A recent World Bank Flags a concerning escalation in Nigeria’s poverty levels, attributing the surge to recent economic and fiscal reforms. Despite commending the Federal Government for its perceived ‘bold reforms,’ the report underscores the resultant pressures on living costs that have pushed an alarming 104 million Nigerians below the poverty line.
Key reforms, including the removal of the petrol subsidy and a restructuring of the foreign exchange market rate, have been pivotal in steering the nation away from a fiscal cliff, according to the World Bank. However, the report acknowledges the temporary hardships created by these measures, emphasizing the need to address the associated costs and continue with the reform momentum.
The World Bank Flags a stark increase in the number of poor people in Nigeria, soaring from 95 million in 2021 to 100 million in 2022. In contrast, the Nigerian Bureau of Statistics reported figures of 82.9 million in 2019 and 85.2 million in 2020. Inflation remains a significant concern, reaching a record high of 27.3% Year-on-Year in October 2023, largely attributed to the removal of the gasoline subsidy.
Shubham Chaudhuri, World Bank Country Director for Nigeria, acknowledged the critical steps taken with the petrol subsidy and foreign exchange management reforms. However, he urged coordinated fiscal and monetary policy actions in the short to medium term to ensure that the benefits of the ongoing adjustments accrue to the Nigerian people.
The report recommended specific actions, including controlling inflation, improving FX market stability, achieving fiscal consolidation through sustained savings, and addressing structural barriers to growth. It projected that with continued reforms, Nigeria’s economy could grow at an average annual rate of 3.5% in 2023-2026, outperforming a scenario without reforms.
The World Bank called for transparency from the Nigerian National Petroleum Company Limited (NNPCL), urging the disclosure of its Statement of Accounts and revenue inflows. The removal of the subsidy is expected to result in fiscal savings of around N2 trillion in 2023, rising to over N11 trillion between 2023 and 2025.
The Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, emphasized the need for an audit of NNPCL’s accounts and hinted at a new salary structure in 2024. The government also plans to encourage holders of foreign currency in domiciliary accounts to invest in attractive instruments voluntarily.
In a panel discussion, the Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, defended his approach of infrequent Monetary Policy Meetings, citing the need for more effective measures to reduce inflation. The Minister of Industry, Doris Uzoka-Anite, expressed disagreement with the World Bank’s stance on power subsidies, asserting that such subsidies are crucial to supporting production in the power sector.
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