The Unassuming Economist

The latest IMF country report on Nigeria finds that “Income inequality and poverty rates are high in Nigeria, with the latter having declined more slowly compared to other countries. At the same time, moving closer to achieving the sustainable development goals and addressing Nigeria’s large development needs will require additional financing. This chapter finds that reforms to generate fiscal space—increases in value-added tax collection, excises, and electricity tariffs—are progressive, i.e. they reduce income inequality. However, they increase poverty gaps and rates to varying extents. Scaling up social safety net transfers and expanding their scope to cover a wider share of the poor can, to some extent, compensate for these adverse impacts at relatively low cost, and bring down poverty rates more generally. In the short term, other measures to shield vulnerable households’ income, including through lifeline electricity tariffs, and higher spending on health and education are needed.”