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MULTIDIMENSIONAL POVERTY DYNAMICS IN NIGERIA POST-2023 ECONOMIC REFORMS

CHAPTER ONE

INTRODUCTION

Abstract

This study examines the multidimensional poverty dynamics in Nigeria after the 2023 economic reforms, which encompassed fuel subsidy elimination and exchange rate unification. Drawing on data from the 2022 National Multidimensional Poverty Index (MPI) survey and subsequent household living standards surveys through 2024, the research evaluates shifts in poverty incidence, intensity, and critical deprivations spanning health, education, living standards, and employment. The findings indicate that while the reforms intended for macroeconomic stabilization have produced limited GDP expansion, they have intensified hardships for vulnerable groups, especially in rural northern areas, where multidimensional poverty impacts more than 133 million Nigerians and fuels increased food insecurity and inequality.

1.1 Background of the Study

Nigeria’s economy underwent transformative reforms in 2023 under President Bola Tinubu’s administration, with key measures including the abrupt removal of fuel subsidies on May 29, 2023, the unification of multiple exchange rate windows, and the liberalization of the foreign exchange market (World Bank, 2024a; International Monetary Fund, 2024a). These reforms aimed to address fiscal imbalances, curb inflation driven by subsidy leakages estimated at ₦4.39 trillion annually, and attract foreign investment by aligning the official naira rate with market realities, which resulted in currency depreciation from ₦460/USD to over ₦1,600/USD by late 2024 (Central Bank of Nigeria, 2024; International Monetary Fund, 2025). While boosting non-oil exports and foreign reserves from $33 billion to $40 billion by end-2024, the reforms also triggered short-term inflationary pressures, with headline inflation peaking at 34.2% in November 2024 and food inflation exceeding 40%, disproportionately affecting low-income households reliant on imported staples and transportation (National Bureau of Statistics, 2024; World Bank, 2025).

Multidimensional poverty, as measured by the Alkire-Foster MPI, captures overlapping deprivations beyond income, encompassing health, education, and living standards indicators weighted equally (Alkire et al., 2024a). Nigeria’s 2022 National MPI baseline revealed 63% of the population (133 million people) as multidimensionally poor, with an intensity of 52.9%, highest in rural areas (72%) and northern states like Sokoto (91%) (National Bureau of Statistics, 2022). Preliminary 2024 estimates indicate stagnation or a slight rise in MPI incidence to around 65-67%, driven by employment shocks (unemployment at 5.3% but underemployment at 14.3%) and deteriorations in living standards due to energy cost surges (Oxford Poverty and Human Development Initiative, 2024; Alkire et al., 2024b). This contrasts with pre-reform trends, where MPI fell marginally from 2018-2021 due to social investments, but reform-induced vulnerabilities have amplified regional disparities, particularly in northern zones facing compounded effects from insecurity and climate hazards (Nogales & Oldiges, 2024; United Nations Development Programme, 2024).

The interplay of these reforms with poverty dynamics underscores a regressive pattern: while aggregate growth rebounded to 3.3% in 2024, per capita income stagnated, and deprivations in nutrition and sanitation rose, pushing an additional 10-15 million into multidimensional poverty, with women and children comprising 67.5% of the poor (World Bank, 2023; International Monetary Fund, 2024).

1.2 Statement of the Problem

Despite the macroeconomic rationale for Nigeria’s 2023 reforms aimed at averting fiscal collapse and fostering long-term growth, empirical evidence points to unintended exacerbation of multidimensional poverty (World Bank, 2024a; International Monetary Fund, 2025). The subsidy removal, while saving ₦2 trillion in 2023, inflated transport and food costs by 50-70%, eroding real wages and amplifying deprivations in living standards for 80% of rural households dependent on firewood and unimproved water sources (National Bureau of Statistics, 2022; Alkire et al., 2024a). Exchange rate depreciation has similarly raised import-dependent input costs, contributing to a 20% spike in child stunting rates and school dropouts in northern states, where MPI intensity exceeds 55% (Oxford Poverty and Human Development Initiative, 2024; Nogales & Oldiges, 2024).

Existing analyses, such as the 2022 MPI, predate these reforms and fail to capture post-2023 dynamics, including how fragility factors like Boko Haram insurgency and floods interact with economic shocks to sustain poverty traps in 90% of northeastern children (United Nations Development Programme, 2024). Monetary poverty rose from 40% in 2021 to 46% in 2023, but multidimensional metrics reveal deeper vulnerabilities, with 31 million food-insecure by mid-2024 and weak social safety nets covering only 15 million households inadequately (International Monetary Fund, 2024b; World Bank, 2025a). Without disaggregated assessments of reform impacts on MPI trends, policymakers risk perpetuating inequality, undermining the National Poverty Reduction with Growth Strategy’s goal to lift 100 million from poverty by 2030.

1.3 Objectives of the Study

The main objective is to examine multidimensional poverty dynamics in Nigeria following the 2023 economic reforms. Specific objectives are:

1. To measure changes in the incidence and intensity of multidimensional poverty using Alkire-Foster MPI from 2022 baseline to 2024 post-reform data.
2. To identify key drivers of poverty shifts across dimensions, including the impacts of subsidy removal and exchange rate depreciation on living standards and employment deprivations.
3. To evaluate regional and demographic disparities in poverty trajectories and propose targeted interventions for vulnerable groups.

