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AS multilateral financial institutions, the World Bank and the International Monetary Fund(IMF) are committed to addressing financial and economic issues. Both institutions work on complementary goals crucial to achieving shared objectives. While IMF focuses on macroeconomic and financial stability of global monetary system, the World Bank concentrates on long-term economic development and poverty reduction, and offering assistance to middle-income and low-income countries. Collectively, their shared desire is to help member countries avert danger lurking ahead.
However, sometimes countries ignore the advice to their own peril. Nigeria has in recent times refused to heed World Bank and IMF cautionary warning, especially regarding poverty reduction and the implications of excessive borrowing. The result is where we are today – in stagnation – and failure of key economic policies. Year after year, successive administrations are stuck in a cycle without tangible progress. Before its ongoing annual meetings kicked off in Washington DC, United States, the World Bank Country Director in Nigeria, Matthew Verghis had delivered a damning verdict on some of President Bola Tinubu’s economic reforms.
The occasion was the launch of Nigeria Development Update(NDU)Report, in Abuja. The main aim of the World Bank’s NDU is to provide an in-depth analysis of Nigeria’s economic and social developments to guide policy formulation and improve the lives of the citizens. It also assesses recent trends, identifies challenges, provides policy recommendations to foster inclusive growth, reduce poverty, and ensure that the benefits of macroeconomic stability reach the general population. In the report, the World Bank lamented that despite far-reaching economic reforms in the last two years (and counting), about 139 million Nigerians still live in poverty. This represents about 61 percent of the population.
Though the Bank commended the federal government for taking some policy steps in stabilising the economy in the form of subsidy removal, unification of the foreign exchange market, it insists that much more need to be done to pull the economy out of negative territory and ensure better living standards for Nigerians. In 2022, the National Bureau of Statistics(NBS), a government agency, had in its survey reported that, at least 133 million Nigerians were trapped in “multidimensional poverty”.
But, always intolerant to contrary opinions, the presidency had to push back on the World Bank’s report. It disputed the figure and described it as “unrealistic, detached from the country’s economy realities”. Rejecting the report, presidential aide on Media and Public Communication, Sunday Dare, said the poverty figure released by the World Bank needed to be “properly contextualised within the limits of global poverty measurement models” based on the benchmark of $2.15 per person per day. This was set in 2017, using purchasing power parity(PPP). The presidency also argued that this should not be mistaken for actual headcount of poor Nigerian.
Taken as a whole, Mr Dare said the government considered the World Bank’s estimate as a modelled global projection, not an empirical representation of living conditions of Nigerians in 2025. If government’s argument makes any economic sense, the following questions suffice: If, indeed, growth has picked up, revenues increased, debt indicators are improving, foreign exchange(fx) market is stabilising, foreign reserves are rising, and inflation finally beginning to come down, why are these ‘miracles’ not reflecting on the living standards of the people? If these are big achievements, as claimed, for which many countries would “envy Nigeria”, why is poverty still rising, and cost of living beyond the purchasing power of the average citizen? Or did the government “sexed up” or exaggerated its policy achievements to give an impression of good performance? Interestingly, economists are not in shortage of terminology to describe the acclaimed economic feats of President Tinubu. That’s why the World Bank raised the alarm. What Nigeria is going through today is Tinubu’s version of “trickle-down economy”. You may ask, what does it mean? An economy where reforms seem to be working, but with high poverty level can be described as “trickle-down economy” or “growth without inclusion”. It happens when an economy is experiencing ‘uneven development’. It highlights a situation where the overall economy appears to be expanding(often due to deregulation or privatisation), but the benefits are not widely shared. This leaves a large number of the population in poverty trap. Isn’t that the situation in the country today, divide down the middle between the “haves and have-nots”.
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Look at it this way: Trickle-down economy suggests that the economic gains at the top are expected to ‘trickle down’ to the poor, but this process is either very slow or not happening at all. The reforms may be benefiting businesses and few investors, but the wealth isn’t redistributed to those with lower incomes. In other words, growth without inclusion is a disconnect between aggregate economic growth and poverty reduction. The reforms may be increasing the national output, but the so-called growth doesn’t translate into jobs or higher incomes for the most vulnerable in the society.
That’s why, in spite of the recent Rebasing of the economy by NBS, which put Nigeria’s nominal GDP at $243bn in 2024, the economy is still sluggish, currently the 4th in Africa after South Africa, Egypt and Algeria. In 2023, Nigeria was ranked 100th out of 163 countries in terms of wealth inequality. It is also ranked the 12th poorest country in the World by GDP per capita, according to new data from IMF, with over 46 percent of Nigerians living below the poverty line, as published by Visual Capitalist(a Canada-based online data-driven content analyst on economic matters). The report released in June this year, showed that Nigeria’s GDP per capita stood at $807.
This places Nigeria among the bottom 15 out of 50 countries surveyed. South Sudan tops the list as the poorest country, with GDP per capita of $251, followed by Yemen, Burundi, the Central African Republic and Malawi. Imagine Nigeria in the same swamp with these poverty-ravaged countries despite our human and natural endowment. That’s what bad leadership does to a country. Just last week, the IMF released another damning report, that revealed that, contrary to government’s repeated claims, Nigeria is not among Africa’s fastest-growing economies. The latest report puts Benin Republic, Cote d’Ivoire, Ethiopia, Rwanda, and Uganda above Nigeria in growth trajectory. According to IMF, the economies of these five countries are buoyed by “sustained policy reforms, improved fiscal management, and investments in infrastructure and manufacturing”.
In real terms, it means that the present administration may have lost direction in economic management and sustained policy implementation. It’s so because all energies are focused on winning the 2027 election. Nothing else matters. Nigeria’s woeful rankings in critical socioeconomic issues, highlights the persistent hardship faced by the citizens. The abysmal figures also reflect the average economic output per person and serves as a rough measure of income levels and standard of living within our country. While Nigeria economic outlook looks pretty good on paper, beneath the surface is a rot of unconscionable corruption in high places that drags down per capita output. This reflects deep structural issues in the economy, with income and opportunities concentrated among a tiny elite, while the majority struggle with hunger, soaring prices of essential commodities and inflation, and inadequate public services. While GDP is not a complete measure of wealth or living standards, it provides insight into how much economic productivity is generated per citizen. That’s why economists warn that unless Nigeria invests in inclusive growth, job creation in key sectors like education, health, and infrastructure, its development will continue to lag behind. Despite this warning, the presidency is hiding the facts for political expediency. Imagine the idiocy exhibited last week by politically exposed former Governor of Kogi state,Yahaya Bello. He said that “President Tinubu is the “angel” of God sent to fix Nigeria. Is this the fear of EFCC in play?
Perhaps soon, we will hear that Tinubu is ‘God in human flesh’. What Bello said surpasses the sycophancy of Edo state Gov Monday Okpebholo who has threatened to evict appointees from the weekly Executive Council meeting if they do not wear Tinubu’s signature ‘Asiwaju cap’. Who says Nigerian politics is not a fun to follow? That’s how far our politics has been damaged by politicians without convictions. Bello, perhaps meant that the man he has dressed in borrowed robes is the biblical Rehoboam of our time to punish Nigerians. It’s this kind of sycophancy that led to the downfall of Rehoboam and division of Israel into different tribes. Nigerians are praying it doesn’t happen.
