Amid rising poverty line, World Bank says Nigeria needs N3.7tn to eliminate challenge
Barely two months after a Multidimensional Poverty Index (MPI) report had placed 63 per cent of the Nigerian populace, representing 130 million, below the poverty line, the World Bank says the country needs N3.7tn to eliminate the problem.
The World Bank’s position, which is contained in its synthesis report for Country Economic Memorandum: Charting a New Course, released this December, further noted that the N3.7tn is even lower than what the country already spends on petrol subsidies annually.
It would be recalled that last month, in November, a joint report released by the National Bureau of Statistics (NBS) disclosed that over 130 million Nigerians, representing 63 per cent of the entire population, live below the poverty line.
The data contained in the NBS’s 2022 Multidimensional Poverty Index Survey released, Thursday, in Abuja, said the figure represented 63 per cent of the nation’s population.
The report added that the poverty index is mostly domiciled in rural areas, especially in the north with women and children being the most affected.
The survey was conducted by the NBS, the National Social Safety-Nets Coordinating Office (NASSCO), the United Nations Development Programme (UNDP), the United Nations Children’s Fund (UNICEF), and the Oxford Poverty and Human Development Initiative (OPHI).
The measure used to calculate the figure was based on Multidimensional Poverty Index (MPI) with five components of health, living standard, education, security, and unemployment.
According to the survey, over 50 per cent of children across the country are affected by poverty.
Remarking, Statistician-General of the Federation, Mr Adeyemi Adeniran, noted that 56,610 households were surveyed and areas such as health, education, living standards, food security, water reliability, underemployment, security shocks, and school attendance were considered.
Adeniran said while the multidimensional poverty index stood at 27 per cent in Ondo State, the figure is estimated at 90 per cent in Sokoto State.
The World Bank’s statement read in part: “Nigeria has the potential and resources to accelerate growth and reduce poverty. In a context of weakened economic growth, widespread poverty, deepening inequality, and political turbulence, realising the government’s ambition of lifting roughly 100 million Nigerians out of poverty by 2030 is challenging.
“For instance, the poverty gap index—a measure of the minimum cost of eliminating poverty if transfers were perfectly targeted—shows that eliminating poverty in Nigeria would cost almost N3.7tn per year (World Bank, 2022c), lower than the amount the country currently spends on petrol subsidies. Removing distortions will allow Nigerians to benefit from their country’s immense wealth.”
In its newly released Nigeria Development Update, the World Bank had said that inflation pushed five million Nigerians into poverty between January and October this year.
It would also be recalled that last October, President Muhammadu Buhari had told the National Assembly that his government plans to finance the huge deficit contained in the N20.51 trillion 2023 Appropriation Act ‘mainly by new borrowings totalling N8.80 trillion.’
Presenting the document before the joint session of the ninth National Assembly (NASS), in October, in Abuja, President Buhari said the 2023 Appropriation Act of N20.51 trillion total expenditure estimates comprises N10.78 trillion fiscal deficit representing 4.78 percent of estimated GDP, above the 3 percent.
“As envisaged by the law, we need to exceed this threshold considering the need to continue to tackle the existential security challenges facing the country.
“We plan to finance the deficit mainly by new borrowings totalling N8.80 trillion, N206.18 billion from Privatization Proceeds and N1.77 trillion drawdowns on bilateral/multilateral loans secured for specific development projects/programmes,” said Buhari.
The 2023 budget proposal is N75 billion above the N19.76 trillion approved by the Senate and House of Representatives in the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy paper (FSP) which was passed on Wednesday and Thursday by both Chambers respectively.
The breakdown of the 2023 budget parameters and fiscal assumptions, revealed that $70 oil price benchmark; 1.69 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day) daily oil production; N435.57/$ Exchange rate; 3.75 percent Projected GDP growth rate and 17.16 percent inflation rate.
The proposed N20.51 trillion 2023 expenditure comprises of Statutory Transfers of N744.11 billion; Non-debt Recurrent Costs of N8.27 trillion; Personnel Costs of N4.99 trillion; Pensions, Gratuities and Retirees’ Benefits of N854.8 billion; Overheads of N1.11 trillion; Capital Expenditure of N5.35 trillion, including the capital component of Statutory Transfers; Debt Service of N6.31 trillion; and Sinking Fund of N247.73 billion to retire certain maturing bonds.
According to Buhari, based on these fiscal assumptions and parameters, total federally-collectible revenue is estimated at N16.87 trillion; total federally distributable revenue is estimated at N11.09 trillion in 2023, while total revenue available to fund the 2023 Federal Budget is estimated at N9.73 trillion including the revenues of 63 Government-Owned Enterprises.
“Oil revenue is projected at N1.92 trillion, Non-oil taxes are estimated at N2.43 trillion, FGN Independent revenues are projected to be N2.21 trillion; other revenues total N762 billion, while the retained revenues of the GOEs amount to N2.42 trillion.”
The 2023 Appropriation Bill aims to maintain the focus of MDAs on the revenue side of the budget and greater attention to internal revenue generation. Sustenance of revenue diversification strategy would further increase the non-oil revenue share of total revenues.
Total fiscal operations of the Federal Government to result in a deficit of N10.78 trillion, representing 4.78 percent of estimated GDP, above the 3 percent threshold set by the Fiscal Responsibility Act 2007.
