write an essay on poverty in nigeria

Deep Structural Reforms Guided by Evidence Are Urgently Needed to Lift Millions of Nigerians Out of Poverty, says New World Bank Report

Abuja, March 22, 2022 – Sluggish growth, low human capital, labor market weaknesses, and exposure to shocks are holding Nigeria’s poverty reduction back says a new World Bank report “A Better Future for All Nigerians: Nigeria Poverty Assessment 2022”. The report represents the culmination of the World Bank’s engagement on poverty- and inequality-relevant data and analytics in Nigeria in the past two years. It draws primarily on the 2018/19 Nigerian Living Standards Survey (NLSS), which provided Nigeria’s first official poverty numbers in almost a decade, as well as the Nigeria COVID-19 National Longitudinal Phone Survey (NLPS). These surveys were implemented by Nigeria’s National Bureau of Statistics (NBS) in collaboration with the World Bank.

According to the report, which brings together the latest evidence on the profile and drivers of poverty in Nigeria, as many as 4 in 10 Nigerians live below the national poverty line. Many Nigerians – especially in the country’s north – also lack education and access to basic infrastructure, such as electricity, safe drinking water, and improved sanitation. The report further notes that jobs do not translate Nigerians’ hard work into an exit from poverty, as most workers are engaged in small-scale household farm and non-farm enterprises; just 17 percent of Nigerian workers hold the wage jobs best able to lift people out of poverty.

The report adds that climate and conflict shocks – which disproportionately affect Nigeria’s poor – are multiplying, and their effects have been compounded by COVID-19; yet government support for households is scant. Households have adopted dangerous coping strategies, including reducing education and scaling back food consumption, which could have negative long-run consequences for their human capital. These issues affect some parts of Nigeria more than others; the report captures this spatial inequality by providing statistics at the state level, which is crucial given Nigeria’s federal structure.

“It is clear that much needs to be done to help lift millions of Nigerians out of poverty, including boosting health and education, bolstering productive jobs, and expanding social protection” said Shubham Chaudhuri, World Bank Country Director for Nigeria. “Yet implementing pro-poor initiatives requires unlocking fiscal space; reforming expensive subsidies – including fuel subsidies – will be essential, alongside countervailing measures to protect the poor as reforms are effected.”

The report suggests at least three types of deep, long-term reforms to foster and sustain pro-poor growth and raise Nigerians out of poverty. These include: (1) macroeconomic reforms (including fiscal, trade, and exchange rate policy); (2) policies to boost the productivity of farm and non-farm household enterprises; and (3) improving access to electricity, water, and sanitation while bolstering information and communication technologies. These reforms together could help diversify the economy, invigorate structural transformation, create good, productive jobs, and support social protection programs as well as other redistributive government policies. The report emphasizes that these reforms are urgent as Nigeria’s population continues to grow; now is the time to ensure that the country seizes the promise of its young people for economic prosperity. It adds that shaping the specifics of Nigeria’s poverty-reducing policies will depend strongly on redoubling efforts to gather and analyze data regularly.

“Conflict is spreading and intensifying across Nigeria, so it is important to implement programs to support poor and vulnerable Nigerians that are simple and flexible while also limiting the risk of exacerbating fragility and conflict” said Tara Vishwanath, World Bank Lead Economist and co-author of the report. “Data can provide vital guidance on how to design, monitor, and evaluate pro-poor projects and programs, giving a voice to poor and vulnerable Nigerians” added Jonathan Lain, World Bank Economist and co-author of the report.

New official household survey data, due to be collected later in 2022, will provide far more detailed insights into the dynamics of and the key constraints on poverty reduction, as well as new pro-poor policies. By investing in data, Nigeria can build trust, accountability, and transparency, taking substantial strides on its pathway to poverty reduction.

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Nigeria’s poverty profile is grim. It’s time to move beyond handouts

Andrew Wells Robertson Professor of Economics, Allegheny College

Disclosure statement

Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Nigerians have been justifiably confused by conflicting poverty data presented by the Muhammadu Buhari administration and the World Bank. According to Buhari, his administration has lifted 10.5 million Nigerians out of poverty within the past two years. But no sooner had he made the statement than the World Bank asserted that inflation has plunged seven million Nigerians into poverty.

These statements might seem to be contradictory to non-economists. But closer analysis suggests that Buhari and the World Bank are right – depending on how poverty is measured.

