Taming Household Poverty in Nigeria Likely to Gulp $2.4bln, World Bank Warns
The World Bank report reveals that climate shocks are increasingly contributing to poverty in emerging markets and developing economies (EMDEs), with Nigeria highlighted as one of the most affected countries.
Its requirement in this direction is estimated at $2.4 billion, equivalent of about 0.6% of its Gross Domestic Product (GDP), to shield its households from falling into poverty after experiencing a climate shock.
This projection, according to the World Bank’s latest Finance and Prosperity 2024 shows the severe financial impact that climate-related events, such as droughts or floods, could have on vulnerable Nigerian households.
The report read: “Understanding the impact of climate shocks on household poverty is crucial for determining the extra financial assistance required to prevent households from falling into poverty after a shock. This can be done by matching weather data with survey responses from households on their income and welfare needs.
The World Bank therefore suggests that Nigeria adopt a comprehensive financial resilience strategy that includes savings, credit, and insurance.
Such a strategy can help households build wealth, manage income fluctuations, and access necessary funds during times of crisis.
The government is also encouraged to subsidize insurance premiums initially, giving households time to accumulate savings and reduce their vulnerability to future climate shocks.
The report added that “the Nigerian government can play a role by subsidizing insurance premiums in the initial years to provide households time to build savings to cover the needs of moderate shocks and to incentivize the private sector to distribute the products while they reach scale.”
Last year, the National Bureau of Statistics (NBS) reported that the Nigerian floods in 2022, which tragically took the lives of hundreds, resulted in significant damage costs between $3.79 billion and $9.12 billion.
The Minister of State for Agriculture and Food Security, Sen. Abdullahi Sabi Aliyu recently said that up to 51% of farming areas in Nigeria are liable to flooding in 2024.