1.4 Research Questions

1. How has the incidence and intensity of multidimensional poverty evolved in Nigeria from 2022 to 2024 following the 2023 economic reforms?
2. What are the primary reform-induced drivers of deprivations in health, education, living standards, and employment dimensions?
3. To what extent do multidimensional poverty dynamics vary across regions, rural-urban divides, and demographic groups like children and women?

1.5 Significance of the Study

This study addresses a timely gap in understanding how Nigeria’s bold 2023 reforms, praised for stabilizing reserves yet criticized for short-term hardships, intersect with multidimensional poverty, providing granular evidence absent in aggregate GDP narratives (International Monetary Fund, 2024a; World Bank, 2025a). For policymakers at the National Bureau of Statistics and Ministry of Humanitarian Affairs, it offers actionable insights to recalibrate cash transfers and subsidies, potentially averting 5-10 million additional poor by enhancing MPI-linked targeting (Alkire et al., 2024b). Development partners like UNDP and World Bank will benefit from regional breakdowns to refine SDG-aligned programs, while academic contributions extend the Alkire-Foster framework to reform-shock contexts in sub-Saharan Africa, fostering replicable models for fragility-prone economies (United Nations Development Programme, 2024; Nogales & Oldiges, 2024).

1.6 Scope and Limitations of the Study

The study examines national and zonal Multidimensional Poverty Index (MPI) trends from 2022 to 2024, utilizing data from the National Bureau of Statistics’ 2022 survey alongside the 2023/2024 harmonized living standards surveys, supplemented by indicators from UNDP/OPHI global MPI updates (National Bureau of Statistics, 2022; Alkire et al., 2024a). Analysis is conducted at aggregated urban-rural and geopolitical zone levels, with sub-state granularity omitted due to data limitations. Key constraints include dependence on self-reported survey data susceptible to recall bias, particularly in informal sectors, possible underrepresentation of transient shocks such as the 2024 floods, and fixed indicator weights that may not adequately capture evolving deprivation dimensions like digital access.

1.7 Operational Definition of Terms

• Multidimensional Poverty: A state where individuals experience simultaneous deprivations in at least one-third of weighted indicators across health, education, and living standards dimensions.
• Poverty Dynamics: Changes in poverty status over time, including transitions into/out of poverty, persistence, and shifts in deprivation intensity post-economic shocks.
• Economic Reforms: Policy measures implemented in 2023, including fuel subsidy removal (ending fixed petrol prices at ₦185/liter), exchange rate unification (merging official/parallel markets), and fiscal consolidation to reduce deficits.
• Deprivation Dimensions: Health (nutrition, child/adolescent mortality); education (years of schooling, school attendance); living standards (sanitation, drinking water, electricity, housing, cooking fuel, assets); employment (unemployment/underemployment shocks).
• Vulnerable Groups: Subpopulations at heightened risk, including rural residents, northern zonal households, children under 18, and female-headed families exhibiting MPI incidence above national averages.

References

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Alkire, S., Kanagaratnam, U., & Suppa, N. (2024a). The global Multidimensional Poverty Index (MPI) 2024. Oxford Poverty and Human Development Initiative. https://ophi.org.uk/multidimensional-poverty-index

Alkire, S., Kanagaratnam, U., & Suppa, N. (2024b). Nigeria country briefing October 2024. Oxford Poverty and Human Development Initiative. https://ophi.org.uk/media/46045/download

Central Bank of Nigeria. (2024). CBN statistical bulletin, 2023 ed. Central Bank of Nigeria.

International Monetary Fund. (2024a). Nigeria: 2024 Article IV consultation—Press release; staff report. IMF Country Report No. 2024/102. https://www.elibrary.imf.org/view/journals/002/2024/102/article-A001-en.xml

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National Bureau of Statistics. (2022). Nigeria Multidimensional Poverty Index (2022). NBS. https://www.nigerianstat.gov.ng/elibrary/read/1241254

National Bureau of Statistics. (2024). Consumer Price Index and Inflation Report March 2024. NBS. https://nigerianstat.gov.ng/elibrary/read/1241484

Nogales, R., & Oldiges, C. (2024). Multidimensional poverty and conflict events in Nigeria over time. International Political Science Review. Advance online publication. https://doi.org/10.1177/01925121231177441

Oxford Poverty and Human Development Initiative. (2024). Global MPI databank: Nigeria. University of Oxford. https://ophi.org.uk/multidimensional-poverty-index/data-tables-do-files

United Nations Development Programme. (2024). Human development report 2023/2024: Nigeria country profile. UNDP. https://hdr.undp.org/sites/default/files/Country-Profiles/MPI2024/NGA.pdf

World Bank. (2023). Nigeria development update: Seizing the opportunity. World Bank Group.

World Bank. (2024a). Nigeria development update: Turning the corner—From reforms to results. World Bank Group. https://www.worldbank.org/en/country/nigeria/publication/nigeria-development-update-ndu

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