Nigeria’s economic reforms have gained international praise, but the country still grapples with persistent poverty challenges. As President Bola Ahmed Tinubu pushes through key economic reforms, the International Monetary Fund warns that a tough road lies ahead due to lower oil prices and global risk.
The Nigerian government’s efforts to stabilize the economy and implement reforms have been recognized by the International Monetary Fund (IMF), but the organization notes that not all Nigerians have benefited from these changes.
Nigeria has a mixed economy, with both state and private sectors contributing to its growth.
The country is richly endowed with natural resources, including oil, gas, and minerals.
Agriculture is also a significant sector, with major crops such as cotton, cocoa, and rubber.
The service sector, driven by telecommunications and finance, accounts for over 50% of GDP.
Nigeria's economy has faced challenges, including corruption, infrastructure constraints, and dependence on oil exports.
Since taking office in May 2023, President Bola Ahmed Tinubu has pushed through several key economic reforms, including the removal of fuel subsidies. While these moves have helped to improve the foreign exchange market and reduce Nigeria’s fiscal debt, the IMF warns that poverty and food insecurity remain significant concerns for the country.
A Tough Road Ahead
According to Axel Schimmelpfennig, IMF mission chief for Nigeria, the reforms have put the Nigerian economy in a better position to navigate the current external environment. However, the outlook is marked by significant uncertainty due to lower oil prices and an increased sense of global risk. The Nigerian government has acknowledged these challenges and plans to address them in its 2025 budget.
The IMF is calling for monetary policies to reduce inflation and for the channeling of savings from the fuel subsidy into the budget. Specifically, adjustments should be made to protect critical investment projects while accelerating and broadening the delivery of cash transfers to those experiencing food insecurity.
A Country Divided
Despite the efforts of the Nigerian government, poverty remains a pervasive issue in the country. Over half of Nigerians live below the poverty line, with poverty rates soaring over the past six years. The World Bank has reported that more than 129 million people in Nigeria are living in poverty, highlighting the need for sustained and effective economic reforms.
Nigeria is one of the poorest countries in the world, with over 100 million people living below the poverty line.
According to the World Bank, approximately 43% of Nigerians live on less than $1.90 per day.
The country's poverty rate has been declining slowly since 2016, but it remains a significant challenge.
Factors contributing to poverty in Nigeria include limited access to education and healthcare, unemployment, and corruption.
A Call to Action
As the IMF continues to provide support to Nigeria, it is clear that a coordinated effort is needed to address the country’s economic challenges. By prioritizing investment in critical sectors, reducing inflation, and providing targeted relief to those most affected by poverty, Nigeria can begin to build a more inclusive and sustainable economy.
