poor, more exposed to inflation, increased from 13 million to 20 million, while the number of poor people in rural areas rose from 67 million to 84 million.
- The removal of petrol subsidies and currency controls by the government has contributed to inflationary pressures, weakening the purchasing power of consumers and raising operating costs for businesses.
- The World Bank recommended targeted cash transfers to mitigate the impact on vulnerable households and emphasized the need for a consistent mix of fiscal and monetary policies to restore conditions for private investment and growth.
- The report highlighted that reforms initiated by Nigeria earlier in the year could reverse the trend of increasing poverty from 2024 onward, but the impact would be limited and slow.
- The World Bank urged the government to safeguard the benefits of petrol subsidy reform, increase non-oil revenues, reduce inflation, and implement coordinated fiscal and monetary policy actions.
Analysis: The World Bank’s report on the increase in poverty in Nigeria sheds light on the challenges facing the country’s economy, particularly the impact of inflation and policy decisions on the well-being of its citizens. The significant rise in the number of poor Nigerians over the past five years underscores the urgency of addressing economic vulnerabilities and implementing effective strategies for poverty reduction.
Several factors contribute to the current economic challenges in Nigeria, including the removal of petrol subsidies and currency controls, which have led to higher inflation and reduced purchasing power. The World Bank’s recommendation for targeted cash transfers to vulnerable households reflects the recognition of the need for immediate measures to alleviate the impact on those most affected by economic difficulties.
The report also emphasizes the importance of coordinated fiscal and monetary policies, calling for a holistic approach to reduce inflation and rebuild confidence. The government’s reforms earlier in the year, such as the removal of petrol subsidies, are acknowledged as critical steps in the right direction. However, the World Bank cautions that the impact of these reforms may be limited and slow.
The economic challenges in Nigeria, as outlined in the report, highlight the need for a comprehensive and sustainable strategy to promote inclusive economic growth, job creation, and poverty reduction. It underscores the importance of addressing structural issues, increasing non-oil revenues, and implementing reforms that lead to a more stable macroeconomic environment.
Moving forward, the Nigerian government faces the task of balancing economic reforms with social considerations to ensure that the benefits of any changes reach the most vulnerable populations. Additionally, efforts to enhance revenue generation, reduce inflation, and promote transparent and accountable spending will be crucial in achieving long-term economic stability and improving the well-being of the Nigerian people.