Nigeria Still Seated as the Poverty Capital of the World
Nigeria the self acclaimed giants of Africa is sadly still wallowing in the infamous position as the poverty capital of the world, with 93.9 people in Africa’s most populous country currently living below the poverty line. The Managing Director, Financial Derivatives Company (FDC) Limited and a member of President Muhammadu Buhari’s Economic Advisory Council (EAC), Mr. Bismarck Rewane, who cited this position, quoted a World Bank data, Rewane, in a presentation at the monthly Lagos Business School’s economic breakfast meeting for September 2021, stating that seven million Nigerians fell into extreme poverty in 2020.
In the report was titled: “Re: Growth Spikes (5.01 per cent), But People are Hungry?”, Rewane, disclosed that Nigeria, with its 200 million plus population, was first declared world’s poverty capital in 2018 in a report by the Brookings Institution, knocking off India from the position.
The report had then stated that the number of Nigerians in extreme poverty increases by six people every minute.
The Brookings Institution’s report had stated in 2018, “At the end of May 2018, our trajectories suggest that Nigeria had about 87 million people in extreme poverty, compared with India’s 73 million. What is more, extreme poverty in Nigeria is growing by six people every minute, while poverty in India continues to fall.”
Rewane pointed out in the latest report that the Petroleum Industry Act (PIA), which is in the process of being implemented, would have minimal impact on new investments in the downstream sector of the Nigerian oil and gas industry. He based his projection on the fact that petrol subsidy was still in existence, despite the deregulation of the downstream sector by the PIA, coupled with investors’ on-going transition towards investments in renewable and clean energy.
The EAC member said, “Implementation of the PIA to continue but subsidies will remain. Minimal impact on new investments in the downstream sector as investors’ transition towards investments in renewable and clean energy.”
Although, deregulation of the downstream petroleum sector is among the provisions in the PIA, the federal government has ruled out immediate removal of petrol subsidy pending when an alternative to petrol is made available.
In his fiscal policy outlook, the economist stated that public finance deficit would remain in its N5.6 trillion for 2021, adding that oil revenue would be insufficient to meet the country’s expenditure needs.
Predicting that tax revenue would be undermined by widespread evasion and a large informal sector, he further said the federal government’s debt burden would intensify as ways and means advances climb.
Ahead of the next Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) slated for September 20 and 21, 2021, Rewane predicted that the committee would likely bring down Monetary Policy Rate (MPR) commonly known as the benchmark interest rate by 0.5 per cent to 11 per cent.
This, he said, would be supported by sustained positive growth rate (5.01 per cent) and continued moderation in inflation rate (16.8 per cent in August), while other interest rates would remain constant.
He further forecasted intensified efforts toward convergence of the exchange rates and the reduction of the parallel market premium.
However, Rewane pointed out some positive developments that could make Nigerians cheer, including the fact that the value of transactions across e-payment channels increased by 46.24 per cent in the second quarter (Q2) of 21 to N72.39 trillion from N49.5 trillion recorded in Q2’20.
They also include the climbing of the Federal Allocation (FAAC) disbursements by 3.76 per cent to N760.7 billion from N733.1 billion in July.
Others are vessels awaiting berth sharply down by 68.75 per cent to five in Lagos ports from 16 in July; as well as the signing of the PIB into law.
Added was that the Medium-Term National Development Plan (2021- 2025) would be unveiled in October, 10 months after the expiration of the Economic Recovery and Growth Plan (ERGP) (2017- 2020).
Also included as part of the positives was the increasing of dollar supply to commercial banks by 200 per cent by the CBN.
However, on the negative side, the FDC boss listed some developments that should worry Nigerians, including the falling of total capital importation to $875.62 million in Q2’21, from $1.91 billion in Q1’21, and the crashing of the parallel market rate to N526/$ on Foreign Exchange (FX) supply shortages.
Commenting on inflation, he said, “While we expect inflation for August to fall again to 16.8 per cent, the impact of insecurity, exchange rate pass through and higher energy costs could exacerbate inflationary pressures.”
