Seven million more Nigerians to slip into poverty in 2020 – World Bank
The World Bank said before the outbreak of the coronavirus disease, it had estimated that about 2 million people would slip into poverty in the country in 2020 as a result of population growth.
The poverty rate in Nigeria is projected to rise from 40.1 per cent in 2019 to 42.5 per cent in 2020 as the country's economy faces its worst recession in four decades, says a new World Bank report released today. The report, “Nigeria In Times of COVID-19: Laying Foundations for a Strong Recovery,” is the latest World Bank Nigeria Development Update (NDU).
According to the report, the number of poor people in Nigeria will increase by seven million this year largely due to the COVID-19 pandemic and population growth. The World Bank said before the outbreak of the coronavirus disease, it had estimated that about 2 million people would slip into poverty in the country in 2020 as a result of population growth. However, the COVID-19 shock alone is projected to push about 5 million more Nigerians into poverty this year.
The global financial institution said the macroeconomic impact of the pandemic would be significant, even if Nigeria manages to contain the spread of the virus. It predicated its projection of the impact on the vulnerability of the economy to oil prices.
According to the bank, oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of banking-sector credit, and 50 per cent of the overall government revenue. With the drop in oil prices, government revenues are expected to fall from an already low 8 per cent of GDP in 2019 to a projected 5 per cent in 2020.
The report also said Nigeria’s economy would contract by 3.2 per cent in 2020, assuming the spread of COVID-19 in Nigeria is contained by the third quarter of 2020. In the event the pandemic becomes more severe, the economy could contract further. Before COVID-19, the bank had forecast a 2.1 per cent GDP growth rate for Nigeria this year.
“While the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery,” said Shubham Chaudhuri, World Bank Country Director for Nigeria. “Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation.”
The World Bank report was released 24 hours after the International Monetary Fund (IMF) released its revised growth estimate for Nigeria, showing a contraction of 5.4 per cent this year, compared to its April forecast of 3.4 per cent contraction.
The report notes that the pandemic is likely to disproportionately affect the poorest and most vulnerable, particularly women. It says due to the disruption of economic activities, women’s livelihoods have been particularly impacted. The report also notes that school closures have reduced the food intake of almost 7 million children who are enrolled in the national school feeding programme.
According to the bank, over 40 per cent of Nigerians employed in non-farm enterprises reported a loss of income in April-May 2020. In addition, the report also expects a reduction in remittances to Nigerian households. The fall in remittances is likely to affect household consumption because half of Nigerians live in remittance-receiving households, of which about a third are poor.
The report discusses policy options in five critical areas that can reduce the human cost and help Nigeria recover from the COVID-19 crisis: (1) containing the outbreak and preparing for a more severe outbreak; (2) enhancing macroeconomic management to boost investor confidence; (3) safeguarding and mobilizing revenues; (4) reprioritizing public spending to protect critical development expenditures and stimulate economic activity; and (5) protecting poor and vulnerable communities.
“The unprecedented crisis requires an equally unprecedented policy response from the entire Nigerian public sector, in collaboration with the private sector, to save lives, protect livelihoods, and lay the foundations for a strong economic recovery,” said Marco Hernandez, World Bank Lead Economist for Nigeria and co-author of the report.
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