The World Bank has said over 50% of Nigeria’s population lives in poverty.
In its latest Nigeria Development Update (NDU) report titled ‘Staying the course: Progress amid pressing challenges,’ World Bank said about 129 million Nigerians are living in poverty.
The Washington-based institution also said the country needs to create productive jobs to reduce poverty.
Without jobs, poor Nigerians will not be able to escape poverty. Poverty is high and rising in Nigeria,” the World Bank said.
“More than half of the population lives in poverty. This partly reflects the modest overall pace of economic growth, which is insufficient to compensate for the erosion of purchasing power brought about by inflation.
“With growth proving too slow to outpace inflation, poverty has risen sharply. Since 2018, the share of Nigerians living below the national poverty is estimated to have risen sharply from 40.1 per cent to 56.0 per cent.
“Combined with population growth, this means that some 129 million Nigerians are living in poverty. This stark increase partly reflects Nigeria’s beleaguered growth record. Real GDP per capita has not recovered to the level it was at prior to the oil price-induced recession in 2016.
“The COVID-19 pandemic compounded this drop in economic activity. Moreover, growth is failing to outpace inflation: large increases in prices across almost all goods have diminished purchasing power.”
“Even when GDP was expanding more rapidly in the early 2010s, richer households benefited more. Jobs hold the key to sharing the proceeds of growth,” the Bretton Woods institution said.
“However, employment on its own is not enough to lift people out of poverty: Nigeria needs productive jobs, but these are scarce.
“Many jobs are not productive and therefore remunerative enough to afford a life beyond poverty.
“In Nigeria, as in many countries, high employment and high poverty coexist. In-work poverty is common as many jobs do not generate earnings that are high enough to escape poverty.
“Low incomes are symptomatic of low productivity jobs. Nigeria’s labor market is changing – with employment shifting from agriculture to services – but these changes are not increasing overall productivity and living standards, because many of the new service-sector jobs are in low-productivity sub-sectors like retail and wholesale trade.
“Sustained poverty reduction depends on creating wage jobs through macro-fiscal stability, growth, and private sector development, complemented by building human capital.”
On July 18, President Bola Tinubu approved N70,000 as the new minimum wage for workers in the country.
According to the World Bank, the move which aims to improve the livelihoods of Nigeria’s workforce, faces significant limitations in its reach and impact – and has been deemed insufficient.
The institution also cautioned that increasing wages, particularly in the public sector, could place additional strain on Nigeria’s already stretched public finances.
“Initiatives that cover mostly highly-formalized wage workers – including policies on public sector jobs and minimum wage legislation – only reach a small segment of Nigeria’s poor and economically insecure population directly, as they do not have access to these types of jobs,” the report reads.
“Such policies may also be fiscally costly, given the large share of formal public sector workers.
“Focusing on excluded workers offers a clearer avenue for reducing poverty.”
Similarly, the institution said minimum wage legislation may not directly reach the poorest workers “because they do not hold wage jobs and around a third of private sector wage earners receive less than minimum wage anyway, demonstrating that enforcement is imperfect”.
