The World Bank says the federal government’s safety nets to the poor could suffer due to the oil price decline.
The World Bank said in its Africa Pulse report entitled ‘Improving Governance and Delivering for People in Africa’ that various safety nets targeted at easing the burden of the citizens may not be enough to lift millions off the poverty line.
It predicted that Nigeria may likely see a rise in the levels of poverty over the next two years despite a moderate economic growth forecast, BusinessDay reports.
The multilateral lender noted that while non-resource-rich countries are expected to continue reducing poverty and grow faster, resource-rich countries like Nigeria may drag due to declining oil prices.
”Resource-rich countries are expected to see less progress in terms of poverty reduction,” the World Bank said.
“Importantly, poverty in resource-rich, fragile countries (which include large countries like the Democratic Republic of Congo and Nigeria) is expected to increase by 3.6 percentage points over 2022–27,” it added.
The Bola Tinubu administration initiated reforms 20 months ago, with petrol subsidy removal coming before foreign exchange (FX) market liberalisation. It came with a plethora of gains but induced inflation and exacerbated poverty, with the number of poor people rising from 104 million to 129 million people in a year.
According to the World Bank, Nigeria accounts for 19 per cent of the share of poverty in Sub-Saharan Africa, followed by Congo, Ethiopia and Sudan with 14 per cent, nine per cent and six per cent respectively.
Despite the growing poverty, the Washington-based lender expects Africa’s most populous nation’s annual GDP to increase by 3.6 per cent in 2025 and 3.8 per cent in two years.
“Economic growth is expected to remain moderate in Nigeria,” the World Bank said.
“It is expected to increase from 3.4 percent in 2024 to 3.6 percent in 2025, and slightly increase to 3.8 percent in 2026–2027.”
It said the gradual recovery of the Nigerian economy along the forecast horizon is driven primarily by the service sector—specifically, finance, information and communications technology services, and transportation—and, to a lesser extent, a rebound in oil production that converges to its OPEC+ quota.
The World Bank’s projection is relatively higher than the International Monetary Fund (IMF) revised forecast for the nation.
IMF has cut Nigeria’s 2025 economic growth forecast downward to 3.0 per cent from the earlier projection of 3.4 per cent in 2024, citing weakening oil supply and escalating global trade tensions.
The two projections are however largely lower than Nigeria’s ambitious projected annual GDP growth of 4.6 per cent outlined in the 2025 budget.