Nigeria’s worrisome extreme poverty situation risks expanding more than the current 133 million people as of last year if urgent fiscal and monetary policies are not put in place soon. The World Bank, last week, brought this biting reality closer to government’s attention when it warned that the poverty rate in the country is being exacerbated by sluggish economic growth. It cited challenges of soaring inflation, foreign exchange shortages, and others, as issues that the federal government must tackle head-on to avert more Nigerians falling into the poverty hole. This is contained in the World Bank’s June 2023 Global Development Report, released recently. Nigeria’s current GDP growth is 2.31 per cent. This is not enough to stimulate economic growth.
The Bank has in the report downgraded its economic growth forecast for sub-Saharan Africa( in which Nigeria is one of the leading economies) to 3.2 per cent for 2023 from 3.4 per cent in its April World Economic Outlook. It also projected that global economic growth will slow to 2.1 per cent this year. This puts Nigeria’s economic recovery at risk. This is because, Nigeria’s economy is said to be clouded by multiple financial challenges. As a result, growth in Nigeria for the remaining six months of the year, is projected to remain slow, thereby affecting efforts to mitigate poverty. This has been made even worse by the recent removal of fuel subsidy, and other deteriorating domestic vulnerabilities such as insecurity, farmers/herders clashes, tight global financial conditions.
Though the World Bank’s warning is not entirely new, it is a repeated alarm bell that must be heeded to avert a looming time-bomb that extreme poverty poses to any country like Nigeria that is exposed to domestic and external shocks. Nigeria’s current GDP growth of 2.31 per cent (year-on-year) is a steep decline of what is needed to revamp an economy in crisis. This is a sharp decline from the 3.11 per cent recorded in the Q2,2022, and 3.5 per cent in the Q4, 2021. Real GDP measures economic growth from one period to another, adjusted by inflation, unemployment, poverty rates and other monetary policy initiatives.
President Bola Tinubu has announced to fix the economy, and boost employment opportunities with a GDP growth of 6 per cent( year-on-year). This translates to N100trillionn yearly. According to McKinsey, a global innovative and technology company, Africa’s three biggest economies – Nigeria, Egypt and South Africa – account for 65 per cent of Africa’s GDP slowdown.
Though the three countries have the fastest-growing population, their economic performance had lagged in recent years, thereby making poverty reduction hard to achieve. President Tinubu last week sought the partnership of the 36 state governors to end extreme poverty. He should walk the talk. In 2019, the Buhari government promised to drastically reduce poverty by 10million every year. He did little to deliver on that promise. Nigeria’s 133 million extreme poverty figure is alarming. This represents about 63 percent of the total population. Undoubtedly, the NBS report shows that poverty remains one of the numerous challenges facing the country. According to the report, the North West has the highest number of poor people with 45.5 million, North East, 20.5 million, North Central, 20.2 million, South-South , 19.7million, South-West, 16.3 million, and South East, with the lowest at 10.9 million.
Rural poverty rate is 106 million, while Urban poverty stands at 27 million. These statistics may have increased by now due to rising food prices, decline in disposable income of the citizens, and lack of access to credit facility for small businesses. Owners of Small and Medium Enterprises should be given loans at low interest rate, while the power sector and Ease of Doing Business (EoDB) should be given urgent attention. Empowering people with practical skills and knowledge is paramount.
Any concrete effort to chart a new course for the economy must have a road map to tackle poverty. Nigeria ought not to be the poverty capital of the world considering its abundant human and material resources. But corruption and high cost of governance across the states have stymied efforts to reduce poverty. Doling out palliatives may not solve the problem. A survey by the NBS in 2020 showed that the living standard of Nigerians deteriorated so much so that 4 out of 10 Nigerians had real capita expenditure below N137,430 per year, less than N11,000 annually. This is unacceptable.
There should be a sincere programme of action towards poverty alleviation. Government at all levels should give poverty reduction a priority attention. There is need to collaborate with the private sector to address this problem frontally. Increasing Nigeria’s GDP should go hand in hand with bridging the inequality. Poverty is a time-bomb waiting to explode. The far-reaching implications could be hard to deal with. It is high time government stopped playing the ostrich with serious national problem as poverty. A country where the poor are predominant, the rich are not safe.