Business
Nigeria’s poverty crisis worsens as 20m join the growing population by 2027
The World Bank last Thursday raised disturbing alarm that poverty in Nigeria will rise astronomically by 3.6 percentage points as 20 millions will swell the ranks of the poor over the next two years through 2027.
The bank released this fearsome disclosure in its Africa’s Pulse report made available at the ongoing Spring Meetings of the International Monetary Fund (IMF) and the World Bank in Washington DC, United States.
According to the report, non-resource-rich countries may continue to reduce poverty faster than resource-rich countries, noting that due to higher prices of agricultural commodities, non-resource-rich countries will witness higher growth overall, despite fiscal pressures.
“Conversely, resource-rich countries are not expected to grow at the same rate given decelerating oil prices. As a result, resource-rich countries are expected to see less progress in terms of poverty reduction (figure 1.10).
“Importantly, poverty in resource-rich, fragile countries (which include large countries like the Democratic Republic of Congo and Nigeria) is expected to increase by 3.6 percentage points over 2022–27, being the only group in the region with increasing poverty rates.”
In separate note encapsulated in the report, the World Bank warned that its discovery demands “urgent improvement in service delivery in countries with rapidly expanding populations, such as the Democratic Republic of Congo and Nigeria.”
According to The World Bank, the development syncs with a well-established pattern, whereby resource wealth combined with fragility or conflict is associated with the highest poverty rates—an average poverty rate of 46 per cent in 2024, 13 percentage points above non-fragile, resource-rich countries.
Resource Curse
Meanwhile, non-resource-rich, non-fragile countries witnessed the biggest gains in poverty reduction efforts since 2000 and fully closed the gap in poverty with other non-resource-rich countries by 2010.
The Bank cautions that Nigeria faces a dire poverty imbroglio, with a large portion of its population living below the poverty line. It estimates that 38.9% of Nigerians were living in poverty in 2023, translating to approximately 87 million people. This high poverty rate is attributed to factors such as economic instability, weak governance, and a heavy reliance on oil revenue.
Professor Atte Oyeyemi, a development economist told Business Hallmark that Despite having the largest economy and population in Africa, Nigeria offers limited opportunities to most of its citizens.
“Nigerians born in 2020 are expected to be future workers 36% as productive as they could be if they had full access to education and health, the 7th lowest human capital index in the world. Weak job creation and entrepreneurial prospects stifle the absorption of the 3.5 million Nigerians entering the labor force every year, and many workers choose to emigrate in search of better opportunities. The poverty rate is estimated to have reached 38.9% in 2023, with an estimated 87 million Nigerians living below the poverty line — the world’s second-largest poor population after India. We don’t have forward-looking leaders but mediocre, who have no love for the country,” he said.
He noted that “In most areas of Nigeria, state capacity is low, service delivery is limited, and insecurity and violence are widespread. Infrastructure gaps constrain access to electricity and hinder the domestic economic integration that would allow the country to leverage its large market size, which is aggravated by trade protectionism.
Dr. Adedayo Ikubolaje of the Economist Associates, a Lokoja- based think tank, told Business Hallmark that “the country’s leaders are confused, daringly experimenting with Western model without considering the peculiarity of our culture, economic culture and the state of infrastructure. IMF and World Bank induced prescriptions can never offer prospects for growth other than academic jargon of theoretical analysis of growth that has no impact on the common people.”
He said that “Emerging problems, such as the increased severity and frequency of extreme weather events, especially in the northern parts of the country, add to these long-standing development challenges induced by weak and selfish leadership, topsy turvy economic policies, defined by somersaults and inconsistency.”
He noted that recent reforms initiated by the federal government are geared towards favouring the upper echelon of society, and are not well structured to yield results that will benefit the people. Rather it will engender more poverty.
He stated that if there had been more broad consultation with the academia, organized private sector and other stakeholders, the reforms could have been a launching pad to a new social compact for Nigeria’s development. “Strengthening macroeconomic fundamentals will allow structural reforms to be pursued and economic growth to be restored. The current low social and economic equilibrium could be switched to one marked by a better funded and more effective state that provides efficient public services, public goods, and a conducive economic environment for the private sector to flourish and create more quality jobs for Nigerians.”
Although most of the population of Africa and its highest levels of poverty are found in rural areas, the World Bank said rapid urbanisation could accelerate poverty reduction under the right conditions.
