Stagnant wages propel 14m Nigerians into poverty as economic pressures mount

A recent report from the World Bank has highlighted the deepening poverty crisis in Nigeria, revealing that stagnant labor incomes have driven an estimated 14 million additional Nigerians into poverty in 2024.

The study, titled Macro Poverty Outlook: Country-by-Country Analysis and Projections for the Developing World, indicates that nearly 47% of the Nigerian population now lives below the international poverty line of $2.15 per day, a situation exacerbated by escalating economic pressures and rapid population growth.

The report states, “Labor incomes have not kept pace, pushing an additional 14 million Nigerians into poverty in 2024. An estimated 47% of Nigerians now live in poverty (or below the international poverty line of US$2.15 2017 PPP).”

This alarming statistic underscores the urgent need for effective economic reforms to address the challenges facing the nation’s most vulnerable populations.

In response to the rising poverty rates, the Nigerian government has initiated cash assistance programs aimed at supporting 15 million households.

Each household is expected to receive a total of N75,000, distributed across three installments, which will ultimately benefit approximately 67 million individuals. However, despite these measures, the World Bank warns that without intensified economic reforms, poverty levels could soar to 52% by 2026.

The report emphasizes the critical need for reforms to protect the poorest segments of society from inflation and to promote the creation of more productive job opportunities.

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“Poverty is estimated at 52% in 2026. Reforms to protect the poorest against inflation and boost livelihoods through more productive work are key for Nigerians to escape poverty,” the World Bank notes. It further highlights the importance of a tight monetary policy, urging the avoidance of excessive reliance on short-term financial measures to moderate inflation.

The Central Bank of Nigeria (CBN) has taken steps to combat inflation by raising the monetary policy rate by 850 basis points from February to September 2024, alongside increasing the cash reserve ratio.

However, these efforts have yet to restore purchasing power to the levels needed to alleviate poverty, according to the World Bank.

The report underscores that macroeconomic stabilization is not a panacea for Nigeria’s economic woes. “While macro stabilization is essential and currently underway, by itself it is insufficient to enable Nigeria to reach its growth potential,” it states.

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The World Bank calls for sustained efforts and the establishment of a credible track record to achieve meaningful progress.

Additionally, the report notes that economic growth has failed to keep pace with the rapid population increase, further contributing to the rising poverty rates.

The World Bank highlighted the urgency of reform, stressing that a comprehensive approach is necessary to build resilience and create sustainable pathways out of poverty for millions of affected Nigerians.

Previously, the World Bank reported that rising inflation and stagnant wages had already pushed 10 million Nigerians into poverty in 2023, painting a grim picture where nominal earnings have significantly lagged behind surging inflation rates.

The organization attributes this dire situation to weak macroeconomic fundamentals and entrenched structural constraints, revealing that approximately 34.3% of Nigerian workers aged 15 and older are classified as working poor, surviving below the poverty line despite being employed.

Many of these workers are trapped in low-skilled and low-wage jobs, highlighting the pressing need for substantial economic reform and investment in better employment opportunities