The Bank says COVID-19 crisis is driving up Nigeria's poverty rate, pushing more than 5 million additional people into poverty by 2022.
The World Bank has said that the number of poor Nigerians is projected to hit 95.1 million in 2022.
The bank made this known in its poverty assessment report titled 'A Better Future for All Nigerians: 2022 Nigeria Poverty Assessment'.
The report noted that COVID-19 crisis is driving up Nigeria's poverty rate, pushing more than 5 million additional people into poverty by 2022.
With real per capita GDP growth being negative in all sectors in 2020, the bank said poverty is projected to have deepened for the current poor, while those households that were just above the poverty line prior to the COVID-19 crisis would be likely to fall into poverty.
"Were the crisis not to have hit (the counterfactual scenario), the poverty headcount rate would be forecast to remain virtually unchanged, with the number of poor people set to rise from 82.9 million in 2018/19 to 85.2 million in 2020 and 90.0 million in 2022, due largely to natural population growth," the bank said.
"Given the effects of the crisis, however, the poverty headcount rate is instead projected to jump from 40.1 per cent in 2018/19 to 42.0 per cent in 2020 and 42.6 per cent in 2022, implying that the number of poor people was 89.0 million in 2020 and would be 95.1 million in 2022. Taking the difference between these two scenarios, the crisis alone is projected to have driven an additional 3.8 million Nigerians into poverty in 2020, with an additional 5.1 million living in poverty by 2022."
Last year, President Muhammadu Buhari claimed that his government lifted 10.5 million Nigerians out of poverty between 2019 and 2021, but a PREMIUM TIMES' fact-check found the claim to be untrue.
The report noted that Nigeria's growth performance was declining even before the COVID-19 crisis.
Between 2000 and 2014, it noted that Nigeria enjoyed a period of sustained expansion, during which the economy grew by around 7 percent per year, outstripping the estimated annual population growth rate of 2.6 percent. Yet real GDP growth dropped to 2.7 percent in 2015, then -1.6 percent in 2016, as the decline in global oil prices induced Nigeria's first recession in almost two decades.
"Growth has not recovered subsequently," the bank said.
"It lies below population growth and the growth performance of peer countries over the same period. This weakening overall growth performance makes it significantly harder to reduce poverty."
The World Bank added that Nigeria's dependence on oil exports is one of the leading causes of its frail growth prospects, and it may also prevent any growth from being broad-based. In 2019, while oil represented just 10 percent of GDP, oil accounted for more than 80 percent of Nigeria's total exports.
"Indeed, this has been true in every year since the 1970s," the bank argued, noting that it leaves Nigeria's economy extremely exposed to movements in global oil production and global oil prices. Despite oil's importance for exports, extractive industries are not a large employer in Nigeria, the bank said.
"This means any growth due to oil production would not necessarily be shared among workers and households: less than 1 percent of working Nigerians are employed in mining and extractives, with the share being even smaller among those from poor households," it noted.
Other Policy, Climate-related Factors
The Washington-based institution argued that other distortionary policies–especially on exchange rates and trade–could further weaken Nigeria's prospects for inclusive growth and poverty reduction.
According to the bank, Nigeria's multiple exchange rates for different types of transactions and the country's trade restrictions–including bans on certain goods and the 2019 border closure–may reduce investor confidence, which, in turn, could limit foreign direct investment (FDI) and competition, factors required to support firms and the job creation needed for broad-based growth.
"Such policies can also have immediate negative effects on poverty reduction through the price channel, as trade restrictions can make the goods that poor households consume–especially food items–more expensive, reducing people's purchasing power and welfare in turn."
The bank argued further that climate change could intensify shocks and limit opportunities to spread the proceeds of growth. The report noted that many non-poor Nigerians are only one small shock away from falling into poverty, while those who are already poor could be pushed into even deeper deprivation.
"Climate-related shocks–such as floods and droughts–are particularly harmful because they threaten the rain-fed agricultural and pastoral activities that are common among households living below or just above the poverty line," it said.
As part of its suggestions on way out, the report encouraged the building out of Nigeria's fledgling social protection system since social protection will strengthen public trust in governance, develop administrative reach, and boost resilience.
Other longer-term pro-poor policy priorities include using macroeconomic levers to speed Nigeria's structural economic transformation and the creation of wage jobs; boosting productivity in farm and non-farm household enterprises, for example through investments in human capital; and investing in bedrock infrastructure for inclusive growth.
The report also noted that strengthening public trust in government is crucial for Nigeria's future, adding that a sound implementation of social protection can help build trust and facilitate future crucial policy steps like reduction or removal of fuel subsidies.
It also called for new strategies for regular data collection and use, including in conflict-affected areas.