What Nigeria can do as non-poor risk poverty

Stronger infrastructures, building human capital and public trust are key to achieving Nigeria’s poverty reduction goal, the World Bank said in a recent report.

Africa’s biggest economy’s poverty headcount rate jumped from 40.1 percent in 2018/19 to 42 percent in 2020 and is projected to hit 42.6 percent in 2022, according to the bank.

This implies that the number of poor people which stood at 89 million in 2020 would hit 95.1 million in 2022. This is an additional 5.1 million living in poverty by the end of this year.

While poverty has deepened for the current poor, the non-poor who were just above the poverty line before the COVID-19 crisis have been described as being one small shock away from falling into poverty.

The Federal Government has unveiled its plan to lift 100 million people out of poverty in 10 years, although the roadmap to achieving this goal is still unclear.

With two economic recessions in just five years, Nigeria’s growth rate has failed to match its average population growth rate of 2.6 percent. The country’s unemployment rate of 33 percent is the second highest globally after that of Namibia.

The World Bank has said that if the country will address the rising poverty rate, it will have to put in place some short-term and long-term policies.

In the short term, increasing access to vaccination is a key immediate priority for recovery. “Rolling out vaccines quickly provides the bedrock for recovery; this also needs to be done equitably to reach those most at risk and to ensure that disadvantaged groups, including the poor and vulnerable, are covered,” the report said.

The bank stated that it is impossible to fully address the broader effects of the COVID-19 crisis on lives and livelihoods until the health threat posed by the virus is under control.

Another thing Nigeria will need to do in the short term is to rapidly recoup the learning lost from pandemic-related school closures. According to the bank, this could be achieved either by building more hours into the school day or adding in holiday lessons.

In the long term, creating good jobs and boosting small-enterprise productivity can help Nigeria reduce its poverty rate.

“One key area where macroeconomic reforms may help is through invigorating structural transformation and hence the creation of good, productive jobs. Ensuring productive jobs are available for Nigeria’s workers offers one surefire way to spread the proceeds of growth,” the World Bank said.

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Nigeria would also have to put in place policies to build human capital and boost productivity to close the gender differences in schooling and the labor market.

“Girls are still less likely to attend both primary and secondary school than boys; this, in itself, suggests that girls’ education remains a particular policy challenge in Nigeria. Tailored education and training for girls and women might also help to address gender gaps in the labor market, especially in terms of occupation segregation,” the report said.

Additionally, for Nigerians to seize the opportunities available to them, the bedrock of infrastructure needs to be strengthened, the bank said.

According to the report, market access is crucial for success in the labour market, and this depends on factors including roads, electricity, and access to information and communication technologies. Such infrastructure may also facilitate the delivery of government policies, including social protection.

The bank found that for two Nigerians living in households with otherwise similar characteristics, those without access to electricity were around 16.9 percentage points more likely to be monetarily poor than those with access in 2018/19.

The report also noted that there is a need to strengthen public trust in government, describing this as crucial for Nigeria’s future. “This lack of trust stems from a weak social contract, meaning the relationship between people and the state: Nigerians care most about health and education, but these receive far less emphasis from the government than policies like fuel subsidies.”

According to research by Pew Research Center in 2015, when Nigerians were asked to name the most important priority for their country, health and education were the most frequent answers.

The World Bank noted that the Nigerian federal budget for 2022 is set to allocate more than four times the health care budget towards petrol subsidies. Also, in 2021 alone, petrol subsidies cost around $4.5 billion, or roughly 2 percent of GDP, much higher than the government’s spending on health and education.

The report also noted that data is a crucial resource for accountable governance and poverty reduction as it can help build trust, accountability, and transparency.

“Data can make policy more efficient and impactful, by showing what works and revealing how policies and programs may be improved,” the bank said.