Economy
The recent report of the National Bureau of Statistics that 133m Nigerians are living in poverty suggests that the current socio-economic policies and poverty eradication strategies of the government have only pushed more Nigerians into poverty rather than lifting them out. There is therefore an urgent need for a rethink and come up with workable strategies that can tackle rising poverty in the country.
By Anthony Isibor
IT is both ironical and inconceivable that a country with a Gross Domestic Product, GDP of $440 billion and the largest economy in Africa has 63% (133 million) of its population living in poverty.
The recent report from the National Bureau of Statistics, NBS, which confirmed this development, indicated that the report was a result of the 2022 Multidimensional Poverty Index, MPI, Survey, which took a sample of over 56,000 households across the 36 states of the Federation and the FCT, between November 2021 and February 2022, and provided multidimensional poverty estimates at senatorial district level.
The country’s poverty levels have been attributed to the failure of nationhood and governance. According to the Institute for Governance and Economic Transformation, IGET, the political elite has placed a considerably greater emphasis on self-serving state capture for patronage and sectarian interests than on a sincere desire to end poverty.
IGET blamed Nigeria’s poverty rate on a broken and corrupt political system, which has created the wrong priorities, a sectarian interests and the dominant partisan political reward system combined, which supersede knowledge and competence in public policy, and which also steadily undermine state capacity and state institutions, encouraging knowledge gaps and incompetence in key decision-making positions.
Although the government has continued to reel out social-economic policies intended to lift the population out of poverty, its efforts have only succeeded in creating more impoverished citizens.
Nigerians are finding it more difficult to carry on their daily activities and even pay for their basic social needs by the day.
The lack of electricity which has been made worse by the scarcity of petroleum products only goes to increase the number of small/medium business that may go out of business.
In September 2022, the World Bank raised the previous worldwide poverty limit from $1.90 to $2.15 per day, a definition of extreme poverty, which differs from the conventional definition of poverty as having an income of less than $5.50 per day.
According to a World Bank report, this means that more than 90% of Nigerians live in poverty when compared to the $5.5 daily poverty limit.
However, poverty levels cannot be measured by monetary conditions alone says the IGET, which is an independent, nonpartisan and innovative public policy think tank in its own report, it noted that multidimensional approach to poverty is necessary because poverty in itself is difficult to define precisely.
The non-financial aspects of poverty include situations such as material squalor, impotence, social exclusion and powerlessness, lack of opportunities, lack of education, and sub-par living conditions.
IGET noted also that a multidimensional approach is required to measure poverty because monetary based assessments ignore a lot that also matter, thus, economic growth does not always result in a decline in poverty or deprivation.
In its poverty report, people live in poverty for a variety of reasons such as inequality and marginalization, conflict, a lack of education and skills, lack of employment or other means of support, high food prices that reduce their purchasing power, the effects of climate change such as floods and droughts, lack of savings, inadequate social welfare and social security programmes provided by the government and unchecked population growth.
“Nigerian poverty is notable in particular because it has been escalating amid a sizable, expanding economy that has largely excluded a vast majority of the population.
“Nigeria’s unchecked population growth in the midst of the current high poverty rates also contributes to the perpetuation of the poverty trap and makes it intergenerational in nature. If this tendency is not reversed, it will have detrimental effects on Nigeria’s future.
For instance, gendered poverty, which is caused and maintained by gender-specific issues such gender inequality, discrimination, and exclusion, is a significant component of Nigeria’s poverty trap. These gender-specific aspects of poverty serve as a good illustration of multidimensional poverty.
“At current trends, Nigeria will not be able to end extreme poverty for 35 million people by 2025, or for 100 million Nigerians within the next 10 years, as indicated in its National Development Plan and other policy pronouncements by the government.” Says the IGET report.
It is clear therefore that much needs to be done to help lift millions of Nigerians out of poverty. Some of the recommended approaches and interventions by the IGET report include:
A transformation of the political and elite space: it is essential that an elite consensus be framed, and a bargain struck, that taking 100 million Nigerians out of extreme poverty is the primary goal of politics and governance alongside the imperative of national security.
This is the elite consensus approach, which is anchored more on political economy than simply on technical policy, accords with the reality that the factors that most affect Nigeria’s economy, including the prevalence of poverty, low productivity and systemic corruption, are mainly issues of political economy – the relationships between individuals, government and its institutions and public policy.
Thus government focus must shift to creating opportunities and investments for wealth-creation for the urban and rural poor rather than self-seeking advantages.
ii. Removal of N4 trillion subsidy should be accompanied by investments in subsidised public transport systems.
iii. The incoming Nigerian government after the elections in February 2023 should increase public spending on health and education, bolster productive jobs, and improve the effectiveness of social protection. The share of the education and health sectors in the federal government and state governments’ budgets should ideally be not less than 20% for education and 15% for health.
iv. Implementing pro-poor initiatives will require unlocking fiscal space; abolishing expensive subsidies for consumption (including petrol subsidies), alongside countervailing measures to protect the poor as reforms are effected.
The IGET also recommends that Nigeria must abolish the fiscal practice, which is based on questionable assumptions about petrol consumption levels.
“Other structural reforms guided by evidence are urgently needed to foster and sustain pro-poor growth and raise Nigerians out of extreme poverty. These include macroeconomic reforms that include expanding the tax net for improved fiscal revenue generation, but not raising taxes on businesses or consumers, introducing a wealth tax for Nigerians with very high levels of personal wealth, reduction of waivers to individual companies with the exception of tax reductions-for-infrastructure construction deals, and the abolition of multiple taxations on small businesses.
“Other necessary reforms include exchange rate policy reform, in particular, ending multiple exchange rates that encourage arbitrage and corruption; policies to boost the productivity of farm and non-farm household enterprises; realistic electricity tariff rates in return for accountability of power generation and distribution companies for the provision of reliable electricity, investments in green energy sources, more effective provision of water, and sanitation (including incentives for businesses involved in providing such basic needs) and bolstering information and communication technologies, in particular broadband access.
“A new approach to the setting of the minimum wage, currently at N30,000 a month, is required. The minimum wage needs to be more frequently reviewed and revised, in order to maintain a wage level that is closer to the reality of food and other prices. At the least, the minimum wage needs to be reviewed upward to match or surpass the current extreme poverty level of income of $2.15 a day.
“Empowerment of (poor) women by assuring their access to productive assets and their participation in political decision-making. Gender-specific reforms, such as in the availability of microfinance at single-digit interest rates and improved rights to own land, are necessary to address the gender dimensions of poverty in Nigeria. The Federal Government of Nigeria needs to ensure urgent, robust, and visible-impact implementation of its National Gender Policy on Agriculture, launched in 2019.
“Other social protection programs should be focused on persons with disabilities, temporary unemployment support (not more than 12 months) for young people, conditional upon undergoing skill acquisition training, and conditional cash transfers for poor families linked to school enrolment for their children. Greater use should be made of data from the mobile telephone ownership across the country for more accurate targeting of these programmes.
“Lastly, given that poverty increases with the number of household members (or family size) in both male and female-headed households, there is an urgent need to intensify family planning services and related activities in Nigeria,” IGET said.
Perhaps, these structural reforms may just appeal to the new government in 2023, which Nigerians are daily praying for in order to rescue the nation, which has been graded among the poverty capitals of the world, dreaded by foreign investors for its security challenges and the nation’s huge debt stock nightmare.
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Tags: Anthony Isibor Institute for Governance and Economic Transformation National Bureau of Statistics
