…Global statistics expected to reach 150 million by 2021- World Bank
…Govt must give support to organised business to strive, flourish; tackle insecurity — Economists, Analysts
…Improving ease of business will attract investment — Experts
By Peter Egwuatu
There are indications that Nigeria’s poverty level may have further deteriorated as the latest reports of the Nigeria Employers Consultative Association, NECA, shows a 10 percentage point rise in the number of the extreme poor in the country against the 2019 report of the National Bureau of Statistics, NBS.
NECA’s report says that the number of citizens in extreme poverty now stands at an estimated 102 million, representing 50 per cent of the Nigeria’s estimated population of about 205 million, as against the 40 per cent reported by NBS in October last year.
This comes at the backdrop of the World Bank forecast that global extreme poverty is expected to rise in 2020 for the first time in over 20 years as the disruption of the COVID-19 pandemic compounds the forces of conflict and climate change, which were already slowing down progress in poverty reduction efforts around the world.
Financial Vanguard’s findings from the data obtained from NECA revealed that the total number of people living in extreme poverty in Nigeria now stands at 15 percent of the total number of people living in extreme poverty world-wide.
In the latest annual report of NECA, its Acting President, Taiwo Adeniyi, said: “With COVID-19, the figure could only be imagined. It is practically impossible to separate unemployment from poverty. The longer people stay out of employment or any reasonable means of income, the higher the rate of poverty.
“Two years after it was reported that Nigeria had surpassed India as the nation with the highest number of people living in extreme poverty across the world, the country’s poverty ranking continues to surge.”
Adeniyi stated further: “The World Poverty Clock, a web tool based on World Data Lab’s global poverty model, estimated in June 2018 that 86.9 million Nigerians are living on less than $1.90 a day. That number has increased by over 15 million in the past two years, according to new figures published by World Data Lab on May 26, 2020.”
The NBS in a report about poverty and inequality from September 2018 to October 2019, had said 40 per cent of people in the continent’s most populous country live below its poverty line of N137,430 ($381.75) a year. It said that represents 82.9 million people.
“In Nigeria, 40.1 per cent of total population were classified as poor. In other words, on average, four out of 10 individuals in Nigeria has real per capita expenditures below N137,430 ($352) per year,” it added.
The NBS said it did not include Borno, the state worst hit by the decade-long Boko Haram armed uprising, because many areas there were not safe to reach.
According to the report, 52 per cent of people in rural areas live in poverty, compared with 18 per cent in urban parts of the country.
It stated: “The highest poverty levels were in the northwest state of Sokoto, where 87.7 per cent of people live under the poverty line compared with 4.5 per cent in commercial hub Lagos state, which had the lowest rate.”
World Bank’s universal perspective
The World Bank noted that poverty reduction has suffered its worst setback in decades, after nearly a quarter century of steady global declines in extreme poverty.
Specifically, the World Bank estimated that the pandemic would push an additional 88 million to 115 million people into extreme poverty this year, with the total rising to as many as 150 million by 2021, depending on the severity of the economic contraction.
It stated this in its biennial ‘Poverty and Shared Prosperity Report,’ released ahead of the 2020 virtual Annual Meetings of the World Bank and the International Monetary Fund (IMF).
The bank had in June, predicted that there would be 95.7 million Nigerians living below the poverty line by 2022, due to the impact of the virus.
It defined extreme poverty as living on less than $1.90 a day, adding that it was likely to affect between 9.1 per cent and 9.4 per cent of the world’s population in 2020.
The report also finds that “many of the new poor will be in countries that already have high poverty rates. A number of middle-income countries will see significant numbers of people slip below the extreme poverty line. About 82 per cent of the total will be in middle-income countries, the report estimates.”
Meanwhile, the rising level of unemployment in the country has also been attributed as one of the major causes of the rising level of poverty.
Development economists and financial experts have stated that the challenge with unemployment has been the fact that economic growth rate in Nigeria has been below the population growth rate.
Rapid population growth outstrips economic growth, which stands at about a negative of -6.1 per cent as at first half of 2020, H1-20. The United Nations estimates that Nigeria will have a population of 400 million by 2050, which experts say may spell doom for the country if there is no corresponding growth in economy.
Analysts’ perspective on unemployment
The unemployment rate in Nigeria according to the NBS’s last report, stated that in the first quarter of 2020(Q1-20) it stood at 27.1 per cent.
In Q3’18, the unemployment rate rose by 0.4 percentage points to 23.1 per cent from 22.7 per cent in Q2-18, while in Q3-18 it rose by 0.9 percentage points from 21.8 per cent in Q1-18.
Reflecting on the unemployment situation, Adeniyi stated: “As at Q3’19, the unemployment rate was reported at 23.1 per cent , under –employment rate 20.1 per cent, and the combined unemployment and underemployment rate , 43.3 percent.
“These figures, with the disruptions created by COVID-19, have the potential to skyrocket the prevalent crime and poverty level, insurgency, child labour, militancy, armed robbery, kidnappings and drug abuse, among others.
“It is instructive to note that for every 10 jobs created globally, the private sector creates nine.”
In his own part, Uche Uwaleke, Financial Economist and Professor of Capital Market at Nasarawa State University said: “As a matter of fact, growth in the employment generating sectors of the economy such as agriculture, manufacturing, construction have been slow. The oil sector which has been powering the tepid growth witnessed pre-COVID employs only an insignificant proportion of the labour force.”
Victor Chiazor, analyst and Head of Research and Investment, Fidelity Securities Limited, said: “With regard to the rise in unemployment, global disruptions in economic activities owing to the COVID-19 pandemic have caused a major spike in job losses globally, Nigeria inclusive. The complete lock-down of the economy has impacted negatively on most businesses, with most of them losing their working capital and being forced to shut down, leading to loss of job for employees in the businesses. Going by the current economic realities, we may not see a reversal in rising unemployment in the immediate as businesses continue to struggle given the abysmal level of economic activities in the country.”
To tackle the issue of unemployment and poverty, Adeniyi said: “For government to address the increasing rate of unemployment and poverty level, serious attention and support must be given to organised businesses to thrive and flourish, rather than the current regulatory environment that is characterised with strangulation and crass exploitation of businesses to fast-track economic recovery and promote job creation.”
Uwaleke said: “To address these challenges, more attention should be paid to tackling insecurity which affects foreign investments and agricultural output as well as improving the ease of doing business and the state of infrastructure in the country, especially power, roads and IT infrastructure.”
Executive Vice-Chairman, HIGH CAP Securities Limited, Mr David Adonri said: “To fight unemployment, Nigerians should be mobilized to fight the numerous wars ravaging the North so that farm security and full commercial activities can be restored. Over-population of the North which is fuelling destitution and insecurity in the country must be confronted headlong.
“Since insecurity is crippling domestic production and escalating inflation, and loss of jobs, Government should end the ill-conceived border closure. Nigerians have also seen the deceit in the purported fight against corruption. Government needs to purge the entire public service of corruption for investors to take the country seriously.”
While proffering solutions to the projected surge in poverty, the World Bank Group President, David Malpass said: “In order to reverse this serious setback to development, progress and poverty reduction, countries will need to prepare for a different economy post-COVID, by allowing capital, labour, skills, and innovation to move into new businesses and sectors. World Bank Group support— across International Bank for Reconstruction and Development, IBRD, International Development Association, IDA, International Finance Corporation, IFC and Multilateral Investment Guarantee Agency, MIGA will help developing countries resume growth and respond to the health, social, and economic impacts of COVID-19 as they work toward a sustainable and inclusive recovery.”