The World Bank has emphasized that implementing cash transfers could play a crucial role in preventing Nigerians from falling into intergenerational poverty traps, particularly as inflation and low economic growth pose challenges for the vulnerable population.
According to the World Bank’s ‘Macro Poverty Outlook: Country-by-country Analysis and Projections for the Developing World’ report, inflation and low economic growth are anticipated to contribute to a rise of 2.8 million people living in poverty by the close of 2023.
The report notes, “The share of Nigerians living below the international poverty line is expected to peak in 2024 at 38.8% before beginning a gradual decline, as inflation cools down and economic growth picks up. Targeted measures, including cash transfers, could mitigate short-term adjustment costs to the poor and vulnerable and mitigate their risk of falling into intergenerational poverty traps.”
The report projects that an estimated 37.5% of Nigerians will live below the international poverty rate of $2.17 per day, and about 70.4% will live below the lower middle-income poverty rate of $3.65 per day in 2023.
The World Bank also anticipates a decrease in the budget deficit from 5% of GDP in 2022 to around 4% in 2025, despite an increase in expenditure due to the implementation of compensatory measures to protect households from the initial effects of subsidy reform.
Concerning public debt, the report projects it to reach 45% of GDP in 2023 due to fiscal financing needs and the depreciation of the naira. The report indicates that debt servicing will remain higher than total revenue in the same year, with an expectation of a drop to about 68% of revenues by 2025.
Highlighting potential risks to Nigeria’s economic performance, the report mentions factors such as policy reversals, weakened reform impetus, a decline in oil production, external factors like global monetary tightening, the war in Ukraine, and regional instability due to the recent coup in Niger.
Recently, President Bola Tinubu launched a social safety net program providing N25,000 to 15 million homes for three months as part of efforts to commemorate the 2023 International Day for the Eradication of Poverty. The World Bank, having authorized $800 million for the National Social Safety Net Program-Scale Up, has already released approximately $299.99 million to Nigeria, supporting the government’s intention to fund a monthly cash transfer system for the poor and vulnerable amidst recent policy changes like the elimination of fuel subsidies.
