Nigeria: World Bank Reports Surge in Poverty as Economic Reforms Impact 104 Million Nigerians

Nigeria: World Bank Reports Surge in Poverty as Economic Reforms Impact 104 Million Nigerians

By Ahmad Hadizat Omayoza, Mamos Nigeria

Nigeria’s economic landscape is facing heightened challenges, as revealed by a recent World Bank report, marking an increase in the number of citizens living below the poverty line. This surge, reaching a staggering 104 million people, is attributed to significant economic and fiscal reforms, including the removal of the petrol subsidy and restructuring of the foreign exchange market rates.

While the World Bank acknowledges the necessity of these reforms to avert a fiscal crisis, it also emphasizes the temporary pain inflicted on the population due to rising living costs. The report discloses a continuous upward trajectory in poverty levels, with 100 million people recorded in 2022, up from 95 million in 2021, and a considerable leap from 85.2 million in 2020, as reported by the Nigerian Bureau of Statistics (NBS).

The World Bank’s Nigeria Development Update, titled ‘Turning the Corner: Time to Move From Reforms to Results,’ underscores the imperative to sustain reform momentum, complete ongoing initiatives, and address associated costs. Inflation, soaring at 27.3% Year-on-Year in October 2023, is highlighted as a significant concern, particularly impacting vulnerable citizens.

The FX market, undergoing volatility in response to new policy approaches, demands further clarity on oil revenues and the impact of subsidy removal on Federation revenues. The report commends the removal of the petrol subsidy, anticipating fiscal savings of around N2 trillion in 2023 and over N11 trillion between 2023 and 2025.

Shubham Chaudhuri, World Bank Country Director for Nigeria, acknowledges the significance of petrol subsidy and FX management reforms but emphasizes the need for coordinated fiscal and monetary policy actions. The report envisions an average annual economic growth rate of 3.5% in 2023-2026, provided reforms continue, offering improved fiscal space for development spending.

The World Bank calls for transparency from the Nigerian National Petroleum Company Limited (NNPCL) by disclosing its Statement of Accounts and revealing revenue inflows. It also recommends actions such as controlling inflation, enhancing FX market stability, achieving fiscal consolidation, and addressing structural barriers to growth.

The report suggests that Nigeria is on the path to recovery, but challenges persist. As the government plans to review salaries in 2024, the Minister of Finance, Wale Edun, emphasizes the need for NNPCL’s account audit. Additionally, efforts to incentivize holders of huge sums in Domiciliary accounts to invest and address inflation through price stability are discussed.

Despite these proposed measures, differences emerge among stakeholders. The Minister of Industry, Doris Uzoka-Anite, disagrees with the World Bank’s stance on power subsidies, asserting that supporting production through subsidies is essential. The complexity of Nigeria’s economic landscape demands ongoing collaboration and multifaceted strategies to navigate these challenges and achieve sustainable development.

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