NAIRAMETRICS
Rising inflation and weak earnings have pushed 10 million Nigerians into poverty in 2023, according to the World Bank in its Macro Poverty Outlook for Nigeria: April 2024.
Presenting a grim reality where nominal earnings have drastically lagged behind the surging inflation rates, rendering the economic growth of the country insufficient to improve living standards, the report noted:
- “Nominal earnings have not kept up with inflation, pushing another 10 million Nigerians into poverty in 2023.”
Persistent Poverty Levels
- According to the World Bank’s statistics, poverty rates in Nigeria have escalated to concerning levels across various economic thresholds. The international poverty rate, which is pegged at $2.15 per day, stands at 30.9%.
- More distressingly, the lower middle-income poverty threshold of $3.65 per day shows that 63.5% of the population lives in poverty, while a staggering 90.8% fall below the upper middle-income poverty line of $6.85 per day.
Nigeria struggles with weak macroeconomic fundamentals
The report attributes this dire situation to a combination of weak macroeconomic fundamentals and deep-seated structural constraints.
A significant overreliance on the oil sector has been identified as a major factor. With the deteriorating performance of this sector, there has been a consequent erosion in macroeconomic stability.
The challenges are compounded by low state revenues exacerbated by an expensive petrol subsidy, ineffective tax rates, and inadequate tax administration, which collectively hamper the government’s capacity to provide essential public services.
Further exacerbating the economic strain are the high levels of inflation, which have persisted and escalated due to loose monetary policies and depreciating exchange rates.
Nigeria also faces substantial hurdles such as inadequate energy and transport infrastructure, high costs of domestic and foreign trade, widespread insecurity, weak institutional frameworks, and low levels of human capital development.
