NIGERIA is facing the prospect of increased poverty over the next decade with an extra 10m people becoming extremely poor unless the government dramatically increases productivity and enhances growth according to a new World Bank report.
At the moment, Nigeria has the highest number of poor people in the world with a total of about 78m people living in extreme poverty. According to the World Bank’s latest Nigeria Economic Update, this situation could get worse more people falling into the extreme poverty trap over the next 10 years unless the federal government introduces policy reforms that bring about robust productivity and inclusive growth.
Marco Hernandez, World Bank lead economist for Nigeria, and co-author of the report, said: “Nigeria’s population is expected to grow by as much as 35m in the next decade and unless the pace of growth and job creation accelerates, the country will account for a quarter of all people living in extreme poverty worldwide. Creating new opportunities for this rapidly increasing labour force will require a new economic model based on productivity growth.
“Without robust productivity growth, the report warns that living standards will continue to deteriorate and the number of people living in poverty will continue to rise, increasing by more than 30m by 2030. The country’s growth outlook is vulnerable to domestic and global risks as it is facing a sharper-than-expected slowdown in the global economy, as well as geo-political and trade tensions.
“Domestically, the predictability of macroeconomic policies, the pace of structural reforms, and the country’s security situation are the main risks. How successfully the economy transforms land, labour, capital and other inputs into goods and services is key as it is currently low compared with peer countries, hindering economic growth, job creation and living standards.”
Also outlined in the report are four priority areas that would lay the foundation for Nigeria’s transition to a new economic model that more effectively uses its large, young population and abundant natural resources to support sustainable growth and poverty reduction. These include policy transparency and predictability, which would be critical to reduce investment risk and promote growth outside the extractive industries.
Others include massive investments in infrastructure, strengthening land tenure security, reduction in regulatory discretion to attract domestic and foreign investment into the non-oil sector, as well as, improve access to finance which could enable new firms to compete with incumbents and allow more productive firms to scale up their operations. The report also recommended building momentum for reforms, which are essential to mitigate risks and promote faster, more inclusive and sustainable growth that improves living standards and reduces poverty.
Reform areas which the bank identified as critical to Nigeria rapid growth include leveraging trade integration to harness the benefits of the Africa Continental Free Trade Area, improved basic education financing to improve human capital outcomes, monitoring the impact of conflict on the welfare of households to protect poor and vulnerable people and leveraging digital technologies to diversify the economy and create jobs for young workers. With reforms in these and other areas, the report noted that Nigeria would be able to strengthen its macroeconomic resilience, promote private sector development and improve the efficiency of public service delivery.
According to the report, terrorism and herder/farmer conflicts have slowed down agriculture, as agricultural growth increased slightly but remains affected by insurgency in the northeast region. It added that the ongoing farmer-herder conflicts in the mainly agricultural middle belt of the nation also had an effect on farm output.
Mr Hernandez added: “Manufacturing production also slowed due to the weaker power supply sector. Overall, the slow pace of recovery in 2019 is attributable to weak consumer demand and lower public and private investment.”