The poverty paradox: Why Nigerians are getting poorer

A country can post stronger reserves, higher revenues, and improved investor confidence, yet leave its citizens poorer. That is Nigeria’s paradox today. On the surface, reform language is encouraging: a more market-reflective exchange rate, narrowed fiscal leakages, improved reserves, and rising government revenues after petrol subsidy removal and FX unification. The World Bank projects growth of […]

A country can post stronger reserves, higher revenues, and improved investor confidence, yet leave its citizens poorer. That is Nigeria’s paradox today.

On the surface, reform language is encouraging: a more market-reflective exchange rate, narrowed fiscal leakages, improved reserves, and rising government revenues after petrol subsidy removal and FX unification. The World Bank projects growth of 4.2 per cent annually between 2026 and 2028, with inflation expected to moderate.

On paper, this looks like a recovery. But poverty does not live on paper. It lives in the rising cost of garri in Bodija, in shrinking rice measures in Kano, in transport fares that decide whether a worker gets to work, and in mothers’ quiet arithmetic of who eats first.

The World Bank’s latest Nigeria Development Update captures this contradiction: poverty rose to 63 per cent in 2025, up from 56 per cent in 2023. Roughly 140 million Nigerians now live below the poverty line, one of the largest concentrations of poverty globally. Household incomes have not grown fast enough to offset inflation.

This is not just a statistical contradiction but a reminder of the gulf between national recovery and human survival. For years, Nigeria postponed reforms as politics trumped economics. The petrol subsidy became a fiscal black hole, consuming trillions while benefiting wealthier households. Multiple exchange rates encouraged arbitrage and rent-seeking. Public finance became less a tool of development than a structure of leakages and privileged access.

Reforms were inevitable, but relief at the bottom has not followed. The deeper paradox is what economists Daron Acemoglu and James Robinson argue in Why Nations Fail: countries are poor not for lack of resources or effort, but because of institutions shaped by those in power. “Poor countries are poor because those who have power make choices that create poverty,” they write.

This is Nigeria’s reality. Poverty persists not because solutions are unknown, but because systems reward extraction over productivity. Their famous illustration is Nogales, a city split by a fence between two countries. Same geography, culture, and families, yet vastly different incomes. The difference lies in institutions: rule of law, public services, property rights, and accountability. The same applies to North and South Korea, identical people, divergent outcomes, because one built inclusive institutions and the other entrenched extractive ones.

Inclusive institutions protect property rights, reward innovation, encourage enterprise, and spread opportunity. Extractive ones concentrate wealth, suppress competition, and preserve elite advantage. Nations fail economically because of extractive institutions.

Nigeria’s poverty paradox is rooted here. Nigerians are not poor for lack of enterprise. They are poor because the system rewards privilege over inclusion, patronage over productivity. Subsidy regimes were captured by elites. Public spending has weak multiplier effects. Farmers bear enormous risk but capture little value. Social protection is too thin to change deprivation. Financial liberalisation benefits investors faster than market women. As reforms are implemented, growth accumulates upward.

Thus, the poor experience reform not as correction but as sacrifice without reward. And perception matters. Economic policy is not judged only by reserves or IMF praise. It is judged by whether citizens believe tomorrow can be better than today. When reform loses social legitimacy, even sound policy becomes fragile.

The danger of the poverty paradox is not only that Nigerians are poorer, but that prolonged hardship erodes trust in reform itself. Government must, therefore, move from economic repair to economic inclusion.

First, inflation control must remain central, not only through monetary tightening but through food supply reforms: security in farming communities, irrigation, rural roads, storage, and logistics. Through much of 2024 and early 2025, Nigeria’s inflation rate remained above 30 per cent, while food inflation climbed even higher in several months. For poor households, whose incomes are spent largely on food and transport, inflation is not an abstract macroeconomic indicator; it is a daily tax on survival.

Second, growth must shift from extraction to production. Industrial clusters, mini-grids, agro-processing zones, and MSME credit expansion will reduce poverty more meaningfully than headline reserve accumulation.

Third, social protection must become a serious national policy, not an occasional intervention. Brazil reduced poverty through Bolsa Família, a targeted cash transfer programme that supported households while improving school attendance and healthcare. Indonesia managed fuel subsidy reforms by expanding direct transfers. India built one of the world’s largest digital welfare systems to improve targeting and reduce leakages.

Nigeria talks often about cash transfers, but implementation remains inconsistent, politicised, and too small relative to need. Poverty cannot be managed with pilot schemes.

The call to action is clear: reforms must be judged not by the applause of markets but by the relief felt in households. Nigeria’s future depends on building institutions that reward productivity, protect the vulnerable, and restore faith that sacrifice today can mean prosperity tomorrow. Without inclusion, recovery will remain a paradox, growth without progress, reform without hope.