Nigeria is a blend of conflicting realities. In 2023, the Nigerian government generated $30.852 billion from the upstream oil sector. How can a country be so rich and yet so poor?
Poverty is the lack of income and resources to cater for the daily necessities of life. Nigeria's poverty rate measures the percentage of Nigerians who live below the international extreme poverty line of $2.15 (2017 prices) daily.
The World Bank's first attempts to measure the poverty level in Nigeria revealed that 47.8% of Nigerians lived in extreme poverty. The poverty rate has fluctuated haphazardly over the decades. The economic hardships and inflation that characterised General Sani Abacha's rule from 1993 to 1998 drove the poverty rate to 58.4%—the highest measured rate.
Despite brief moments of prosperity from the early 2000s to the late 2010s, the sharp increase in the poverty rate from 30.9% in 2018 to 38.9% in 2023 has raised some concern among Nigerians. About 87 million Nigerians remain in poverty despite the government's policy interventions.
Key takeaways
- 1988: Following post-independence political instability, Nigeria's poverty rate was 47.8%.
- 1992-1996: During General Sani Abacha's military dictatorship, the poverty rate reached its highest point at 58.4%.
- 2000-2018: The 2000s marked a period of economic growth, with the newly elected democratic government capitalising on record oil prices, reducing the poverty rate to 30.9%, its lowest level, by 2018.
- 2020-2023: The combined effects of the COVID-19 pandemic and the Russia-Ukraine War led to a sharp rise in the poverty rate, which reached 38.9%, leaving 87 million Nigerians in poverty.
1960–1985: Independence
Nigerian's optimism after gaining independence from the United Kingdom dissipated as quickly as it formed when the Prime Minister of the First Republic, Sir Abubakar Tafawa Balewa, was assassinated in a coup and Major General Johnson Aguyi-Ironsi formed a military government in 1966.
This assassination started a series of coups and counter-coups leading to Ironsi's death barely six months after his coup. The infamous Biafran War followed in 1967, with four coups occurring from 1967 to 1985. The country's political instability during this period left little time for economic prosperity and all but ensured the poverty rate remained high at 47.8% in 1985.
1990s peak (1992–1996)
Generation X and many Millennials view the period between 1992 and 1998 negatively, particularly 1996, as the poverty rate worsened and rose to 58.4%. This period coincided with the dictatorship of General Sani Abacha and the highest level of poverty in Nigeria.
The Abacha government, characterised by a ban on political expression and human rights abuses, hastily tried and executed Ken Saro Wiwa, a writer and activist who was a popular critic of the military regime. The execution drew criticism from international organisations and world governments. This led to the suspension of Nigeria’s commonwealth membership, and sanctions from the European Union followed swiftly.
The sanctions isolated Nigeria from crucial international allies. The government of the day looted funds, and oppressive policies denied Nigeria the opportunity to develop its economy and eradicate poverty. In 2023, experts estimated that $5bn of stolen funds had been recovered.
The 2000s: post-military era
The dissolution of the military government after Abacha’s death and the adoption of a civilian government in 1999 ushered in a period of economic and political stability in the country. The Obasanjo-led government maximised political stability and record oil prices in 2006 by developing an economic strategy and framework to combat rising poverty levels.
The Nigerian Economic Empowerment Development Strategy (NEEDS) was developed to address Nigeria's development challenges and build the economy. NEEDS led to many reforms, ranging from banking to the private sector. These reforms paid dividends as Nigeria's poverty rate dropped rapidly to its lowest at 30.9% in 2018.
2020 - 2023: COVID, Ukraine-Russia war, and others
The confirmation of the first case of coronavirus disease (COVID-19) in Nigeria on February 27, 2020, to the introduction of various preventive measures such as a restriction of movement and a ban on social gatherings, led to the disruption of economic activities.
The pandemic reduced oil prices by 35% in 2020 as the demand for oil products declined sharply due to restrictions on movements. As the global economy and Nigeria started to recover from the pandemic, Russia, one of the world's largest producers and importers of oil, invaded Ukraine in 2022. The invasion disrupted the global supply chain, and oil prices fell by another 20%.
The removal of fuel subsidies by the Tinubu-led government led to an increase in the price of fuel from ₦195 in January to a high of ₦617 in mid-2023, which has played a major role in keeping 87 million Nigerians in poverty.
Conclusion
Poverty has remained a persistent problem in Nigeria since 1960. The gap between the poor and rich widens each decade. Although the poverty rate showed signs of improvement, particularly between 2010 and 2015, recent global events such as COVID-19 and the Russian Ukraine War have drastically altered the landscape. Economic policies and government reforms must be formulated to eradicate poverty.
