That ominous World Bank report

The recent warning by the World Bank to the effect that additional six million Nigerians may be pushed into poverty due to the increase in food prices, calling on the government’s attention for short-term policies to support welfare, deserves urgent attention by managers of the nation’s economy.

The Washington-based institution stated this in its latest report titled ‘COVID-19 in Nigeria: Frontline Data and Pathways for Policy’.

In June, the World Bank had said an estimated 7 million Nigerians were pushed into poverty in 2020 due to rising prices alone — without considering the direct impacts of COVID-19.

Using the Nigeria COVID-19 National Longitudinal Phone Survey (NLPS), the report examined the impact of the COVID-19 crisis on human capital, livelihoods, and welfare of Nigerian households.

The NLPS represents a successful collaboration between the National Bureau of Statistics (NBS) and the data production and methods team at the World Bank.

The World Bank lamented that the effects of the COVID-19 pandemic have brought Nigerian households’ food security under threat.

“The rise in prices witnessed between June 2020 and June 2021 alone could push another six million Nigerians into poverty, with urban areas being disproportionately affected. This underscores the need for short-term policies to support welfare,” the report stated.

“The simple simulations suggest that the share of Nigerians living below the national poverty line could have increased from 40.1 per cent to 42.8 per cent due to the food price inflation witnessed between June 2020 and June 2021.

“This means about 5.6 million additional Nigerians would be living in poverty. While food price inflation would decrease purchasing power and raise poverty across Nigeria, it appears that urban areas could be disproportionately affected.

“In 2018/19, about 16 percent of poor Nigerians were urban dwellers. Yet among those who would be newly impoverished by the increase in food prices between June 2020 and June 2021, around 27 percent would be from urban areas.

“Nevertheless, poverty in Nigeria is set to remain a primarily rural phenomenon, with or without rising food prices.”

The report said that coverage of social protection programs remained low throughout the COVID-19 crisis.

It stated that between March 2020 and March 2021, just four percent of households received support — in the form of cash — from the federal, state, or local government.

This figure, the World Bank said, was significantly below what would be needed to counteract the widening and deepening of poverty brought about by the crisis.

The report further noted that while many schools have reopened across Nigeria, learning that was lost during the COVID-19 crisis still needs to be recouped — and some children have not returned to school.

Commenting on the report, Shubham Chaudhuri, World Bank country director for Nigeria, said: “The COVID-19 crisis has provided a wake-up call to address the long-standing structural challenges that could constrain the government’s ambition to lift 100 million Nigerians out of poverty.”

“There is no time like the present for the country to prepare for future climate and conflict shocks and seize the promise of its young population to lay strong foundations for inclusive growth.

It is, however, paradoxical that while the World Bank is warning against plunging additional six million Nigerians into poverty, the federal government is planning the removal of fuel subsidy in 2022. The Minister of Finance, Budget and National Planning, Zainab Ahmed, said Nigeria will remove fuel subsidies by 2022 and replace them with N5000-a-month transportation grant to the poorest Nigerians.

Speaking at the launch of the World Bank Nigeria Development Update (NDU) penultimate Tuesday, the minister said the grant will go to about 30 to 40 million Nigerians who make up the poorest population of the country.

“The subsidies regime in the [oil] sector remains unsustainable and economically disingenuous. Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.

“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.”

The World Bank in the development update had said the poorest 40% in Nigeria consume less than 3% of the total PMS in the country, highlighting that the rich were benefiting more from the subsidies.

“We are very optimistic that the recent developments in the oil sector, such as the Petroleum Industry Act (PIA) 2021, hopefully, the full reactivation of the four public refineries in the country, and the completion and coming on stream of the three private refineries under construction in 2022, would significantly boost contribution from the sector to our economic growth efforts,” Ahmed added.

Although, fuel subsidy has been more of political than economic consideration, it is evident that Nigerians are going through harrowing times. The removal of petrol subsidy will consequently have ripple effect on the cost of living with its concomitant impoverishment. This is a negation of the federal government’s policy to lift 100 million Nigerians out of poverty in the next 10 years and thus requires a rethink.

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