Nigeria needs to spend $18.7b annually to close poverty gap – World Bank

Africa’s biggest economy could need almost $18.7 billion annually to reduce its rising poverty levels, according to World Bank estimates.

In a recent report titled, ‘A Better Future for All Nigerians: 2022 Nigeria Poverty Assessment’, the Washington-based bank stated that the poverty gap index for Nigeria is 0.129, so vast resources are required to eliminate poverty in the country, especially in rural areas.

“Multiplying the poverty gap index by the poverty line and by Nigeria’s population shows that eliminating poverty would take almost N3.7 trillion per year (or $18.7 billion),” It stated.

Last year, Sadiya Farouq, the Minister of Humanitarian Affairs, Disaster Management and Social Development said the Federal Government spent over five billion dollars since 2016 to fight poverty in the country. That is one billion dollars spent annually.

BusinessDay analysis shows that the figure is just about six percent of World Bank recommended data.

Analysts say that although the fund may not be enough, it would really address many issues in the economy compared to just one billion dollars that is spent yearly.

“It is better than spending less as it could speed up the government’s efforts towards eradicating poverty”, Temitope Omosuyi, an investment strategist at Afrinvest (West Africa) Limited said.

Giving a breakdown on how the fund should be spent, Omosuyi suggests that a portion of it should be spent on consumption while the excess can be spent on the education sector because no economy can grow sustainably without quality human capital also on the health sector and in addition the infrastructure challenges in the country.

Read also: Five charts that mirror Nigeria’s poverty crisis

Likewise, Ayorinde Akinloye, an investment and research analyst at United Capital Plc noted that the World Bank is correct on the basis that the country needs a large sum of money in order to reduce poverty.

“It is difficult to estimate the money that we need. But what is certain is that a huge sum of money is needed to create and position the economy to help lift people out of poverty,” Akinloye said.

He further added that it is a huge burden for the government to bear alone, that is why they need to create enabling policies to allow the private sector to invest their money.

In 2021, President Muhammadu Buhari inaugurated the Steering Committee of the National Poverty Reduction with Growth Strategy (NPRGS) to achieve his mission of lifting 100 million Nigerians out of poverty within a decade.

Already, he claimed that his administration has successfully lifted 10.5 million Nigerians out of poverty in the last two years.

But data shows that the number of poor Nigerians has risen due to two recessions owing to the collapse of oil prices and disruptions caused by the pandemic which have weakened consumers’ purchasing power, caused job losses, eventually throwing millions into poverty.

“Given the effects of the crisis, the poverty headcount rate is instead projected to jump from 40.1 percent in 2018/19 to 42.0 percent in 2020 and 42.6 percent in 2022, implying that the number of poor people was 89.0 million in 2020 and would be 95.1 million in 2022,” the report shows.

Damilola Adewale, a Lagos-based economic analyst said even if the funds are in place, there are other institutional problems that can actually impede the effective impact of the funds in reducing poverty.

“So, the institutional mechanism must be right for funding to resolve the issue of poverty,” Adewale advised.