The World Bank reports that skyrocketing inflation has plunged 129 million Nigerians into poverty, raising urgent concerns about the country’s economic outlook and the need for swift intervention.
The Nigeria Development Update report has been released by the World Bank, revealing that more than 129 million Nigerians are currently living in poverty.
The report was released on Thursday in Abuja, as headline inflation increased, driving millions of Nigerians into hunger.
According to the international financial organization, more than 129 million Nigerians accounted for a significant increase from 40.1 percent in 2018 to 56 percent in 2024.
According to the World Bank report, poverty has significantly increased due to growth being insufficient to surpass inflation. Since 2018, it’s estimated that the percentage of Nigerians living below the national poverty line has jumped from 40.1% to 56%.
Together with population growth, this has resulted in approximately 129 million Nigerians living in poverty. This significant rise is partly a consequence of Nigeria’s struggling economic performance. Real GDP per capita has yet to return to its pre-2016 oil price recession level.
The decline in economic activity was exacerbated by the COVID-19 pandemic. Additionally, growth is unable to surpass inflation: significant price hikes across nearly all goods have eroded purchasing power.
It stated, “The combination of multiple shocks amidst high economic insecurity has intensified and expanded poverty in Nigeria. In 2023, it is estimated that over 115 million Nigerians are living in poverty. Since the period of 2018/19, nearly an additional 35 million people have fallen into poverty, resulting in more than half (51.1 percent) of the Nigerian population being considered impoverished at present.”
The report indicates that the number has risen from 115 million in 2023 to 129 million in 2024, signifying that an additional 14 million Nigerians have fallen into poverty this year.
The bank, headquartered in Washington, credited this increase to inflation, inadequate economic management, and external shocks.
Various factors have led to the significant rise and evolving nature of poverty: the COVID-19 recession, natural disasters like floods, escalating insecurity, the substantial costs associated with demonetization in Q1 2023, high inflation rates, and sluggish economic growth.
The report highlighted that earlier domestic policy errors intensified the impact of recent shocks, notably increasing inflation, which reduced purchasing power and pushed numerous urban families into poverty. To address this crisis and support economically vulnerable households, the government is enhancing cash transfer programs.
It also highlighted that although poverty was still primarily a rural issue, urban poverty had increased dramatically. Currently, 31.3 percent of people living in urban areas are experiencing poverty, compared to 18 percent in 2018.
The recent World Bank report highlighted that having a job does not necessarily ensure an escape from poverty. Many positions lack sufficient productivity and compensation to support a life above the poverty line.
It stated, “Employment is crucial for distributing the benefits of economic growth. With Nigeria’s youthful and expanding population, jobs that can leverage the country’s potential ‘demographic dividend’ are urgently needed.”
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Sienaert also refuted allegations that the institution aims to maintain Nigeria’s economic dependence.
Sienaert stated, “I’ve been the lead economist at the World Bank in Nigeria for two years focusing on economic policy issues. During this time, I have not encountered any conspiracy within or outside of the World Bank aimed at undermining Nigeria.”
He highlighted that Nigeria’s fiscal deficit decreased from 6.2 percent of GDP in 2022 to 4.4 percent in the first half of 2023, due to reforms like eliminating foreign exchange and fuel subsidies.
In the meantime, Dr. Ndiame Diop, the World Bank Country Director for Nigeria, encouraged the Federal Government to continue its reforms and cautioned that reversing them could have disastrous consequences.
Diop warned that undoing these reforms would be harmful and could lead to serious negative consequences for Nigeria.
He recognized that the reforms are challenging yet crucial for stabilizing the economy.
Diop also mentioned that the World Bank is prepared to provide Nigeria with additional loans and technical assistance to support its ongoing reforms.
When asked whether the World Bank would continue to issue loans to Nigeria, Diop confirmed, “Yes, we have several projects lined up for this fiscal year that are financed by the World Bank. These initiatives are primarily government projects managed mostly at the state level.”
He stated, “Nigeria is a crucial partner for the World Bank. We’ve been offering both technical assistance and financial support. However, what’s truly significant is that our funding includes technical guidance and implementation aid to ensure everything proceeds as planned.”
Since Tinubu assumed office in May 2023, the average price of commodities in Nigeria has risen by 45.92 percent to reach a headline inflation rate of 32.70 percent as of September 2024.
This rate has risen by 10 percentage points from the 22.41 percent recorded in May 2023.
The inflation rate rose for 13 successive months owing to several factors, such as the elimination of fuel subsidies which resulted in higher transportation and production costs, along with the depreciation of the naira against major currencies.
The National Bureau of Statistics’ monthly inflation report revealed that the average price of commodities rose from 22.41% in May to 22.79% in June. In July, it further increased by 1.29 percentage points to reach an inflation rate of 24.08%. Inflation continued its upward trend at 25.80% in August, climbed to 26.72% in September, reached 27.%33 October), then grew slightly more reaching November’s figure was %28..20%, and closed out December at %.8928
By late 2023, inflation had surged due to rising prices for food, energy, and essential goods.
By January 2024, the inflation rate rose to 29.90 percent, largely driven by higher food costs.
The percentage was 31.70% in February, rising to 33.20% in March, and slightly increasing again to 33.69% in April. It maintained an upward trend at 33.95% in May and reached a peak of 34.19% by June 2024 before decreasing to 33.40% in July, dropping further to 32. 1%\in September .
