World Bank’s 2022 projection on poverty in Nigeria — Nigerian Tribune Editorial

Posted by News Express | 22 June 2022 | 263 times

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•World Bank HQ, Washington, D.C., United States

 

AS may be naturally expected, the recent reports from the World Bank regarding poverty in Nigeria are distressing.  The bank projects that before this year runs out, an additional one million Nigerians will become trapped in poverty. According to it, inflation is likely to aggravate the poverty situation in the country. The financial organisation made the projection in its latest Nigeria Development Update released last week. The report titled ‘The continuing urgency of business unusual’ indicated that inflation in Nigeria,  already one of the highest in the world before the war in Ukraine,will increase further as a result of the rise in global fuel and food prices caused by the war.

The one million Nigerians to fall into the poverty trap by the end of 2022 are in addition to the “six million Nigerians that were already predicted to fall into poverty this year because of the rise in prices, particularly food prices.” Quite alarmingly, Nigeria is in a paradoxical situation where growth prospects have improved, but inflationary and fiscal pressures have also increased considerably,  making the economy more vulnerable. The situation, says the apex global bank, arises from the ballooning cost of gasoline subsidies at a time when oil production continues to decline. Hence Nigeria, for the first time since its return to democracy, is alone amongst major oil exporters and is unlikely to benefit fiscally from the windfall opportunity created by higher global oil prices.

To be honest, the prospect of another one million Nigerians in the poverty trap is more than scary. Yet it is very likely to materialise because the current administration is lethargic and clueless about urgent matters. It routinely rejects criticism, no matter how evidence-based, putting Nigeria’s economic woes squarely at the doorstep of its predecessors or, occasionally, middlemen. To achieve the inglorious record of being the world’s poverty capital in 2018, Nigeria overtook India, a country with a population of over 1.3 billion people. But in its reaction to the June 2018 Brookings Institution report, the Federal Government dismissed it on the grounds that it was compiled when the country was in the throes of what it called the worst economic recession in 29 years. Worse still, rather than creating jobs, the government has had to contend with incessant job losses. Statistics by the National Bureau of Statistics (NBS) consistently point to increasing unemployment and underemployment rates, indicating that the domestic labour market is fragile and that economic growth has not been strong enough to provide employment.

It has taken the administration forever to figure out how to fix the country’s  refineries in order to stop the importation of refined crude oil. Again, the fact is well known that a lot of the poor indices in the economy are related to the pervasive insecurity which is fast crippling food production, but it has not addressed insecurity decisively. It is also incontestable that the economy is plagued with an extremely low production profile and the country imports even essential commodities. The present administration, together with its lacklustre Central Bank, does not seem to care very much. It cannot be a thing of joy that the poverty rate in Nigeria moved from 15 per cent at independence in 1960 to 50 per cent in 2021 even as the CBN Governor, Mr Godwin Emefiele, insinuated that Nigeria might never be able to solve its infrastructure challenges.  Emefiele was quoting a Moody’s report which concluded that Nigeria needed to spend about $3.3 trillion in capital expenditure over the next 30 years or $1.1 trillion a decade to close its infrastructure deficit. This amounts to $100 billion (N40 trillion) per annum or 28 per cent of Nigeria’s GDP of N144 trillion, although it spent just about $100 billion on infrastructure provision in the last decade. The current level of infrastructure deficit is of course a major constraint to economic development and the attainment of a growth average rate of at least five to seven per cent, which is required to boost productivity and sustainable growth for businesses. Yet the government typically borrows to fund recurrent expenditure, spending money that the country has not earned.

As we have said time and again, the government needs to improve the economic conditions that would make it possible for Nigerians to establish businesses and for the country to attract foreign investors who would also set up enterprises offering massive employment. In this regard, we insist on our recommendation that the fundamental shortages in infrastructure within the economy, especially the problem of power, need to be addressed, while the environment for doing business should be made less tedious. Taking into consideration the continuing increase in the unemployment rate, the government is duty-bound to improve the real and productive sectors of the economy which are the engines of employment for the teeming population of Nigerians out of productive engagement. Needless to say, it must reduce its lavish spending and overall governance costs. No two ways about it.


Source: News Express

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