2022: Why COVID-19 May Force 11 million Nigerians Into Poverty – Finance Minister

The Minister of Finance, Budget and National Planning, Zainab Ahmed yesterday said that the COVID-19 crisis may plunge 11 million Nigerians into poverty by the end of 2022.

The Finance Minister stated this during the second day of the National COVID-19 Summit where stakeholders discussed the Theme: “Pushing Through the Last Mile to End the Pandemic and Build Back Better”.

Ahmed, who was represented by the Director General of Budget Office, Ben Akabueze, said that before the pandemic, about two million Nigerians were expected to fall into poverty by 2020 as population growth outpaced economic growth.

According to her, before the pandemic COVID-19, 6.6 million Nigerians were pushed into poverty in 2020 by the recession bringing the total newly poor to 8.6 million in the same year.

“This implies an increase in the total number of poor in Nigeria from about 90 million in 2020 to about 109 million in 2022”, she said.

Ahmed listed a vulnerable employment; lower remittances and being close to the poverty line as some of the factors responsible for the increase in poverty.

On the impact of COVID-19 on the country’s economy she noted that Nigeria’s total trade, driven by the slumped in exports, contracted by N3:731.49 billion (10.32 per cent) from N36,152.11 billion in 2019 to N32,420.71 billion in 2020. Export declined by N6,669.55 billion (43,75 per cent) to N12,522.67 billion while imports galloped by N2,2938.15 billion (17.32 per cent) to N19,898.03 billion in 2020.

She said this led to a significant trade deficit of N7.375 trillion billion in the review period from a surplus of N2.232 trillion in the 2019 fiscal year. The decline in exports as across all segments.

The minister added the country’s outstanding debt rose by N5.51 trillion or 20.12 per cent to N32.92 trillion as at December 2020 from N27.40 trillion in December 2019. Partly from new external borrowings comprising $3.4 billion budget support facility from the IMF, and the IDA of $1.2 billion, among others largely induced by COVID.

She stressed that domestic debt stock also increased by N1.83 trillion to N20.21 trillion. Total reported public Debt/GDP as at December 31, 2020 rose by 3.61 percentage points to 21.61 per cent from 19 per cent at end of 2019 however, is sustainable.

Ahmed also said Brent Crude Oil price fell to as low as $7.15 per barrel in April 2020 from $67.91 per barrel at end of 2019 an 89.46 per cent decline over the period. The price she said quickly rebounded to over $51 per barrel as at the end of the year.

The finance minister, speaking in the federal government health sector financing, said the budget for sector has more than doubled in nominal terms over the past five years.

She said the budget increased by 123.6 per cent from N305.06 billion in 2016 to N682.13 billion in 2021. Inclusive of about N82 billion transfers to NHIS made possible by key and strategic interventions.

“This was further increased by N137 billion or 20 per cent to N820.2 billion in the 2022 proposed budget.”

Ahmed said: “The COVID-19 pandemic has impacted negatively on global economic activities affecting both developed and developing countries alike.

“The impact was disproportionately higher for developing countries particularly for those with poor health systems and those with higher cross border activities.

“Economies with lower fiscal buffers and/or higher fiscal distress we’re also less capable of intervening and therefore also more heavily affected.

“Nations generally experienced both health and economic impacts, albeit in varying degrees.

“The nature of the pandemic also meant that the measures to the curtail the health impact were reinforcing/aggravating the economic impacts on nations.

“The pandemic reaffirmed the need for adequate and appropriate funding for the health sector globally, but has equally made domestic resource mobilization in support of this goal critical; in this regard, we are contemplating earmarked taxes for the health sector.

““Very importantly the COVID-19 crisis has further reaffirmed the need to build fiscal buffers that is critical for the next pandemic that is certain to come in the future.

“The FGN is therefore coordinating efforts among all tiers of government to face the difficult task of restoring the nation to a more secure future by tackling both the health and economic impacts of the pandemics, “she said.