Poverty increasing in Nigeria under Buhari watch: World Bank


President Muhammadu Buhari

World Bank says poverty is increasing in Nigeria under Buhari watch
World Bank says poverty is increasing in Nigeria under Buhari watch

By Abankula, with agency reports

Poverty, accentuated by the pandemic, is increasing in Nigeria, with 11 million more people joining the rank of the poor, the World Bank said on Tuesday.

Presenting its six-monthly update on development in Nigeria, the organisation noted that although Nigerian economic growth has resumed after the COVID shock, it is lagging behind the rest of sub-Saharan Africa.

The report underscored food inflation, heightened insecurity and stalled reforms as the drivers of the increasing poverty,

The bank estimated a GDP growth forecast for Nigeria of 1.9% in 2021 and 2.1% in 2022, compared with 3.4% this year and 4.0% next year for sub-Saharan Africa.

Lead economist for Nigeria Marco Hernandez said inflation, especially in food prices, was exacerbating poverty and food insecurity.

Food accounted for almost 70% of Nigeria’s total increase in inflation over the past year.

He said the COVID-induced crisis was expected to push over 11 million Nigerians into poverty by 2022, taking the total number of people classified as poor in the country to over 100 million.

The total population is estimated at 200 million.

He said it was expected that between 2020 and 2022 there would be a decrease of about 13 per cent in per capita income in comparison with what would have been a situation without COVID-19.

The World Bank expects the Nigerian inflation rate in 2021 to be 16.5%. The forecast for sub-Saharan Africa, excluding Nigeria, is 5.9%.

The World Bank expects the Nigerian inflation rate in 2021 to be 16.5%. The forecast for sub-Saharan Africa, excluding Nigeria, is 5.9%.

Hernandez said increased insecurity across the nation — ranging from mass abductions at schools, kidnappings for ransom, armed conflict between herdsmen and farmers, armed robberies and various insurgencies — was a drag on growth and job creation.

He said it was critical for the government to maintain reform momentum, but that some important reforms had stalled.

He cited petrol subsidies, which have recently returned after the government had established a market-based pricing mechanism, and electricity tariff reform, an area where planned adjustments to bring prices in line with costs have been paused.

Hernandez said Nigeria had the largest number of people without access to electricity in the world, and that electricity subsidies benefited mainly richer households.

Only 22% of the poorest households have access to electricity, while 82% of the richest are able to access power.

Shubham Chaudhuri, World Bank Country Director for Nigeria said
sustaining reform momentum in Nigeria is critical to ensuring robust economic recovery beyond 2021.

Chaudhuri said though Nigeria was at a critical juncture, it had so much potential which had not been realised.

He added that with the COVID-19 crisis and the pressures on the economy, the pressures on society had been heightened.

Related News

He also said that Nigeria faced interlinked challenges in relation to inflation, limited job opportunities and insecurity.

“While the government has made efforts to reduce the effect of these by advancing long-delayed policy reforms, it is clear that these reforms will have to be sustained and deepened for Nigeria to realise its development potential.”

He said the over N100 billion a month that goes into petrol subsidy mostly benefits the rich.

He, however, said that a fraction could be used as cash transfers to support the poor at a time of rising prices or be geared towards primary health care or basic education.

“So that is part of the restructuring or policy reforms in a number of areas.

“What should the Federal Government be doing, what should the sub-national governments be doing and most importantly, what government should not be doing,” he said.

He also said that inflation reduced the purchasing power of Nigerians and had been increasing not only constantly and at a very fast pace, but since August 2019 when the borders were closed.

Hernandez, however, said that as the crisis has had a profound effect on Nigerians, it also had been a wake-up call.

“We want to commend the government for events in a series of very bold and inaudible reforms that have been stalling for many years.

“That includes the doctrine of economic sustainability plan that plans a series of reforms over the coming years, greater transparency in old revenues and improved budgeting practices.”

He said that given the urgency to reduce inflation amidst the pandemic, a policy consensus and expedite reform implementation on certain areas should be considered.

He added that exchange-rate management, monetary policy, trade policy, fiscal policy and social protection would help save lives, protect livelihoods and ensure faster and sustained recovery.

At the panel discussion, Mr Clem Agba, Minister of State for Budget and National Planning, gave reasons why some of the reforms like the removal of petroleum subsidy were suspended.

According to him, it is because the government is looking for alternatives to ensure that when the programmes continue, Nigerians do not suffer.

“To follow up with these reforms, we are working on the strategic revenue initiatives and we are beginning to see some improvements in revenue.

” I dare say that the country is no longer so much of a mono dependent economy because of the reforms that are ongoing.

“In the past, oil used to be the main driver of the economy in terms of revenues, oils was giving us about 70 per cent of revenue and about 90 per cent of foreign exchange.

“Today oil is only contributing about 45 per cent while non-oil sector is contributing about 55 per cent.”

He appealed to Nigerians to understand that the reforms were necessary to achieve the desired growth.

Load more