How Nigerian government’s policies pushed more citizens into poverty – World Bank

June 28, 2023
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THE World Bank has asserted that some policies of the Nigerian Federal government pushed more citizens into different categories of poverty.

The Bank cited, in its latest report in its Nigeria Development Update (NDU) 2023, the country’s inflation rate as one of the highest globally, a situation it said pushed an estimated four million people into poverty between January and May 2023.

The report was launched on Tuesday, June 27 in Abuja.

The ICIR had reported how CBN’s lending to the Federal government over the stipulated limits was negatively impacting inflation and consequently compounding poverty levels.

In the NDU 2023 document, the global lender warned that about 7.1 million poor Nigerians would become poorer if the Federal government failed to compensate or provide palliatives for them, following the removal of fuel subsidy.

According to World Bank data, 89.8 million Nigerians were poor as of the beginning of this year, but the number rose to 93.8 million with the additional four million that became poor between January and May this year.

The latest projection is that the number will further rise to 100.9 million if the government failed to compensate vulnerable citizens for fuel subsidy removal.

The report read in part, “Consumer price inflation has surged and is currently one of the highest globally, which is related to Nigeria’s fiscal imbalance and points to the urgency of reform efforts. Inflation in Nigeria has been high for many years due to structural factors, but it escalated in 2022 to the point where consumer prices increased at their fastest pace for 17 years.”

The report also noted that consumer price index further accelerated in 2023 through May by 22.4 per cent year-on-year. Inflation was also driven by the monetisation of the fiscal deficit by the CBN, multiple exchange rates and exchange rate depreciation in the parallel market, and intensified trade restrictions, exacerbated by the spike in global food and energy prices.

“The CBN implemented measures to control rising inflation, including raising the monetary policy rate by 700 basis points, but these proved ineffective, and monetary policy remained loose overall in the first half of the year. The loss of purchasing power from high inflation has increased poverty in the short-term, pushing an estimated four million Nigerians into poverty between January and May 2023.”

The National Bureau of Statistics (NBS) recently disclosed that inflation in the country rose to 22.41 per cent in May, which is the highest in about 19 years.

Also, the NBS, in its National Multidimensional Poverty Index (MPI) report, disclosed that 133 million Nigerians were multi-dimensionally poor.

The NBS said 63 per cent of Nigerians were poor due to a lack of access to health, education, living standards, employment, and security.

In its new report, the World Bank noted that the loss of purchasing power increased the poverty headcount rate by an estimated 2 percentage points, or the four million people.

The World Bank added that the number of poor people in rural areas increased by an estimated four per cent, while in urban settings, there was an estimated increase of 11 per cent.

The report read, “In the immediate term, the removal of the petrol subsidy has caused an increase in prices, adversely affecting poor and economically insecure Nigerian households. Petrol prices appear to have almost tripled following the subsidy removal.

“The poor and economically insecure households, who directly purchase and use petrol, as well as those that indirectly consume petrol, are adversely affected by the price increase. Among the poor and economically insecure, 38 per cent own a motorcycle and 23 per cent own a generator that depends on petrol. Many more use petrol- dependent transportation.

“The poor and economically insecure households will face an equivalent income loss of N5,700 per month, and, without compensation, an additional 7.1 million people will be pushed into poverty.”

The World Bank warned that many newly poor and economically insecure households would likely resort to consequential coping mechanisms, such as “not sending children to school, or not going to the health facilities to seek preventive healthcare, or cutting back on nutritious dietary choices.”

The Bank stressed the need for adequate compensation, noting that compensating transfers would be essential in helping to shield Nigerian households from the initial price impacts of the subsidy reform.

The lending institution further applauded the removal of the subsidy and foreign exchange management reforms, which it maintained were crucial measures in rebuilding fiscal space and restore macroeconomic stability.




Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.


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