The International Monetary Fund (IMF) has called on the Nigerian government to scale up its cash transfers to help poor Nigerians manage the current cost of living crisis. cost of living crisis
Axel Schimmelpfennig, IMF’s Assistant Director, African Department and Mission Chief to Nigeria, made this call at the briefing on Nigeria’s Article IV Consultation on Thursday.
He said: “On fiscal policy, we very much recognised the pain that many Nigerians are facing at the moment. Hence, our emphasis on scaling up the cash transfer programme. It can potentially reach up to 50 million recipients, and that is potentially benefit some 65 million Nigerians in need.”
Nigerians under lots of pain
The IMF also acknowledged the pain Nigerians are going through due to rising inflation and ongoing reforms.
Schimmelpfennig said: “There is a lot of pain for Nigerians right now, and our policy advice aims to provide support to those in need while reinvigorating growth and job creation.”
He noted: “We encourage that the cash transfer system and other support systems are implemented. We emphasise that it is very important to scale those up to help Nigerians manage the ongoing cost of living crisis.”
Schimmelpfennig further said that the Fund supports the Central Bank’s commitment to bringing down inflation, which hurts the poor disproportionally.
Low revenue hampers fiscal policy
In its latest staff report for Nigeria, the IMF noted fiscal policy in Nigeria is limited due to low government revenue, which is about 9.4% of the country’s Gross Domestic Product (GDP).
The report read: “Fiscal policy needs to support vulnerable households, create space to boost social and development spending, and maintain debt sustainability. Fiscal policy is held back by one of the lowest revenue takes in the world of 9.4 percent of GDP in 2023.
“As the government finalizes and presents its reform agenda, sequencing will be key to ensure safety nets are in place or strengthened before proceeding with other measures that could adversely impact poor and vulnerable households.”
The report further stressed the need for the Federal Government to reprioritise expenditures to ensure social protection.
It read: “Expenditure reprioritization is needed to create space for social protection and other priority spending. The authorities have recently approved an enhanced social transfer mechanism developed with World Bank support, and some initial payments have been made.
“In response to governance concerns, the authorities automated and digitalized the system to build a robust mechanism that delivers swift and targeted support to vulnerable households—some 15 million households or 60 million Nigerians potentially benefit from the scheme. Once the safety net has been scaled up and inflation subsides, the government should tackle implicit fuel and electricity subsidies.”
What you should know
▪︎The World Bank recently said that cash transfers can help save Nigerians from intergenerational poverty traps as inflation and low economic growth adversely affect the poor.
▪︎However, new research by the World Bank revealed that the conditional cash transfer program of the Federal Government since 2016 has little effect on household consumption, financial inclusion or employment of beneficiaries, especially women.
▪︎The Federal Government had to suspend the cash transfer programme for further investigation and revamping following alleged misappropriations within the programme.
▪︎Betta Edu was earlier suspended as a humanitarian affairs minister due to the misappropriation of N585 million earmarked for palliative distribution.
▪︎Also, Edu’s predecessor, Sadiya Umar-Farouq, is being investigated by the EFCC. The ex-minister is being probed over an alleged laundering of N37.1 billion during her tenure as a minister.
▪︎The Federal Government recently said that it has revamped its cash transfer program to combat fraud, with immediate implementation of direct payments.