“From 2010 to 2019, poverty reduction was primarily driven by urbanisation rather than significant decreases in poverty within rural or urban areas. In 2020, only 41 per cent of the continent was urbanized, but the urban population is projected to grow by over 238 million by 2035, surpassing the rural population,” The World Bank said.
This rapid growth presents opportunities for the rural poor seeking to improve their livelihoods through migration, it added.
However, the success of this transition will depend on the ability of urban areas to provide the necessary infrastructure, services, and employment opportunities to support the increased population.
Growing Poverty
In 2018, reports emerged that Nigeria overtook India as the country with the largest number of people living in extreme poverty, with an estimated 87 million Nigerians said to be living on less than $1.90 per day.
Since then, the government has made claims to lifting people out of poverty, even as the living condition in most parts of the country has deteriorated.
There is nothing to show that government efforts are yielding positive results. The social safety net in form of cash payment to the vulnerable has not done anything to lift a fraction out of poverty since Buhari’s and now Tinubu’s administration came on board. President Bola Tinubu has introduced sweeping socio-economic reforms which the government said were aimed at fixing the economy and redirecting it on the path of growth – removal of fuel subsidies, unification of exchange rates, among others.
The ripple effects of the policies have been severe on many Nigerians, amid elevated food prices and sundry inflationary pressures, triggering hunger protests across sections of the country. It has led to more Nigerians moving to abject poverty, widening the gap between the rich and poor, effectively wiping out the middle class.
Business Hallmark takes a more detailed look at the bleak outlook. The World Bank estimates that 38.9% of Nigerians were living in poverty in 2023, meaning 87 million people were living below the poverty line.All
In 2018/19, 40.1% of people were poor according to the national monetary poverty line, while 63% were multi-dimensionally poor based on the National MPI 2022.
Multidimensional poverty is more common in rural areas (72%) compared to urban areas (42%).
Approximately 25% of the population (53 million) is considered vulnerable, meaning they are at risk of falling into poverty.
The World Bank projection that poverty in Nigeria could rise by 3.6% by 2027 is already causing anxiety among the people. Nigeria is home to 19% of the extremely poor population in sub-Saharan Africa, the highest share in the region.0
Nigeria’s heavy reliance on oil and economic fragility are widely considered as major contributors to the poverty crisis.
Also fingered is weak governance and corruption, which are said to play a significant role. Also high levels of income inequality exist in Nigeria, with the wealthiest individuals accumulating vast wealth while millions struggle to make ends meet.
Conflicts, particularly those involving Boko Haram and Fulani militia violence, and climate-related disasters (droughts and floods) have a significant impact on household poverty dynamics.
Another factor believed to have exacerbated poverty is COVID-19 pandemic with millions more people affected by it economically, inducing slide into extreme poverty.
While formal unemployment is relatively low, many Nigerians work in informal sectors and remain poor, emphasizing the importance of the quality of work rather than just employment.
Dr. Ikubolaje stressed that “Poverty leads to poor health outcomes, including high infant mortality and low life expectancy, as poor people lack access to basic healthcare and have limited options for healthy choices.
He also said “Poverty also affects access to education, limiting opportunities for children and young people.
“Poverty is a major contributor to food insecurity and malnutrition. The combination of poverty, unemployment, and inequality can contribute to social unrest and instability.
Turning the Tide
To address the crisis, he noted that government must rethink its economic policies, take a gradualist approach in implementation and do occasional review of their impact on the people and the economy. It must also attempt reducing reliance on oil and diversifying the economy. This is crucial for long-term poverty reduction.
“Tacking corruption and strengthening governance structures is essential for creating a stable and equitable environment for economic growth and poverty reduction.
The lack of a stringent regulatory and monitoring system has allowed for rampant corruption. This has hindered past poverty alleviation efforts to a large extent, since resources which could pay for public goods or directed towards investment (and so create employment and other opportunities for citizens) are being misappropriated.
He also emphasized the importance of implementing and strengthening social safety nets to protect vulnerable populations from economic shocks and ensure access to basic needs.
“Investing in human capital through education and healthcare is crucial for empowering individuals and promoting economic development. Creating quality jobs, particularly in the informal sector, is vital for reducing poverty and improving living standards.