Thursday, 29 November 2012 03:35

Breaking the Dynasties of Poverty in Nigeria

Written by Dr. Chukwuma Charles Soludo
Photo: Basel Action Network (BAN) Photo: Basel Action Network (BAN)


Poverty is the summary measure of the state of well-being of a people, and hence the effectiveness of governance. Embedded in the measurement of poverty are such variables as income, education, employment, and access to basic necessities of life such as housing, clothing, food, water, etc. Breaking the vicious circle of poverty and inequality vis-a-vis insecurity, low savings - low investment and low and fragile growth traps constitute a central concern of public policy. In Nigeria, most people can FEEL the poverty burden - on the streets and the high level of dependency.  A deepening crisis which receives little attention is the breakdown of the social ladder, values, and networks traditionally used in our society to climb out of poverty. Poverty is consequently becoming an inheritance - a dynasty - whereby the children of the poor will, in all likelihood, end up poor. Increasingly, the rich won’t be able to sleep because the hungry and angry poor are awake!


If the statistics released by the National Bureau of Statistics (NBS) on the state of poverty in Nigeria in 2010 and 2011 at 69% and 72% respectively are correct, then there is a state of emergency. The previous poverty survey in 2004 put the index at 54% and by 2011 it has jumped to 72% despite an average 7% annual growth of income, said to be led by non-oil sector (largely agriculture where the majority of the poor are). No other comparable oil exporting country has a similar record.  If the numbers are correct, Nigeria would not only miss the MDG goal in 2015 but would probably hold the world record as the country which rather than reduce poverty by half, actually almost doubled it. All these despite the plethora of public interventions to reduce poverty, including NAPEP and MDG funds!


From the NBS result, much of the Northern Nigeria is still in a poverty trap, although the rate of worsening poverty has slowed down. An interesting puzzle is the South, (especially the South-east which previously had the lowest poverty rate) but now shown to be on a high speed lane in the race to the bottom to catch up with the North. While poverty is declining elsewhere in the world, the states in Nigeria are reported to be competing to see which one wins the trophy as the poorest state.


I have decomposed the relative contributions of each state and geo-political zone to the worsening poverty, using the NBS figures, and the results for the zones are: North-central (4.7%); North-east (10.2%); North-west (15.6%); South-east (37%); South-south (14.3%); and South-west (18%). In total, the 19 Northern states contributed about 30%, while the 17 states in the South contributed 70% of the deterioration in the national poverty index. At the state level, the five states with the worst deterioration (in percentages of deterioration compared to 2004) are: Anambra (238%); Bayelsa (189%); Abia (185%); Oyo (152%); and Enugu (132%). The states with the most improvement in reducing poverty (percentages of improvement) are: Niger (32%), Kogi and Jigawa (17%); Kwara (13%), Kebbi (10%), and Lagos (7%). The full results show that compared to 2004, poverty worsened dramatically in all Southern states except Lagos in 2010, whereas in the North, it worsened in 11 out of the 19 states. A very interesting symmetry is the fact that except for Adamawa and Zamfara States, every state where poverty declined in the 2004 survey, it increased in 2010 and vice versa. Can this be true or a typo? The statistics are quite intriguing. To be honest, I have serious reservations about the NBS figures. As I argued in an earlier article, the flaws are so much that neither the arithmetic nor the economics makes sense. The NBS needs help to give Nigeria credible national income and social statistics.


If the figures are correct, they raise a very important issue pertaining to the size of government spending and poverty. Interestingly, some of the states that spent the most money also had very high deterioration in poverty between 2004 and 2010: Ogun (117%), Edo (119%), Imo (109%), Rivers (101%) and Akwa Ibom (80%). The results challenge the thinking in some quarters that the more money states have, the more likely they are to reduce poverty. They also raise issues about value for money spending in the states as well as the composition of the expenditure. These and the issue of how we measure performance are issues for another day.


While we can dispute the exact figures or their distribution, what is not disputable is that there is pervasive poverty in the land. Many factors determine poverty but we focus on three: size of the household, educational level, and occupation of the head of household. The least educated are likely to be in the informal sector or peasant agriculture with low income, and probably with a large family size. It is shown in Nigeria that 90% of households whose family size exceeds 10 are in poverty. It is not difficult to see why some parts of the country are trapped in poverty. To escape the trap, our political and religious leaders must have the courage to educate the people that the number of wives and children anyone decides to have is a choice, and not destiny. If you have children that you cannot train in school, you have condemned them and perhaps their own children to a life of poverty. In one of the organisations I worked, I was told of a driver who had 32 children.  Clear and sensible population policy as well as a credible programme for demographic transition can no longer be ignored.