The first is income or monetary measure of poverty, what economists refer to as the ‘ headcount index ’. It measures the proportion of the population that is poor based on a minimum personal income - for example $1.90 per day. This minimum amount is deemed adequate to maintain an acceptable living standard, given the cost of living in a given country.

Based on this measure, Buhari is right to claim that – by transferring cash to 12 million households during the past five years – a majority of these Nigerians have exceeded the income threshold. Therefore, they have escaped poverty.

The other measure is known as the multidimensional poverty measure . It measures poverty by income, and by the access people have to health, education and living standard indicators. These include sanitation, drinking water, electricity, and housing. It is therefore possible for someone to be regarded as non-poor under Buhari’s calculations, but poor when this measure is used.

This is the measure the World Bank appears to be applying. By this measure 47.3% Nigerians, or 98 million people, live in multidimensional poverty. Most of them are located in northern Nigeria. This poverty rate does not include Borno State, where insurgency has prevented data collection.

Aware of this, the Buhari administration has set the very ambitious goal of lifting 100 million Nigerians out of poverty by 2030. This is a tall order, considering that another five million more Nigerians are expected to become poor as a result of COVID-19 in 2020.

The administration’s cash transfer programme is commendable. But Buhari should turn his focus more on promoting structural transformation. This would move millions of poor Nigerians from low-productivity agricultural and informal-sector activities to high-productivity sectors such as manufacturing, agro-processing, as well as information and communication technologies.

What is poverty?

Poverty is an amorphous and subjective concept, which is influenced by what people consider to be more valuable in life. Those who value more money in their pocket would prefer a monetary measure of poverty. But Nigerians who care more about the healthcare, food, education, electricity, transportation, and security their money can buy would regard the World Bank’s figures as a more useful indicator.

Some economists have proposed the notion of a ’ Happy Planet Index ’ as a better measure of poverty. It measures poverty based on three indicators. These are average subjective life satisfaction, life-expectancy at birth, and ecological footprint.

An illiterate 80-year-old woman who lives on less than $1.90 per day but reports she has been happy all her life; lives in a small hut with no access to electricity; has never visited a hospital or seen a doctor, and consumes mainly organic products grown on her farm, would not be regarded as poor under the Happy Planet Index definition. But she would be poor under the headcount index and multidimension poverty measure. This means poverty is in the eye of the beholder.

Some analysts perceive the stylised conceptualisations of poverty as Eurocentric. They claim that such reflect Western values and marginalise non-Western conceptions of a ‘good life’.

High food prices

One reason for the World Bank’s assertion that seven million Nigerians have been driven into poverty is the 22% increase in the price of food. Food prices contributed about 60% to Nigeria’s inflation rate of 18%. Rising food prices exacerbate poverty because it reduces the real purchasing power of households, and shifts expenditures away from essential items such as health, education and housing.

An average Nigerian household spends about 56% of income on food, the highest in the world. Countries like US, UK, Canada, and Australia spend 6.4%, 8.2%, 9.1%, and 9.8%. Nigeria’s high expenditure on food implies that a slight increase in food prices would push more people into multidimensional poverty.

Food prices have been rising in Nigeria and pushing more people into poverty for a few reasons. First, the depreciation in the value of the Naira has resulted in steep increases in the prices of imported food items, such as rice, sugar, milk, beverages, and frozen food. The Naira has depreciated by about 13% during the past year.

Second, because of Nigeria’s rapid population growth, food supply in the country may be lagging demand. Nigeria’s population has been growing by about 2.6% per annum , while agriculture value added has been growing at 2% .

This means that agricultural output is barely keeping pace with consumption. Supply shortfalls have been exacerbated by instability, banditry , terrorist attacks , poor infrastructure and climate change. Also, the exodus of farmers to urban centres in search of illusive opportunities.

Regardless of who is right, Nigeria’s poverty profile is grim and embarrassing for a country endowed with humongous human and natural resources. The Nigerian National Bureau of Statistics said in 2020 that 40% or 83 million Nigerians live in poverty. Although Nigeria’s poverty profile for 2021 has not yet been released, it is estimated that the number of poor people will increase to 90 million, or 45% of the population, in 2022.

If the World Bank’s income poverty threshold of $3.20 per day is used, Nigeria’s poverty rate is 71% . Compared to lower rates for some oil-producing developing countries like Brazil (9.1%), Mexico (6.5%), Ecuador (9.7%) and Iran (3.1%), this is grim.

The Nigerian National Bureau of Statistics data suggest that the number of poor Nigerians exceeds the total population of South Africa, Namibia, Botswana, Lesotho, Mauritius and Eswatini combined.

