Ring-Fencing Finance for a Sustainable and Inclusive Social Protection System in Nigeria

BY PAUL ODOKARA

This article is published under the Act Naija! Civil Society Action to Strengthen Social Protection in Nigeria project, implemented by the Bread for the World Germany, Africa Network for Environment and Economic Justice (ANEEJ) and New Initiative for Social Development (NISD) which is co-funded by the European Union (EU).

The alarming rise in poverty in Nigeria continues to generate deep concern, especially given the nation’s vast human and natural resources. According to the World Bank’s latest Nigeria Development Update, the number of Nigerians living in poverty has soared from 80 million (40%) in 2019 to about 139 million (61%) in 2025. Even more troubling is the projection that this figure could reach 141 million by 2026—a stark reminder of the urgent need for structural reform. Despite successive administrations implementing various social protection programmes, the depth and spread of poverty have continued to widen across regions and generations.

One viable strategy to reverse this distressing trend is the ring-fencing of finance—a deliberate and institutionalized commitment at both national and sub-national levels to allocate a fixed percentage of the budget to fund social protection schemes. This financial earmarking is not just a budgeting choice but a strategic instrument for sustainability and inclusion. It guarantees that essential social protection programs receive predictable funding, protecting vulnerable populations from policy inconsistencies and political transitions.

Current Landscape and Challenges

Nigeria’s social protection landscape is characterized by fragmentation, duplication, and underfunding. The International Labour Organization (ILO) reports that only 14.8% of Nigerians are covered by at least one form of social protection, far below the global average of 52.4% and the African average of 19.1%. In 2021, the country devoted only 0.14% of its GDP to social protection—one of the lowest figures globally for low- and middle-income economies. This chronic underinvestment undermines program efficiency and perpetuates poverty. Without adequate and protected funding, social protection cannot fulfil its role as a safety net or as a catalyst for inclusive growth. Ring-fencing, therefore, becomes not only a policy priority but also a moral and developmental imperative.

The Urgency of Domestic Financing

As international aid from OECD countries and donor agencies continues to decline, developing nations like Nigeria must look inward for sustainable solutions. Innovative domestic financing models are urgently needed to fund social protection systems that can reduce poverty and foster decent work opportunities for the country’s rapidly expanding youth population. The call for homegrown financing is both practical and patriotic—it ensures ownership, accountability, and resilience of social programmes even in the face of fluctuating global aid.

Building a Framework for Sustainable Financing

Stakeholders at a recent National Dialogue on Social Protection, convened by ANEEJ in collaboration with the Federal Ministry of Humanitarian Affairs and Poverty Alleviation under the Act Naija – Civil Society Action to Strengthen Social Protection in Nigeria initiative, emphasized the importance of dedicating a consistent share of both national and state budgets to social protection. Institutionalizing such allocations would guarantee continuity and reduce the vulnerability of programmes to fiscal uncertainties and political changes.

The government can complement this by creating a Social Protection Basket Fund, supported by contributions from private corporations and multinational companies. This fund should operate under a multi-stakeholder governance framework—bringing together government, civil society organizations, and the private sector—to ensure transparency and accountability in resource utilization.

Expanding Nigeria’s tax base is another crucial step. By widening the tax net and ensuring compliance among individuals and corporate entities, the government can enhance public revenue, providing a more stable foundation for social spending. Additionally, the gains from asset recovery efforts should be channeled into social protection programmes. Nigeria has successfully reclaimed assets worth billions of naira from various corruption cases, and a portion of these recovered funds could serve as a sustainable source of financing for poverty alleviation.

Combating corruption and illicit financial flows must also remain a priority. Strengthening anti-corruption institutions to investigate, prosecute, and recover stolen funds—particularly from politically exposed persons—will not only plug leakages but also demonstrate government commitment to inclusive governance and fiscal justice.

To sustain these efforts, there is a pressing need for legislative reforms mandating budgetary provisions for social protection at all levels of government. Social protection should not be viewed as charity but as a constitutional rightaligned with Articles 22 and 25 of the Universal Declaration of Human Rights (1948) and Chapter 2, Section 14 of Nigeria’s 1999 Constitution (as amended).

Institutionalizing Social Protection

Civil society organizations have a crucial role in ensuring accountability and policy coherence. There is an urgent need to strengthen the National Social Investment Program Agency Act (2023) to institutionalize social protection and shield it from political interference. This will ensure continuity of programmes and fair targeting of beneficiaries regardless of administration changes. Efforts must also be directed toward updating the National Social Register to improve the accuracy of data and the targeting of interventions, ensuring that assistance reaches the most vulnerable.

Learning from Global Best Practices

Nigeria can learn from other countries that have effectively institutionalized social protection. Ghana funds its National Health Insurance Scheme through a dedicated health levy; South Africa’s constitution guarantees social grants, while Kenya’s Social Assistance Act mandates financial provision for vulnerable citizens. These examples underscore that long-term sustainability in social protection depends on strong legal and fiscal frameworks that guarantee funding and continuity.

The way forward

As the world observes the International Day for the Eradication of Poverty under the theme “Ending Social and Institutional Maltreatment by Ensuring Respect and Effective Support for Families,” Nigeria must respond decisively. Ring-fencing social protection funds is one of the most pragmatic ways to uphold the dignity of millions of families dehumanized by poverty. It represents a moral contract between government and citizens—a commitment that no Nigerian should be left behind due to economic hardship or institutional neglect.

Conclusion

In a period of rising poverty, shrinking fiscal space, and diminishing foreign aid, ring-fencing finance for social protection is not an option—it is a necessity. Adequate and predictable funding will not only alleviate poverty but also enhance productivity, reduce the number of out-of-school children, and contribute to national stability by addressing some root causes of insecurity.

Nigeria must now look inward—mobilizing domestic resources, combating corruption, and managing finances prudently. Through deliberate action, transparent budgeting, and inclusive governance, the country can build a sustainable future where poverty is not a destiny but a challenge overcome through responsibility and collective resolve.

• Paul Odokara is the FCT Programme Officer of Act Naija! Civil Society Action to Strengthen Social Protection in Nigeria.