What Nigeria must do to take millions out of poverty – World Bank

Nigeria needs “productive jobs” for poverty reduction in the country, the World Bank has said.

The bank, in its Nigeria Development Update October 2024 edition titled “Staying the course: Progress amid pressing challenges” said poverty is high and rising in Nigeria.

“Without jobs, poor Nigerians will not be able to escape poverty. More than half of the population lives in poverty,” it said.

This, the bank said, partly reflects the modest overall pace of economic growth, which is insufficient to compensate for the erosion of purchasing power brought about by inflation.

Yet, it said it also reflects the non-inclusive structure of growth: even when Gross Domestic Product (GDP) was expanding more rapidly in the early 2010s, richer households benefited more.

“Jobs hold the key to sharing the proceeds of growth. Since Nigeria has a young and growing population, the jobs that can harness the country’s potential “demographic dividend” are needed now.

“However, employment on its own is not enough to lift people out of poverty, Nigeria needs productive jobs, but these are scarce,” it said.

In Nigeria, as in many countries, the report said, high employment and high poverty coexist.

“In work poverty is common as many jobs do not generate earnings that are high enough to escape poverty. Low incomes are symptomatic of low productivity jobs.

“Nigeria’s labour market is changing with employment shifting from agriculture to services but these changes are not increasing overall productivity and living standards, because many of the new service-sector jobs are in low-productivity sub-sectors like retail and wholesale trade,” the report said.

The report said sustained poverty reduction depends on creating wage jobs through macro-fiscal stability, growth, and private sector development, complemented by building human capital.

It explained that wage jobs are associated with escaping poverty, but they remain rare, “Just 13.6 per cent of employed Nigerians are primarily engaged in wage work”.

It added that addressing the urgent need for more wage jobs depends on the foundations of macro-fiscal stability and growth.

“This entails establishing the conditions for private sector development, boosting market access, increasing openness to trade, and promoting a better business environment can all help.”

This, it said, must be complemented by other long-run efforts to reduce poverty, including building human capital and ensuring the skills of Nigeria’s workers match the current needs of the labour market.

The bank said short—and medium-run policies to boost productivity in farm and non-farm household enterprises would provide relief while higher-paying jobs are not available but could support some in succeeding and growing.

“Most farm and non-farm household enterprises are currently small-scale, rarely employing individuals from outside the household. Supporting these household enterprises relies on many of the foundational policies, especially the bedrock of basic infrastructure, but also goes beyond these,” it said.

Like other firms, the report said they need to be able to access the inputs they require, including tools, fertiliser, and productive, climate-resilient crop varieties for farmers, for which improved access to finance may also help.

In addition, it said, they need to reach output markets to foster commercialisation and productivity growth.

According to the bank, policy initiativesbank, policy initiatives for women and youth can improve the labour market’s poverty-reducing potential.

It further explained that the initiatives that cover mostly highly formalised wage workers, including policies on public sector jobs and minimum wage legislation, only reach a small segment of Nigeria’s poor and economically insecure population directly, as they do not have access to these types of jobs.

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Such policies, it said, may also be fiscally costly, given the large share of formal public sector workers.

“Focusing on excluded workers offers a clearer avenue for reducing poverty. Women and youth have lower access to productive jobs than the rest of the population, so supporting better labor market outcomes for them is key.

“For Nigeria’s vast youth population, policies to support skills and job matching, manage external migration including by helping young emigrants reach destination countries that seek their skills, and provide fallback employment including by ensuring that public investments consider job creation potential can help improve access to productive jobs,” the report said.