What Nigeria needs

Nigeria needs more industrial production, foreign and domestic investment, not just handouts.

There has been too much emphasis on cash transfers, and less on building the capacities of Nigerians to transition into the sectors and jobs of the future.

Cash transfers alone are inadequate and not pervasive enough for extricating a significant number of Nigerians from extreme poverty. Those who received cash payments under the national social investment programme risk falling back into poverty at the end of the programme. But structural transformation is more enduring, as it enables Nigerians to acquire and utilise productive capacities for permanently escaping poverty.

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Challenges of Poverty on National Development in Nigeria

• October 13, 2021
• Posted by: rsispostadmin
• Categories: IJRISS, Social Science

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue IX, September 2021 | ISSN 2454–6186

Omaku Angulu Abubakar & Habakuk Aboki Pre-ND Department, Isa Mustapha Agwai Polytechnic, Lafia Nasarawa State

Abstract: One of the most notable challenges of economic development of any nation is poverty. This is because it is the responsibility of the leadership of any nation to carter for the welfare of its citizens. It is estimated that globally, about three billion people live below $2 per day poverty threshold and may increase to three billion people by the year 2050. A substantial number of these people living in absolute poverty are Africans. This vicious cycle of poverty among Africans is noted to ‘be trans-generational and may continue unabated of appropriate strategies to combat same are not put in place. Nigeria being the most populous nation in Africa has a good share of these poverty striking Africans and has made concerted efforts since independence to tackle this poverty, cycle without achieving, the desired results. This paper attempts an explanation of the concept of poverty and its theoretical framework, the impact of poverty on Nigerian economic development, causes of poverty in Nigeria and effort made by successive governments to eradicate poverty in the country. In conclusion, some policy recommendations aimed at eradicating poverty in the country were made.

Key Words: Challenges of Poverty, National Development, Nigeria’s Experience.

I. INTRODUCTION

Poverty has been acknowledged as a major global development challenge, its attack and prevalence in Africa has assumed a disturbing dimension. Africa is widely believed to be the continent with the fastest growth of poverty. In Nigeria about 86.9 million people live in severe poverty, which is about 50% of its entire population (World Bank, 2020). According to Umo (2012) in the post slavery and colonial experience, poverty is perhaps the single most widespread social pathology the continent has experienced since political independence in the 1960s. Khalid (2008) posited that one quarter of the world population continue to live in absolute poverty, unable to meet their most basic needs and surviving on less than one dollar a day (World Bank international poverty line USD1.90). Over one hundred million children of school age are denied the right to basic education in sub-Saharan Africa and the number continues to rise. Each year, about half a million women die worldwide in child birth due to lack of access to simple and affordable anti-natal health care while close to one quarter of a million children under the age of five die from malnutrition, malaria measles and other preventable diseases.

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Reducing inequality and poverty in Nigeria: An alternative approach

President Buhari’s last months is packed with a devastating feedback loop of macroeconomic and social issues, coupled with another outcome of the gravest forces of…

President Buhari’s last months is packed with a devastating feedback loop of macroeconomic and social issues, coupled with another outcome of the gravest forces of our time: economic inequality. Of course, the existing issues like extreme poverty, high cost of living, insecurity, and more deepening inequality; likewise, inequality worsens the spread of these issues especially in Northern Nigeria.

Regardless of opinions, the administration will be judged on these facts. Notwithstanding, widening income inequalities is the most defining challenge of our time, as noted by American President Obama in 2013.

But unlike the other countries where poverty is diminishing in absolute terms and inequality is increasing, Nigeria is faced with rising poverty and widening inequality. The World Bank report highlights that more than two out of five people in Nigeria, 46 per cent of the population, live in extreme poverty. The relative income has not grown for over six years, making them monetarily poor. The cost of living has increased due to the high inflation rate. These people are also disadvantaged in education, infrastructure and other basic needs by the state and federal governments. Most of them are located in Northern Nigeria.

Comparatively, Nigeria’s three richest men have a combined wealth of $23.9 billion, according to the 2021 Forbes list of Africa’s billionaires. Aliko Dangote is worth $12.1 billion, Mike Adenuga is worth $6.3 billion, and Abdussamad Rabiu is worth $5.5 billion. According to Oxfam, the wealth of these three men increased by $6.9 billion since the pandemic. If 64-year-old Dangote spent $1 million every day (414 million Naira) without reinvestment, it would take him 33 years to exhaust his fortune – when he is 97 years old. The wealth of these individuals could end extreme poverty at a national level. Yet, in 2021, the number of people in extreme poverty had increased by seven million as Nigeria maintained its position as the world’s poverty capital.

