With the right policies, Nigeria can leverage trade to reduce poverty

The World Bank says the Russian-Ukrainian war, the COVID-19 pandemic and rising inflation pose challenges to Nigeria’s poverty reduction goals.

World Bank economists Jonathan Lain and Jakob Engel said so in a recent blog post.

The Washington-based institution, however, said trade could be a life-saving solution.

He said that through its effects on investment, technology transfer and competition, trade can contribute to growth – by stimulating job creation, increasing domestic value added and lowering the price of goods that Nigerians buy along the way.

“Nigeria’s aspiration to lift all its people out of poverty by 2030 represents a serious challenge,” the bank said.

“Even before COVID-19, four out of 10 Nigerians lived below the national poverty line, or some 80 million people.

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

“In Nigeria, many policies restrict trade; the country is not unique in this respect, as protectionist policies have been on the rise around the world and the ongoing war in Ukraine could make it worse.

“Over the past two decades, import bans, tariffs and foreign exchange restrictions have all impeded the flow of goods to Nigeria.

“These restrictive policies culminated in Nigeria closing its land border for over a year in August 2019. Nigeria is also currently negotiating the terms of its participation in the African Continental Free Trade Agreement (AfCFTA); therefore, trade policy discussions are highly topical.

According to the World Bank, specific government policies may therefore be needed if the gains from trade liberalization in Nigeria are to be reaped.

He recommended the provision of social protection to support households whose well-being is at risk.

He also advised the government to implement deeper reforms such as improving labor mobility between states and helping workers retrain in sectors where jobs and revenues benefit from greater exposure to international markets.

“Additionally, broader reforms that promote sustainable growth and share its income with poor and vulnerable Nigerians could help households that could lose out if trade is liberalized; these include macro-economic reforms that diversify the economy away from oil, spur structural transformation, and boost the creation of wage employment as well as investment in infrastructure to help households access markets and economic opportunities,” the bank said.

“With the right mix of complementary policies, Nigeria can leverage trade as a pathway to poverty reduction.”

In June 2021, President Muhammadu Buhari launched a steering committee on the National Strategy for Poverty Reduction and Growth (SNPRG).

He said the committee would reflect his commitment to lift 100 million Nigerians out of poverty in 10 years, with a well-documented framework for implementation and financing.