For the large army of people eking a living in the informal sector and peasant agriculture with very low productivity and incomes, public policy must explicitly target them. Productivity per hectare of land is very low in Nigeria. While aiming to raise the productivity of the existing peasant farmers, Nigeria needs a long-term strategy of transition from peasant agriculture to commercial farming. Most of the existing, ad hoc skill acquisition centres do not work well, and cannot reach many in need.


The key to sustained poverty reduction is access to opportunities by all. Access to qualitative education is the foundation and provides the social ladder that enables the children of the poor to break out of the cyst. In my primary school at Nigercem Nkalagu, I was in the same class with the children of the General Manager of Nigercem. For the secondary school and university education, we were in class with children of the super rich and taught by the same teachers.  Most successful people I know today had humble beginnings and the only magic that happened in their lives was access to qualitative education as well as opportunities to demonstrate their talent. In that world, if the children of the poor were more brilliant and hard working, they had a chance of doing better in life than children of the rich. Not anymore! Today, the children of the rich would be in elite private schools or abroad, while the others are condemned to a bleak future in the collapsed public schools.


My estimate is that the poorest 40 per cent of our population (which NBS says are also food poor), with their children in the poorest of schools, if any, are getting a raw deal, and their children will likely end up in poverty. A vicious circle ensures, thereby creating dynasties of poverty. The middle group which manages to enter the largely public higher institutions end up with estimated 60% being unemployable because of the poor quality of education. With no structural diversification of the economy, the labour market is tightening relative to the supply of labour force from our youthful population, and hence very high unemployment. A tiny one or two per cent are able to offer their children world class education abroad. We are creating multiple enclaves of Nigerians, with the hungry, angry but rugged bottom 40% on the one hand, and the ‘managing to get by’ middle as well as the upper, elitist but fragile top likely on a collision course.


One of the consequences of the oil resource curse in Nigeria is the creation of a culture of easy money, with no correlation between effort and reward. Everyone sees hundreds with no daytime jobs ‘making it’, and no one cares to ask what you do for a living. The millions excluded must survive one way or another. A sizeable number are now engaged in the underground speculative and criminal economy including prostitution, kidnapping, armed robbery, 419 scams, oil bunkering, drug trafficking, smuggling; dealership in fake and substandard products; etc. As the informal sector, especially trading shrinks, millions (largely uneducated) are migrating to all parts of the world and Africa in search of ‘opportunities’. Social networks based on kinship and trust, especially in business, are also breaking down. Without trust, most of the interventions to help the poor, including non-collaterised loans, break down.


Perhaps a more dangerous development is the poverty of the mind especially among the bottom 40%, and the impact of religion in keeping them down. I was brought up to ‘work and pray’. In my secondary school, some of us had on the cover of our notebooks the quote by Albert Einstein that “genius (success) is 1% inspiration (luck) and 99% perspiration (hard work)”. Another popular quote we had was: “success is when preparation meets with opportunity”. When I mentor young ones, I emphasise three keywords: focus, hard work, and prayer. Especially among the trapped 40%, and increasingly also among the ‘educated’, people now want opportunity without preparation.


Success is seen to be all about ‘luck’ and no personal responsibility in terms of effort. No wonder there is a boom of all kinds of spiritual and religious groups promising ‘miracles’, and there is a booming clientele.  If the promises of instant miracles don’t materialise, the clergy will see visions for their ‘captives’ about some relatives or friends who have ‘taken their luck’. A friend of mine in the oil and gas sector told me an interesting story. For several years during Christmas, he would buy rice and kill cows to share to the destitute in his village, as well as give scholarships and credit for micro entrepreneurs. After some time, he noticed that the number that came dwindled dramatically. He was happy and thought that it was an indication that less number of people needed help. It took a courageous close relative of his to tell him that the reason was that people said that he was ‘collecting their luck’ through his philanthropy, and that was why he was a successful oil magnate. I have heard several such stories. The import of this is that private charity will decline. How do you get millions with this kind of mindset to work their way out of poverty? Our imams and pastors have to help us with this!


Nigeria suffers from an illusion of affluence. We are a poor nation. The proposed Federal Government budget for 2013 comes to about $180 per Nigerian. There is a whole lot that government can and should do to break the poverty traps. But there is a lot more that the society must do. Perhaps a national summit to focus on this emergency is the starting point!


Dr. Chukwuma Charles Soludo, is the former governor of Central Bank of Nigeria (CBN)


Last modified on Thursday, 29 November 2012 14:13