But there is a silver lining to all these. According to World Bank data, the life expectancy of Nigerians has increased from 46 years in 1999 to 55 years in 2019. It is one of the few real successes of this government, although the ones before it should be credited too. Readers may draw opposing opinions even if they agree on the same set of facts. These should give us all hope.

Like Nobel economist Joseph Stiglitz’s, the International Monetary Fund showed that inequalities tend to slow a country’s growth and make growth more volatile. Research by the IMF showed that raising the income share of the poorest 20 per cent of the population contributes to the country’s growth. In contrast, increasing the income share of the country’s wealthiest people decreases its growth. That is why the countries under the Organisation for Economic Co-operation and Development rejected the idea of trickle-down economics – a means of spreading income from the rich to the poor. It was popular under the Reagan and Thatcher administrations – in the 1980s. There is overwhelming evidence that inequalities are not inevitable, poverty more so. Inequalities and poverty are socially reproduced and can be changed.

Despite promises to tackle corruption and injustices, the cost of governance contributes to the problem. According to Senator Shehu Sani’s revelation, Nigeria’s top politicians are paid over 750 times more than a school teacher and 150 times more than a policeman or other security personnel. Indeed it would take a typical worker on a minimum wage 102 years to rake in the annual amount handed to a Nigerian Senator. Research shows that reducing the gap between rich and poor is not limited to the good for the economy. Evidence shows that countries that reduce inequality in their economy have seen increased life expectancy, higher educational attainment, more social mobility, trust and more. These countries include Namibia, Togo, and other South American countries with a similar economic profile to Nigeria. The point here is that fairer, more equal societies benefit everyone. So, the question is how to tackle them.

Redistribution of resources is vital. Changes to the current policy to address the unfair tax burden on businesses is imperative. Doing so could potentially keep millions of people out of poverty every year instead of pushing seven million people into poverty every year. Increasing inequality was placing a more significant fraction of the nation’s income in the hands of those facing higher tax rates. The Nigerian tax system is regressive, which means the lower-income individuals contribute more to the government revenue than wealthy individuals. The public resources are also spent unfairly and inefficiently. Changing to a progressive wealth tax policy could lead to improvement and efficiency. A progressive wealth tax is an annual tax imposed on an individual’s net wealth, where the wealthier individuals pay more. Of course, the ability to pay and other principles of taxation should be considered.

Oxfam’s 2022 inequality report shows that Nigeria has 4,690 individuals whose net worth is at least $5 million and about 250 individuals with over $50 million. The report indicates that imposing an annual tax of 2% on wealth over $5m, 3% for those with $50m, and 5% on the three billionaires would raise $4.1 billion every year. If the wealth tax was raised for the higher earners, say 5% on wealth over $50 million and 10% over $1 billion, the annual revenue generated would be over $6 billion. The yearly wealth tax would be enough to provide basic needs, like adequate water supply, homes, schools, hospitals, electricity, and roads, for a large part of the population. All things being equal, investments like these would reduce the existing social problems of poverty and inequality in our societies.

A lesson from the Clinton administration in 1993 can shed light on the success of this policy. As the American government faced an ever-increasing deficit, tax increases appeared necessary. A proposal was put that those who had benefited most from the economic expansion and tax cuts of the 1980s should pay more taxes. Only the top 1.2% of taxpayers experienced rate increases. For example, married couples with incomes above $140,000 had their income tax rates increased, from a marginal tax rate of approximately 28 to 36 or 39.6%. As it turned out, the tax revenues raised on upper-income individuals in the years following 1993 were far higher than had been anticipated. The increased revenues were primarily responsible for eliminating the deficit in the late 1990s. It is worth noting that Professor Martin Feldstein, Reagan’s chairman of Economic Advisers, argued that the tax increase would raise less revenue than what was estimated. But history showed he predicted wrongly.

In the context of Nigeria’s macroeconomic and social crisis, turning a blind eye to inequality would prove disastrous in years to come. Like Clinton, a political will to tackle these issues is required. This year, 2022, will be the last full fiscal year of President’s Buhari, where he has the opportunity to make amends.

Dr Aminu is a senior lecturer in Economics at Cardiff Metropolitan University (Twitter: @AminuEcon)

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