Nigeria’s poverty crisis is deepening because reforms are anti-people — Economist

The World Bank last week said about 61 per cent of Nigeria’s population — 139 million people — now live in poverty, rising from 40 per cent, or 81 million people, in 2019. In this interview with News Central TV monitored in Lagos, the former Head of Research at Financial Derivatives Company Limited (FDC) and founder of ACPAE Consulting Limited, Izuchukwu Clement Igbanugo, corroborated the figures, explaining why Nigeria’s poverty numbers are rising despite government claims of progress, and why recent economic reforms have worsened the situation for millions of households. He added that one in every five poor people on Earth is a Nigerian. CHIMA NWOKOJI brings details.

The national government seems to be rejecting the World Bank’s recent poverty report, even though the Bank is one of its main development partners. Since Nigeria borrowed from the World Bank, why would the government disagree with its findings? Is there a disconnect somewhere?

The World Bank’s report didn’t come as a surprise. My own estimate puts the number of poor Nigerians at around 145 million, which aligns closely with the Bank’s figure.

Interestingly, a few weeks ago, I had discussions with some government officials who insisted that poverty had actually decreased — which is simply not true. The World Bank, if anything, is conservative in its calculations. Poverty has been rising for at least a decade. Since 2015, we have not recorded any improvement.

Now, while the World Bank described Nigeria’s economic reforms as “bold,” the problem is that their implementation was anti-people. When reforms do not prioritise the welfare of citizens, poverty will inevitably worsen. Poverty is about capability — the ability to live decently, to access food, healthcare, and education. If those capabilities are eroded, people become poorer.

From a methodological point of view, the World Bank’s approach is credible. They use consumption-based models, not just income-based ones. Their surveys, conducted locally and adjusted for inflation and population trends, are among the most robust globally. So, whichever way you look at it, Nigeria’s poverty situation has undeniably worsened — not improved.

The government insists that the World Bank’s poverty figures are unrealistic. But with food inflation at 40 per cent and unemployment near 35 per cent, even as reforms are meant to stabilise the economy, do you think the government underestimated the short-term social costs of its policies?

The government didn’t underestimate the short-term effects — it failed to estimate them at all. There was no consideration for the social consequences of policy actions. Everything we are witnessing now appears to be an afterthought.

Let’s start with fuel subsidy removal. In 2022, before the reforms, the government said it spent $10 billion on subsidy. Today, that same amount equals about N15 trillion. By ending subsidy, the government effectively took N15 trillion from households. Those households cannot be richer — they are poorer. Subsidy removal, in economic terms, acts like a reverse tax.

Then there’s inflation. Inflation itself is a form of tax — as Milton Friedman said, it’s a “tax without legislation.” In 2023, inflation was about 28 per cent; in 2024, it rose to 33 per cent; and in 2025, it’s around 40 per cent. Imagine someone earning N100,000 in early 2023 who could buy 100 tubers of yam. By the end of that year, he could afford only 72. By 2024, just 48. By 2025, even fewer. Clearly, that person is poorer.

Take petrol: in 2022, a household could afford 500 litres at N200 per litre. Now, at N800 per litre, the same income buys just 125 litres. Whichever way you look at it — mathematically or practically — people are worse off under these policies.

The only way citizens wouldn’t be poorer is if government had simultaneously provided safety nets — access to affordable food, healthcare, and education. But those measures are either missing or poorly executed.

The government says it has provided relief through cash transfers, education funding, and student loans. For instance, N297 billion is reportedly being distributed to 15 million households, and the President recently mentioned N300 billion to support 8 million Nigerians. Yet, many say they haven’t seen or heard of anyone who benefited. Why is this not cushioning the hardship?

Good question. Let’s analyse it with simple arithmetic. If N297 billion is distributed to 15 million households, that means each household gets roughly N19,000 per year. On average, a Nigerian household consists of five people. That’s about N4,000 per person per year — barely enough to buy three bottles of cooking gas or a few loaves of bread.

It makes no meaningful impact on purchasing power, especially when inflation has eroded 70 per cent of household income. Even if the money reached people — which is doubtful — the scale is negligible, less than 0.1 per cent of GDP. That cannot mitigate the cost of reforms that have withdrawn trillions from the economy.

As for student loans, they sound promising, but how many have actually accessed them? The government often cites programmes like TETFund and other schemes, but they reach a very small percentage of the vulnerable population.

The real problem is that Nigeria implemented major reforms without price stabilisation measures or social protection buffers. In other countries — like Indonesia or India — subsidy removal was accompanied by direct cash rebates or fuel credits to citizens. In Nigeria, it was an abrupt, unplanned decision made on the President’s first day in office, without a transition framework. The result is a prolonged economic shock that households are still grappling with.

So if you were to advise the government now, what concrete steps or policy adjustments would you recommend to ensure that future reforms actually improve living standards for ordinary Nigerians — not just macroeconomic indicators?

First, government must abandon the idea that a market economy means zero subsidy or zero welfare. That’s a false narrative. Every capitalist economy — from the U.S. to the U.K. to Canada — has some form of subsidy.

For instance, in 2023, global energy subsidies totalled about $1 trillion, according to the International Energy Agency. The European Union alone spent $360 billion — about 4 per cent of its GDP — on subsidies. Even the U.S. and U.K. maintain significant welfare programmes. So, removing all forms of support in a fragile economy like Nigeria’s is simply bad economics.

Second, government must shift from state-centric to people-centric governance. Policy must begin and end with the people in mind. In countries that liberalised successfully — like Poland or Israel — reforms were carefully phased and cushioned with social safety nets. Nigeria did the opposite.

Third, there’s a need for transparency and accountability. We don’t even know who’s in the so-called social register. After billions were spent compiling it, the public still can’t access the data. If truly 15 million households are beneficiaries, that’s about 75 million Nigerians — one in three citizens. Yet, no one can identify even one verified recipient. That’s unacceptable.

Lastly, Nigeria must mainstream poverty reduction strategies into every policy — from fiscal planning to healthcare, agriculture, and education. You can’t solve a problem you refuse to acknowledge.

Today, about 139 million Nigerians live in poverty — meaning one in every five poor people on Earth is Nigerian. While Nigeria accounts for roughly one in 50 of the world’s population, it represents one in five of its poor. That should alarm everyone.

Until the government admits there’s a problem, builds a credible social register, and designs reforms around people, not just numbers, Nigeria will continue to record “bold” economic reforms — but poorer citizens.