Surging Inflation Plunges Millions into Poverty in Nigeria, World Bank Reports

Surging Inflation Plunges Millions into Poverty in Nigeria, World Bank Reports

…By Babatunde Lucas for TDPel Media.

The World Bank has revealed a distressing statistic, stating that approximately four million individuals in Nigeria fell into poverty between January and May 2023.

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The bank attributes this development to the surge in inflation rates in the country, which it considers to be among the highest globally.

The rising number of impoverished Nigerians compounds the existing poverty situation in the country.

Escalating Poverty Figures:

Based on World Bank data, at the start of this year, 89.8 million Nigerians were classified as poor.

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However, with an additional four million individuals slipping into poverty during the period from January to May, the total has now surged to 93.8 million.

Should the government fail to compensate vulnerable citizens for the removal of fuel subsidies, the World Bank’s Nigeria Development Update report projects that the number of poor Nigerians could further rise to 100.9 million.

This projection underlines the urgent need for measures to support the most vulnerable members of society.

Causes and Impact of Inflation:

The National Bureau of Statistics (NBS) recently announced that inflation in Nigeria soared to 22.41% in May, marking the highest level witnessed in approximately 19 years.

Additionally, the NBS’s National Multidimensional Poverty Index report disclosed that 133 million Nigerians are experiencing multidimensional poverty.

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Insufficient access to healthcare, education, living standards, employment, and security contributes to poverty, affecting 63% of Nigerians.

The World Bank’s Perspective:

The World Bank concurs that inflation has reached a 17-year peak and is influenced by several factors, including the Central Bank of Nigeria’s funding of budget deficits, multiple exchange rates, devaluation, and trade restrictions.

The bank’s report emphasizes the urgency of reform efforts to address Nigeria’s fiscal imbalance and curb inflation.

It highlights that high inflation levels have persisted for many years due to structural factors, but the situation escalated in 2022, with consumer prices increasing at their fastest pace in 17 years.

By May 2023, the consumer price index had surged to 22.4% year-on-year, further exacerbating the situation.

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Ineffective measures to control rising inflation, such as raising the monetary policy rate, have resulted in loose monetary policy throughout the first half of the year.

Consequently, the loss of purchasing power has pushed an estimated four million Nigerians into poverty between January and May 2023.

Rural-Urban Disparities and Fuel Subsidy Removal:

The World Bank’s report indicates that more people have fallen into poverty due to declining purchasing power, potentially resulting in a total of 137 million poor individuals in Nigeria this year.

The report highlights that poverty has increased by approximately 4% in rural areas and 11% in urban settings.

The removal of fuel subsidies poses a significant risk, with around 7.1 million people at the brink of poverty unless the government provides compensation.

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The abrupt removal of subsidies has led to a nearly tripled increase in petrol prices, adversely affecting poor and economically insecure households that directly or indirectly rely on petrol.

The report emphasizes that without compensation, an additional 7.1 million individuals will be driven into poverty, leading to detrimental consequences such as reduced access to education, healthcare, and nutrition.

Call for Comprehensive Reforms:

While acknowledging President Tinubu’s decisive action in removing the fuel subsidy, the World Bank urges Nigeria to capitalize on this momentum and implement ambitious and comprehensive reforms to enhance long-term growth prospects.

The report emphasizes the need for compensatory measures to shield Nigerian households from the adverse effects of subsidy removal.

Failure to address these issues may perpetuate poverty and limit opportunities for sustainable development in the country.

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Conclusion:

The World Bank’s disclosure of millions falling into poverty in Nigeria due to escalating inflation rates is a cause for concern.

The figures highlight the urgent need for the Nigerian government to implement comprehensive reforms and provide compensatory measures to protect vulnerable citizens.

Addressing the structural factors contributing to inflation and poverty is crucial for the country’s long-term growth and development.

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