The World Bank highlights the potential of cash transfers to prevent Nigerians from falling further into poverty, especially as inflation and low economic growth negatively impact the vulnerable population. The report, titled ‘Macro Poverty Outlook: Country-by-country Analysis and Projections for the Developing World,’ warns that inflation and low economic growth could lead to an additional 2.8 million people falling into poverty by the end of 2023.
The report indicates:
- The share of Nigerians below the international poverty line is expected to peak at 38.8% in 2024 before gradually declining with cooling inflation and improved economic growth.
- Targeted measures, including cash transfers, are recommended to mitigate short-term adjustment costs for the poor and vulnerable, reducing the risk of intergenerational poverty traps.
As of 2023, an estimated 37.5% of Nigerians live below the international poverty rate of $2.17 per day, while about 70.4% live below the lower middle-income poverty rate of $3.65 per day.
The World Bank also notes that the budget deficit is anticipated to decrease from 5% of GDP in 2022 to around 4% in 2025, despite increased expenditure due to compensatory measures for households amid subsidy reform.
Key points from the report:
- Public debt is projected to reach 45% of GDP in 2023 due to fiscal financing needs and the depreciation of the naira.
- Debt servicing is expected to remain higher than total revenue in 2023 but drop to about 68% of revenues by 2025.
- Risks to economic performance include policy reversals, weaker reform impetus, a decline in oil production, global monetary tightening, regional instability, and climate events.
The World Bank’s recommendation aligns with Nigeria’s recent social safety net initiatives, such as the program launched by President Bola Tinubu, distributing N25,000 to 15 million homes for three months. The World Bank has already released about $299.99 million of the authorized $800 million for the National Social Safety Net Program-Scale Up, aiming to continue until June 30, 2024.
However, concerns arise about the eligibility of low-income and vulnerable individuals for the Federal Government’s cash transfer program, as less than 1% of the population has a National Identity Number (NIN), a requirement for the initiative.
In conclusion, the World Bank emphasizes the importance of sustained reform momentum and structural changes for inclusive growth to address economic challenges and reduce poverty in Nigeria.
