Four million people entered poverty within four months – World Bank projects 101 million poorer

The World Bank has disclosed that about four million people entered into poverty between January and May 2023 in Nigeria.

The bank said the development was due to the hike in inflation rates in the country, which it described as one of the highest.

According to World Bank data, 89.8 million Nigerian were poor as of the beginning of this year, and with an additional four million Nigerians becoming poor between January and May this year, the figure has risen to 93.8 million.

According to the World Bank Nigeria Development Update report, the latest projection means the number of poor Nigerians will rise to 100.9 million if the government fails to compensate vulnerable citizens for fuel subsidy removal.

Naija News recalls that the National Bureau of Statistics (NBS) recently disclosed that inflation in the country rose to 22.41%t in May, which is the highest in about 19 years.

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

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

In a similar view, the World Bank also said inflation has risen to a 17-year high and has been driven by several factors, such as CBN funding of budget deficit, previous multiple exchange rates, devaluation, and trade restrictions.

The report noted that “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 consumer price index further accelerated in 2023 through May, up to 22.4 % y-o-y. High inflation has been driven by the monetization 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 4 million Nigerians into poverty between January and May 2023.”

The World Bank, in its new report, explained that more people entered into the poverty bracket because of purchasing power, adding that it might indicate that the total number of poor people in the country has risen to 137 million this year.

The global lender added that the number of poor people in rural areas increased by an estimated 4% while in urban settings, there was an estimated increase of 11%.

The report further said with the removal of fuel subsidy, about 7.1 million people are at risk of becoming poor if no form of compensation is provided by the government.

The report stated, “In the immediate term, the removal of the petrol subsidy has caused an increase in prices, adversely affect ting 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. Much 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 will likely resort to consequential coping mechanisms, such as “not sending children to school, or not going to the health facilities to seek preventative healthcare or cutting back on nutritious dietary choices.”

The global lender said if compensations are not put in place to cushion the effects of the subsidy removal, several Nigerian households would not be shielded.

While applauding the bold step of President Tinubu for removing the fuel subsidy, it said “The report added, “Following a bold start with the recent PMS subsidy reforms and FX reforms, the urgency remains for Nigeria to seize the opportunity to chart a new course with ambitious and comprehensive reforms to raise long-term growth prospects.”