Nigeria may be home to a quarter of the world’s population of poor people in the next ten years if viable economic policies are not put in place, the World Bank said on Monday.
“Under a business-as-usual scenario, where Nigeria maintains the current pace of growth and employment levels, by 2030 the number of Nigerians living in extreme poverty could increase by more than 30 million,” the bank said in its Nigeria Economic Update report.
Nigeria currently has the largest population of poor people in the world, overtaking India (despite having population five times the size of Nigeria’s) in early 2018, according to Brookings Institution.
“At the end of May 2018, our trajectories suggest that Nigeria had about 87 million people in extreme poverty, compared with India’s 73 million,” Brookings Institution in a report published in June 2018. “What is more, extreme poverty in Nigeria is growing by six people every minute, while poverty in India continues to fall.”
More than a year later, the World Bank warned that Africa’s largest economy faces a “significant” cost if the government does not take necessary steps.
Nigerian President Muhammadu Buhari said by the end of his second term in 2023, his administration would have spent eight years working on the road map of “policies, programmes and projects” that will lift the bulk of Nigerians out of poverty.
“Our Administration’s eight years will have laid the grounds for lifting 100 million Nigerians out of poverty in 10 years,” Buhari said.
The bank said the removal of fuel subsidies and trade restrictions, increase in internally generated revenue and improved economic predictability can significantly help the country’s economy. It also advised the government to reduce central bank lending to some sectors.
Removal of fuel subsidies is a contentious subject in Nigeria.
Top chiefs of the then opposition party, All Progressives Congress, railed against the partial removal of fuel subsidies in 2012 by the then President Goodluck Jonathan.
Buhari, also of APC, has kept the policy in place despite describing it as “fraud” and the considerable strains it puts on Nigeria’s purse.
His government earmarked N305 billion for the subsidies in the current year. The 2020 spending plan shows that N450 billion has been budgeted for the same.
“To the detriment of socio-economic developments, Nigeria has spent nothing less than N10 trillion on petrol import subsidy between 2006 and 2018,” BudgIT, a civic tech organisation said in April.
“Let it be known: Nigeria is dancing on the edge of a razor blade by continuing its subsidy regime.”
And while Buhari critics have campaigned for the economy to be opened up, the president shut down the country’s land borders.
Government officials, including the governor of Nigeria’s central bank, said it was in the best interest of the country’s economy to check unregulated influx of goods from neighbouring countries like the Republic of Benin, Cameroon and Niger. The government also said the closure will help grow agriculture, especially rice farming, and cut illegal exportation of fuel to those countries, which are benefitting off the fuel subsidy courtesy unscrupulous Nigerian businessmen.
But the closure is hurting both ways.
While International Monetary Fund’s Abebe Selassie said in October that the closure has impacted Benin and Nigeria, figures released last month by Nigeria’s statistics office showed that rising prices of food pushed inflation to 11.61% in October, the highest since May 2018.
NBS’s food index showed that inflation jumped from 13.51% in September to 14.09% in October.
“This rise in the food index was caused by increases in prices of meat, oils and fats, bread and cereals, potatoes, ham and other tubers, fish and vegetables,” the statistics office said in its report.
Nigeria relies on the importation of some of these items.
“The rise in food inflation does suggest that border closures may have played a part in temporarily pressuring prices higher,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered told Reuters.
