WORLD Bank officials have warned that between 15m and 20m Nigerians will be sucked into extreme poverty by 2022 as a result of the global economic slowdown precipitated by the coronavirus pandemic.
Nigeria currently has the highest number of people living in poverty with as many as 86.9m Nigerians living on less than the daily threshold of $2m a day. With the current economic slowdown that has reduced demand for Nigerian crude oil, thus badly curtailing government revenue, more Nigerians are expected to slip into extreme poverty, consolidating the country’s position as the poverty capital of the world.
At the recent virtual launch of the 2021 Macroeconomic Outlook of the Nigerian Economic Summit Group, a private sector-led think-tank, Dr Doyin Salami, the chairman of the Presidential Economic Advisory Council, said things are set to get worse. At the forum, the World Bank said its estimates show that between 15m and 20m Nigerians will join the poverty ranks by 2022.
According to all the economic experts who spoke, Nigeria needs to implement key reforms in order to get the economy out of the current doldrums and achieve sustainable inclusive growth. Nigeria is currently a mono-economy with over 90% of government revenue coming from crude oil and with the sector in crisis, the outlook appears very bleak.
World Bank senior Economist, Gloria Joseph-Raji, noted that the Covid-19 pandemic hit the Nigerian economy very hard as the country experienced its deepest recession since the 1980s and the second in five years during the course of 2020. She added that Nigeria needs to push forward policies that help to improve the business environment and improve the welfare of the average Nigerian.
Ms Joseph-Raji said: “We actually consider Nigeria right now to be at a critical junction in the sense that the achievement of its development goal of lifting 100m people out of poverty by 2030 was already challenging even before Covid-19 struck and then the pandemic has made this even more challenging and more urgent. With lower growth and fewer jobs, then coupled with high inflation, our estimates are that the number of the poor will increase by about 15m to 20m people by 2022 from the about 83m people in 2019.
She noted that the authorities had risen to the occasion and had taken some bold reforms in order to respond to the crisis. Ms Joseph-Raji said the authorities had tried to adopt a market-based mechanism for petroleum pricing and adjust electricity tariffs to more cost-reflective levels in order to free up fiscal resources but said more needs to be done if Nigeria really wants to make progress towards meeting its broad development goals.
According to Ms Joseph-Raji, the key priorities for the government include adopting more transparent and credible foreign exchange allocation, mobilising tax revenues in a way that does not negatively affect investments and growth and strengthening the management of monetary policies towards the primary objective of price stability. She added that the outlook is very uncertain and there is a need for the government to prioritise certain key policy reforms if Nigeria must really turn the corner and recover and rebuild resilient and inclusive growth.
Dr Salami added: “If the economy is going to grow and people are going to feel it, then it is pretty clear that output growth must not only be rapid. We really do need to find ourselves in a position where this economy is growing at about 6% and to move in that direction requires significant investments.”
Last year, Nigeria’s economy plunged into its second recession in five years amid the fallout of the Covid-19 pandemic. Dr Salami said merely exiting recession should not be Nigeria’s goal as the level of exit mattered more.