Atlantic Post

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LAGOS, Nigeria — The grim economic reality confronting Nigeria reached new lows with the recent release of the World Bank’s Nigeria Development Update report, which revealed an alarming surge in the number of Nigerians living in poverty. Over 129 million Nigerians now struggle below the national poverty line, an astronomical rise from 40.1% in 2018 to 56% in 2024. This sobering figure starkly underscores the deepening socioeconomic crisis, exacerbated by high inflation, sluggish economic growth, and poor policy decisions.

This catastrophic increase in poverty — from 115 million in 2023 to 129 million in 2024 — is a devastating indictment of the government’s economic policies under the leadership of President Bola Tinubu. While the administration has attempted to implement reforms to stabilise the economy, these measures have seemingly compounded the economic suffering for ordinary Nigerians. The World Bank’s report reflects the harrowing reality faced by millions: rising inflation, shrinking purchasing power, and escalating unemployment, all set against a backdrop of unrelenting external and domestic shocks.

The Shocking Numbers: A Bleak Outlook for Nigeria’s Future

The latest Nigeria Development Update report released by the World Bank revealed alarming data, showing that more than 129 million Nigerians — representing 56% of the population — now live below the poverty line. The report detailed how inflation has eroded incomes and how real GDP per capita has stagnated since the recession triggered by the 2016 oil price crash. According to the report, economic growth has failed to outpace inflation, rendering the government’s poverty alleviation efforts ineffective.

The situation in Nigeria is dire. The report highlights how poverty has worsened since 2018, with an additional 35 million Nigerians falling into poverty. What’s worse is that these figures don’t just reflect rural hardship; they highlight growing urban poverty, with 31.3% of city dwellers now living in poverty, up from 18% in 2018. The unprecedented rise in urban poverty indicates that economic challenges are spreading across every segment of the population.

Alex Sienaert, the World Bank’s lead economist for Nigeria, issued a stark warning: unless structural reforms are undertaken, Nigeria’s economic situation will continue to worsen. Sienaert’s warning underscores a worrying trend: Nigeria’s current trajectory isn’t just unsustainable; it’s outright dangerous for the country’s long-term stability.

Multiple Shocks, One Crisis: Why Nigeria’s Poverty is Rising

The report attributed this surge in poverty to a combination of domestic and external factors. Inflation, which is described as the primary driver of this increase, has disproportionately affected urban and rural populations alike. The removal of fuel subsidies, which was intended to boost fiscal stability, has only added to the inflationary pressures by increasing transportation and production costs.

Further compounding these challenges were a series of poorly managed policies, including the high-cost demonetisation policy in early 2023. Other factors, such as COVID-19, natural disasters (particularly devastating flooding), and worsening insecurity, have all contributed to Nigeria’s spiralling economic woes.

The Failures of the Tinubu Administration’s Economic Reforms

While the World Bank acknowledges the economic reforms implemented under President Bola Tinubu’s administration, including the removal of foreign exchange (FX) and fuel subsidies, these measures have not yielded the expected relief. Instead, many Nigerians are questioning the effectiveness of these reforms, with Bauchi State Governor Bala Mohammed openly criticising the federal government’s approach.

During the launch of the Nigeria Development Update report in Abuja, Governor Mohammed expressed frustration at the government’s inability to deliver meaningful economic relief to Nigerians. He pointed out that while the Federation Account Allocation Committee (FAAC) had increased allocations to states, inflation had eroded the value of these funds, leaving state governments scrambling to meet critical needs.

“We are all living with these people, and I can tell you, we are at risk of being lynched because of your policies,” Mohammed warned, directing his sharp criticism at the federal government’s economic managers. He added that minimum wage increases, while laudable in theory, would only affect a small segment of the population, further entrenching the divide between the employed and the unemployed.

This brutal assessment of the Tinubu administration’s policies reflects a growing sentiment across Nigeria: the reforms are failing, and the country is teetering on the brink of economic collapse.

A Nation in Peril: Inflation, Unemployment, and Hunger Worsen

As Nigerians grapple with worsening inflation, which has skyrocketed since President Tinubu assumed office in May 2023, many wonder when relief will come. The inflation rate surged to a shocking 34.19% in June 2024, with food inflation remaining one of the major culprits driving up costs for households. The prices of essential commodities have soared, leaving families struggling to afford even the most basic items.

