BY EMEKA EJERE
If the warning by the World Bank is anything to go by, then Nigeria should be ready to have more millions of its population thrown into poverty by the economic impact of the coronavirus pandemic, with personal incomes back four decades.
According to the global lender, while the pandemic is set to create millions of “new poor” in middle-income countries, the precarious pre-pandemic economic situation in Nigeria makes the country uniquely vulnerable.Before the pandemic, Nigeria was already battling rising unemployment and inflation amidfalling incomes, a situation that was compounded by its dependency on oil.
With more than half of the country’s population unemployed or underemployed, inflation has risen sharply over the past 12 months while foreign direct investment has plummeted. According to recent Consumer Price Index (CPI) report released by the NBS, Nigeria’s inflation rate rose to 13.22% in August 2020, the highest recorded in 29 months, since March 2018 when it was 13.24%. Similarly, the nation’s unemployment rate rose to 27.1% in the second quarter of 2020, according statistics from the NBS.
The International Monetary Fund 9IMF), has forecast that the Nigerian economy will contract by 4.3 per cent this year, which would be the largest contraction in nearly 40 years. Battered by the oil price crash brought on by the coronavirus pandemic, Africa’s biggest economy late last month sunk into its second recession in less than five years..
As Nigeria’s crude oil production fell to a four-year low, gross domestic product contracted by 3.6 per cent in the three months through September, after shrinking by 6.1 per cent in the previous quarter, according to official data released by the National Bureau of Statistics.. The economy had barely begun to recover from the recession that followed the 2015 oil price crash.
In its annual Nigeria development report released last week, WEorld Bank suggested reforms including moving even closer to a market-driven exchange rate, reopening land borders, easing forex restrictions on business, reforming the tax system, fixing the power sector and extending direct cash transfers to the vulnerable and poor as some of the ways forward for Nigeria.
Only recently, the minister of Finance, Budget and National Planning, Zainab Ahmed, while defending the 2021 budget proposals at the sitting of the Senate Committee on Local and Foreign Loans, revealed that Nigeria’s public debt would hit N38tn by December 2021.
“It is projected, based on existing approval, to rise to N32.51tn by December 31, 2020 and N38.68tn by December 31, 2021,” she disclosed.
Her comments aggravated growing concerns over Nigeria’s debt stock. This is even as the nation plans to fund the 2021 budget deficit with N4.28 trillion new borrowings which represents about one-third of the proposed budget.
In the 2021 budget presented to the National Assembly in October, President MuhammaduBuhari, proposed N13.08 trillion expenditure for the next fiscal year. He also announced that total federally distributable revenue is estimated at N8.433 trillion in 2021 while the total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion.
“If Africa’s biggest oil producer is to avoid a prolonged recession, it will have to enact a series of potentially politically unpopular reforms”, the World Bank warned.
Living in extreme poverty
The latest report by World Poverty Clock has shown that over 105 million Nigerians or 51 per cent of the nation’s population now live in extreme poverty – from 98 million in October 2019. Nigeria, according to the World Poverty Clock, has a total population of 205,323,520 people with 105,097,856 in extreme poverty.
An individual is classified as living in extreme poverty if the person earns below $1.90 or N855 a day. The data further show that there are more Nigerian males are in extreme poverty compared to their female counterparts. About 53,133,553 million men are living below the poverty threshold, while women are 51,564,303.
The data showed that the standard rate of escape from poverty is 0.3 people per second but Nigeria falls short of – with -4.4 people escaping poverty per second.
Nigeria remains the poverty capital in the world in terms of the number of people. It is, however, below some other countries in poverty in percentages. Niger has 72% of its population in extreme poverty, Madagascar has 77%, the Democratic Republic of Congo has 75%, Central African republican has 79%, while South Sudan has 80% of its population in extreme poverty.
The figures by World Poverty Clock, however, are not totally in tandem with the latest figures on poverty released by the National Bureau of Statistics (NBS). NBS had in May 2020 released its 2019 report on “Poverty and Inequality in Nigeria” and put the figure of Nigerians living in extreme poverty at 89.2 million or 40.1 per cent of Nigeria’s population.
A frontline development economist, Barr Fred Nzeako, is of the view that the nation’s economy never really exited recession as all the signs of economic recession have been there contrary to government’s claims, hence the glaring socio-psychological impacts everywhere.
What has happened now,he argued, is that the economy has gone deeper into recession, describing the situation as terribly bad and Nigerian economy as one on autopilot.
“Nigeria never really exited recession because we’ve been living with all the signs of economic recession and you can see the socio-psychological impact here and there”, Nzeako told Business Hallmark in a telephone interview.
“What has just happened now is that we have gone deeper into recession.
“If you don’t know what it means for a country to be on autopilot that is exactly the situation that Nigeria has found itself today.
On whether there is still hope for the common man, Nzeako said, “There is no hope for the common man really. You have a government that has no programmes, no policies.
“The only programme this government has is to borrow and you’re not seeing what the money is being used for; and the debt keeps mounting.”
A former presidentof Chartered Institute of Bankers of Nigeria (CIBN), Mr. OkechukwuUnegbu, said he had always been of the view that the economy never exited recession as claimed by the nation’s economic managers.
Unegbu told Business Hallmark that an economy cannot be said to have exited recession with all the economic indicators pointing negatively.
He said, “We were never out of recession because all this while, all the economic indicators were still pointing negatively.
“So, now that they’ve announced that Nigeria is in recession, it means we’re in deep hole.
Unegbu lambasted the governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, who he said is not managing the economy but playing politics.
“It is unfortunate that the CBN governor is aligning himself with politicians. In fact, he’s playing politics, he’s not managing the economy”, Unegbu fumed.
Before now, Unegbu had cautioned that to achieve the much needed growth, the federal government needed to create more jobs, support the growth of Small and Medium Enterprises, and keep inflation under control.
“Economic growth is still low, and inflation rising. But diversifying the economy could help government achieve the desired growth,” he had advised.
However, Minister of Information, Alhaji Lai Mohammed believes no government in the country’s history has alleviated poverty like the President MuhammaduBuhari administration.
“No government in the history of this country has ever methodically and seriously put in place measures aimed at addressing poverty alleviation and creating jobs for youths like this Administration,” Mohammed said recently. .
The minister said the government’s N-Power, Trader Moni, Farmer Moni, Market Monitargetted at lifting 10 million Nigerians out of poverty have empowered over two million youths.