World Bank: Nigeria’s Economic Reforms Stabilised Economy but Deepened Poverty, 139 Million Now Living in Poverty
The World Bank has commended Nigeria for stabilising its economy through recent reforms, but warned that the benefits have yet to reach most citizens. In its latest Nigeria Development Update (NDU) released on Wednesday, the Bank said policies such as fuel subsidy removal, foreign exchange liberalisation, and tax adjustments have helped avert a fiscal collapse. However, these same measures have intensified hardship, with an additional 58 million Nigerians slipping into poverty in just six years. The number of poor citizens has now reached 139 million, representing 61 percent of the population.
The report, titled “From Policy to People: Bringing the Reform Gains Home,” paints a troubling picture of how rising inflation and food costs have undermined the reform gains. The World Bank revealed that average consumption fell by nearly 7 percent between 2019 and 2023, while inflation surged to a three-decade high of 34 percent following subsidy removal and FX reforms. Using a new CPI-FP index, the Bank found that prices of essential foods such as rice, beans, bread, beef, and yam rose by a staggering 406 percent between 2019 and 2024, more than double the official food inflation rate. For millions of low-income households who spend up to 70 percent of their earnings on food, this crisis is “an existential threat,” particularly in Northern Nigeria.
Beyond inflation, the World Bank highlighted a historic fiscal shift that has left the Federal Government cash-strapped. For the first time, state governments collectively received more allocations from the Federation Account than the Federal Government itself, limiting Abuja’s capacity to invest in national projects. With federal capital budget execution pegged at just 24.5 percent, the Bank warned that the country risks widening inequality between states and the centre. Meanwhile, the federal deficit is projected to remain at 2.8 percent of GDP through 2027, further constraining fiscal space for growth-driving investments.
A major factor behind Nigeria’s food inflation, according to the report, is the government’s trade policy. High import duties—ranging from five to 35 percent—and outright bans on staples like rice, wheat, and tomatoes have driven up local prices and concentrated market control in the hands of a few corporations. Just three firms control 96 percent of rice imports under current waivers, while one company dominates 82 percent of the sugar market. The World Bank urged the government to remove trade barriers and channel new FAAC windfalls—estimated at ₦27 trillion in the first eight months of 2025—toward social protection, health, and education to cushion the effects of reforms.
Reacting to the report, Finance Minister Wale Edun maintained that the Tinubu administration’s “Renewed Hope Agenda” remains focused on poverty reduction and improving living standards. “At the end of the day, the reforms must translate to better living standards,” he said at the 31st Nigerian Economic Summit. The World Bank, however, cautioned that without urgent expansion of Nigeria’s social protection coverage—which has fallen from 19 percent in 2019 to just six percent in 2023—reform gains will remain fragile. It recommended a monthly cash transfer of ₦22,500 to the ultra-poor, costing ₦2.5 trillion annually, just 19 percent of FAAC deductions. “Without coordinated and transparent fiscal management,” the report concluded, “Nigeria risks wasting the opportunity to convert stabilisation into shared prosperity.”
source: The guardian