Increased transportation and production costs following the removal of fuel subsidies have only made matters worse. Since Tinubu took office, the average price of commodities has increased by an astronomical 45.92%. This sharp rise is a direct consequence of poorly implemented economic policies and is felt most acutely by the millions of families that are now forced to make tough choices between food, rent, and other necessities.

Across the country, there is a growing sense of hopelessness. The World Bank report lays bare the struggles faced by ordinary Nigerians, who are now adopting drastic measures to cope with the economic turmoil. From cutting out luxuries like dry-cleaning services and private tutoring, to engaging in informal barter systems, Nigerians are doing whatever they can to survive the growing hardship.

Rural vs. Urban Poverty: The Crisis Extends Beyond the Countryside

Although poverty has traditionally been seen as a rural problem, the World Bank report shows that this is no longer the case. Urban poverty has surged, and now 31.3% of urban dwellers live below the poverty line, compared to 18% in 2018. This rapid rise in urban poverty reflects the failure of Nigeria’s economic policies to address the widening gap between the rich and poor, as well as the increasing cost of living in cities across the country.

The surge in urban poverty is particularly alarming because it reveals the fragility of Nigeria’s economic infrastructure. As millions of urban residents slip into poverty, the pressure on urban resources — from housing to transportation to healthcare — increases. This growing urban crisis is likely to spark further unrest, especially as more and more families struggle to make ends meet.

World Bank: Painful Reforms Necessary for Long-Term Stability

Despite the growing backlash against the Tinubu administration’s policies, the World Bank insists that these reforms are essential for Nigeria’s long-term stability. During the presentation of the Nigeria Development Update, the World Bank argued that while the removal of fuel and FX subsidies has caused short-term pain, these reforms are necessary to prevent the economy from spiralling out of control.

Dr. Ndiame Diop, the World Bank’s Country Director for Nigeria, emphasised that reversing these reforms would spell disaster for the country. He acknowledged the challenges these policies have created, but stressed that continued reform is essential to stabilise Nigeria’s economy and lay the groundwork for future growth.

Government’s Response: A Long Road Ahead

While the Federal Government has expressed optimism about Nigeria’s economic trajectory, critics remain skeptical. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, argued that Nigeria is “turning the corner,” citing efforts by the Central Bank of Nigeria (CBN) to stabilise monetary policy and manage exchange rates.

Edun’s comments, however, are unlikely to reassure the millions of Nigerians currently living in poverty. As inflation continues to rise and the economy remains in turmoil, many question whether the government’s efforts are enough to address the root causes of Nigeria’s economic crisis.

The recent decision by the CBN Governor Olayemi Cardoso to raise interest rates has also drawn criticism, with many arguing that this move will only worsen the situation by making it more difficult for businesses and individuals to access credit. Cardoso, however, defended the decision, claiming that higher interest rates are necessary to tackle inflation and bring price stability to the economy.

The Need for Urgent Action

The World Bank’s Nigeria Development Update paints a bleak picture of the country’s economic future. With 129 million Nigerians now living in poverty, the need for urgent action has never been clearer. While the government has implemented some reforms, these measures have not been enough to stem the tide of rising inflation, unemployment, and hunger.

As the country grapples with worsening economic conditions, the Tinubu administration faces mounting pressure to reverse course and adopt policies that prioritise the welfare of ordinary Nigerians. Without significant changes, the outlook for Nigeria remains grim, and the spectre of widespread unrest looms large.

The inflation trend continued to fluctuate as 2024 progressed, exacerbating the already dire economic conditions for millions of Nigerians. By August, the inflation rate had reached 32.15 percent, before dipping slightly in September to 32.70 percent, as highlighted by the National Bureau of Statistics (NBS). This minimal relief was far from enough to ease the daily struggles of the average Nigerian household, which was already stretched thin due to the rising cost of living.

