World Bank Forecasts: Lifting Import Restrictions to Propel 1.3 Million Nigerians Out of Poverty

In the latest Nigeria Development Update (NDU) report released in December 2023, the World Bank has projected that the elimination of import restrictions in Nigeria could potentially lift approximately 1.3 million people out of poverty. This significant development aligns with recent moves in the country, including recommendations from some members of the House of Representatives to impose a ban on the import of items that can be locally produced.

The Central Bank of Nigeria (CBN) has also played a pivotal role in this shift by lifting the foreign exchange prohibition on 43 items, including essential commodities like rice, fertilizer, and cement. The World Bank has applauded the CBN’s decision, emphasizing its positive impact on consumer welfare, especially for the poorer households.

The report highlights the disproportionate impact of import restrictions on goods commonly consumed by lower-income households. For instance, the price escalation of rice, a staple food for approximately 84% of Nigerian households, has been exacerbated by import restrictions. The World Bank’s estimates suggest that removing these restrictions could lead to a 4.7% reduction in the prices of affected items, resulting in an overall increase in purchasing power and subsequently lifting 1.3 million people (around 0.6% of the population) out of poverty.

Regional Disparities in Poverty Reduction

The World Bank further indicates that specific states will experience varying degrees of positive impacts on poverty reduction due to the removal of import bans. The biggest beneficiaries are projected to be Kaduna, Ekiti, Enugu, FCT, Kwara, Anambra, Adamawa, Cross River, and Kebbi. On the other hand, states such as Rivers, Akwa Ibom, Ondo, Abia, Imo, and Ebonyi are expected to benefit less from these poverty reduction measures.

While acknowledging potential challenges for certain sectors resulting from the removal of import restrictions, the World Bank emphasizes the importance of mitigating these challenges through leveraging comparative advantages. Additionally, the institution urges the government to focus on reducing the overall cost of doing business and implementing complementary reforms to support Nigeria’s structural agenda for enhanced competitiveness and economic diversification.

Addressing the Impact of Recent Reforms

The World Bank report also delves into the broader economic context, noting that recent reforms initiated by the current administration are poised to reverse the increase in poverty witnessed over the past five years. Shockingly, the report reveals that approximately 24 million Nigerians slipped into poverty between 2018 and 2023, with the total number of poor individuals surging from 79 million to 104 million.

The recent economic reforms are anticipated to gradually undo this trend from 2024 onward. Sluggish growth and rising inflation have contributed to an increase in poverty rates from 40% in 2018 to 46% in 2023, pushing an additional 24 million people below the national poverty line. The urban poor, more exposed to inflation, increased from 13 to 20 million, while the number of poor people in rural areas rose from 67 to 84 million.

In the medium term, the World Bank projects that these reforms will reverse the trend, leading to higher economic growth and lower inflation. However, the impact is expected to be limited, with poverty rates decreasing from 46% in 2024 to 44% in 2026.

As Nigeria navigates these economic shifts, the World Bank emphasizes the need for sustained efforts in fostering a business-friendly environment, implementing strategic reforms, and promoting inclusive economic growth to address the complex challenges of poverty alleviation. Infostride News will continue to monitor and report on these crucial developments shaping Nigeria’s economic landscape.