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  • Business - Companies
  • Updated: June 02, 2022

Factors Affecting Nigeria’s Poverty Reduction Scheme Revealed By World Bank

Factors Affecting Nigeria’s Poverty Reduction Scheme Revea

World Bank economists Jonathan Lain and Jacob Engel have identified the global pandemic, rising inflation, ongoing uncertainty related to the war in Ukraine and the relentless population growth as the factors that have made Nigeria’s poverty-reduction goals more challenging than ever.

According to them, Nigeria’s aspiration to lift all of its people out of poverty by 2030 presents a serious challenge.

Though, before COVID-19, about 80 million people lived below the national poverty line.

The economists stated: “The global pandemic, rising inflation, and ongoing uncertainty related to the war in Ukraine – combined with relentless population growth – have made Nigeria’s poverty-reduction goals more challenging than ever.

“Trade presents one vital – but often untapped – the pathway to poverty reduction.  Through its effects on investment, technology transfer, and competition, trade can help growth-boosting job creation, increasing domestic value-added, and reducing the price of goods that Nigerians buy along the way. All of these effects may contribute to reducing poverty.

“Yet trade may have different impacts on households depending on where in the country they live, what jobs they do, and whether they are rich or poor: even if trade leaves people better off on average, some households could lose out. Trade has two types of direct price effects on households’ wellbeing.

“First, trade policies determine the prices for products that households need to buy. Second, trade policies influence households’ income-generating activities, by changing the prices of goods that they produce.

"There are also important indirect effects; for example, trade can alter the mix of jobs – and the earnings in those jobs – that are available in the economy by increasing private investment but also exposing domestic firms to international competition.”

They added that in Nigeria, many policies limit trade, “the country is not unique in this regard, as protectionist policies have been on the rise the world over and the ongoing war in Ukraine could intensify this.

"Throughout the past two decades, import bans, tariffs, and foreign exchange restrictions have all curbed the flow of goods into Nigeria.

“These restrictive policies culminated in Nigeria closing its land border for more than a year in August 2019.

"Nigeria is also currently negotiating the terms of its participation in the African Continental Free Trade Agreement (AfCFTA); therefore, discussions of trade policy are very topical.”

 

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