The Domino Effect of Inflation on Households

For many Nigerian families, the rapid inflation surge has created a chain reaction that affects every aspect of their daily lives. Rising transportation costs, driven by the removal of fuel subsidies and an unstable naira, have caused prices of goods and services to skyrocket. Basic commodities such as rice, bread, and cooking oil have seen unprecedented price hikes, with many households now unable to afford three square meals a day.

A Lagos resident, Ifeoma Okoro, shared her frustration: “I used to feed my family on N500 per meal, but now, the same meal costs N1,500 or more. The government says they are making reforms, but what reforms? All I see is more suffering.”

Similar stories have echoed across the nation, from Lagos to Kano, as Nigerians cope with the harsh reality that their purchasing power has been slashed dramatically. Inflation, which has been steadily rising for over a year, has not only driven food prices but also caused housing rents to soar, making affordable shelter a luxury for many.

“We’ve had to move to a smaller apartment because we couldn’t keep up with the rent,” said Musa Garba, a father of four from Kano. “Even basic items like school supplies for my children have become unaffordable. It’s hard to see the light at the end of this tunnel.”

Nigeria’s Economic Crisis: Root Causes and Consequences

The World Bank’s Nigeria Development Update report underscores the harsh reality behind Nigeria’s poverty crisis, linking it to a combination of domestic policy failures, global economic shocks, and the long-term impacts of the COVID-19 pandemic. According to the report, inflation, compounded by poor economic management and external shocks, has trapped millions more in poverty.

One of the key issues identified in the report is the failure of Nigeria’s economy to grow at a rate fast enough to outpace inflation. Real GDP per capita remains stagnant, unable to recover to the pre-2016 oil price crash levels. This economic stagnation, coupled with a booming population, has worsened the poverty rate. The World Bank report indicates that over 129 million Nigerians now live below the national poverty line, a staggering increase from 40.1 percent in 2018 to 56 percent in 2024.

The major drivers of this poverty explosion, according to the World Bank, are Nigeria’s chronically low growth rates, its dependence on oil revenues, and its susceptibility to global economic shocks. In addition, the pandemic further crippled Nigeria’s economy, causing a slowdown in economic activity that has yet to be fully reversed. The devastating floods of 2022, growing insecurity in various regions, and the disastrous consequences of the government’s demonetisation policy in early 2023 all added fuel to the fire, pushing millions more into poverty.

A glaring flaw in the Nigerian economic management system has been its heavy reliance on oil, which has left the country vulnerable to global oil price fluctuations. While other oil-producing nations diversified their economies, Nigeria failed to do so, creating a system that oscillates between boom and bust cycles, depending on the volatility of the oil market. The recent removal of fuel subsidies, though deemed necessary for long-term fiscal sustainability, has exacerbated the crisis by raising transportation and production costs, further fuelling inflation.

Worsening Urban Poverty

While poverty has traditionally been more prevalent in rural areas, the report points out that urban poverty has risen dramatically. The surge in urban poverty is attributed to the higher costs of living in cities, compounded by inflation and stagnant wages. According to the World Bank, urban poverty increased from 18 percent in 2018 to 31.3 percent in 2024, with millions of urban dwellers now struggling to afford basic necessities.

The situation is particularly dire in cities like Lagos, where the cost of housing, transportation, and food has outpaced the earnings of many residents. What used to be Nigeria’s economic hub has now become a city where millions struggle to survive, relying on informal jobs that offer little security or upward mobility. The sharp rise in urban poverty also reflects the failure of job creation policies that, while creating more employment, fail to address the productivity and remuneration of these jobs.

Alex Sienaert, the World Bank’s lead economist for Nigeria, highlighted this issue during the presentation of the report: “Being employed is no guarantee of escaping poverty. Many jobs are simply not productive or well-paying enough to lift workers out of poverty. What Nigeria needs are more productive jobs, jobs that can harness the country’s potential ‘demographic dividend’.”

Sienaert’s remarks point to a broader systemic failure. Nigeria has one of the world’s youngest populations, and while this could be a tremendous asset in terms of potential labor force, it is instead becoming a liability due to the lack of productive employment opportunities.

Clashing Opinions on Tinubu’s Economic Reforms

The Nigeria Development Update report has also triggered a clash of opinions between the World Bank and local political leaders on the effectiveness of President Bola Tinubu’s economic reforms. While the World Bank lauded the reforms, acknowledging that they were difficult but necessary steps for long-term economic stability, not everyone shares this view.

Governor Bala Mohammed of Bauchi State sharply criticised the reforms, stating that they had failed to deliver the expected relief to the Nigerian people. According to Mohammed, state governments are bearing the brunt of the economic hardship, as federal revenue allocations have failed to keep pace with inflation, leaving states unable to meet their financial obligations.

“We are all suffering, and the people are tired,” the governor lamented. “The purchasing power of Nigerians has been destroyed. The money we share is no longer enough to meet basic needs. These policies are not working for the average Nigerian. With all due respect, we need to review them immediately.”

Mohammed’s concerns reflect the widespread discontent among state leaders, many of whom are grappling with dwindling resources and growing pressures to meet wage demands, develop infrastructure, and provide essential services. The increasing cost of governance, coupled with rising inflation, has left many states on the brink of financial collapse.

World Bank’s Response: Reforms Are Painful but Crucial

In response to these criticisms, the World Bank has stood firm in its defense of the reforms, asserting that while they may be painful in the short term, they are essential for Nigeria’s long-term economic stability. Dr Ndiame Diop, the World Bank Country Director for Nigeria, warned that reversing the reforms would spell “doom” for the country.

“The reforms, although difficult, are necessary. They are meant to address the structural weaknesses in Nigeria’s economy,” Diop said, stressing that any attempt to reverse them would derail Nigeria’s path to recovery. He also noted that the World Bank is willing to provide further loans and technical assistance to support the country through this challenging period.

While the World Bank acknowledges the hardship caused by these reforms, its message is clear: Nigeria must stay the course to stabilise its economy and reduce its reliance on oil revenues. The removal of fuel subsidies, the unification of exchange rates, and the tightening of monetary policy were all steps taken to create a more resilient economy, one that is less dependent on external shocks.

Tinubu’s Administration: A Balancing Act

President Bola Tinubu’s administration has defended its economic policies, particularly the removal of fuel subsidies, as a necessary evil. The government has argued that the subsidies were unsustainable and consumed a disproportionate share of Nigeria’s GDP. By removing them, the government hoped to free up resources for other critical areas of the economy, such as infrastructure and social programs.

Minister of Finance, Wale Edun, pointed out that Nigeria’s fiscal deficit had shrunk from 6.2 percent of GDP in 2022 to 4.4 percent in the first half of 2023, thanks in large part to the removal of subsidies and other reforms. He expressed optimism that Nigeria was “turning the corner” and credited the Central Bank of Nigeria (CBN) for its efforts to stabilise monetary policy and manage exchange rates.

However, the administration faces a delicate balancing act. On one hand, it must continue with reforms to stabilise the economy; on the other, it must manage the growing discontent among the Nigerian populace, who are facing severe hardships as a result of these policies. President Tinubu’s extended absence from the country, as he takes his annual vacation, has only added fuel to the fire, with many Nigerians feeling abandoned during a time of crisis.

The Future: What Lies Ahead for Nigeria’s Economy?

The outlook for Nigeria remains uncertain. While the government and international financial institutions like the World Bank insist that reforms are necessary for long-term stability, the immediate impact on the Nigerian population has been devastating. Poverty rates continue to rise, inflation remains high, and unemployment is rampant.

Experts warn that unless the government finds a way to mitigate the short-term effects of its policies, the country could face an even deeper crisis. The World Bank has urged the Nigerian government to focus on job creation, improving productivity, and expanding social safety nets to protect the most vulnerable populations.

In the meantime, Nigerians are left to navigate an increasingly challenging economic landscape. For millions, survival has become a day-to-day struggle, and without significant intervention, the future remains bleak.

The World Bank’s Nigeria Development Update report paints a sobering picture of Nigeria’s economic situation. With over 129 million Nigerians now living in poverty, the country is at a critical juncture. While the reforms enacted by President Tinubu’s administration may provide long-term stability, their short-term effects are pushing more people into poverty, fuelling discontent, and threatening social stability.