Tackling the Menace of Extreme Poverty

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Government at all levels need to be genuinely committed to poverty alleviation, writes Obinna Chima

A new report released last week by the Washington-based Brookings Institution, which showed that Nigeria had overtaken India as the country with the largest number of extreme poor, clearly rattled policymakers in the country. Even though the federal government has since dismissed the report, saying the indices used in arriving at its conclusion might have been complied when Nigeria was in recession, some analysts believe that the poverty situation in the country has worsened in the past three years.

The Brookings Institution, in its report titled: “The Start of a New Poverty Narrative,” pointed out that the Democratic Republic of the Congo could soon take over the number two slot. It said, “At the end of May 2018, our trajectories suggest that Nigeria had about 87 million people in extreme poverty, compared with India’s 73 million. What is more, extreme poverty in Nigeria is growing by six people every minute, while poverty in India continues to fall.

“In fact, by the end of 2018 in Africa as a whole, there will probably be about 3.2 million more people living in extreme poverty than there are today. Already, Africans account for about two-thirds of the world’s extreme poor.
“If current trends persist, they will account for nine-tenths by 2030. Fourteen out of 18 countries in the world—where the number of extreme poor is rising—are in Africa.”

But defending the government, the Minister of Trade and Investment, Okechukwu Enelamah, pointed out that with the present administration’s infrastructural programmes and its enabling environment for businesses, extreme poverty would soon be a thing of the past in the country.

Enelamah said, “I think first, we need to understand when we get these reports that there are reports that are lagging in indicators, which means people are reporting on history. There are reports that are leading indicators, which means that they are forward looking and, of course, there are reports that capture generally what you do which is current.

“They are actually dealing with what is current. So, when you get reports from Brooking institute or all sorts of people, you need to look at the context. Somebody may have written a report when we were in recession.”

Aside the Brookings Institution report, the United Nation’s Millennium Development Goals (MDGs) report had stated that while the world had managed to slash the number of poor people by half in the last 20 years, there were more people now in sub-Saharan Africa, including Nigeria, living in a state of extreme poverty and hunger than ever before.

Similarly, a former Central Bank of Nigeria (CBN) Governor, Prof. Chukwuma Soludo, had in an article ahead of the 2015 general elections, stated that poverty incidence and unemployment in Nigeria had risen simultaneously to all-time high levels and with the level of job losses in the country, things appeared to be deteriorating.

Unemployment Crisis

While the level of poverty remains a source of concern to all, the rising state of unemployment is also worrying. Poverty and unemployment combined are the greatest challenges facing Nigeria. The Chief Executive Officer, Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, warned recently about “a looming unemployment crisis in Nigeria.”

According to Rewane, the FDC think-tank estimated that fourth quarter unemployment figures would spike to 21.5 per cent.
About 4.07 million Nigerians were unemployed between January and September last year, the National Bureau of Statistics (NBS) had revealed. The bureau, in the report had stated that the number of Nigerians that became unemployed rose from 11.92 million in the first quarter of last year to 13.58 million and 15.99 million in the second and third quarters of 2017 respectively.

But the NBS shelved the release of the fourth quarter 2017 unemployment data earlier scheduled for last month.
Rewane estimated a population growth of 3.2 per cent for the country, which is higher than GDP growth in Nigeria.
Commenting on the Brookings Institution report, Rewane, said, “The solution to poverty is that your GDP growth rate is lower than your population growth rate.

“You are producing 14,000 children every day and what you are producing in terms of output is only about 80 per cent of that. So, everyday that passes, more and more people are getting poor. That was why the International Monetary Fund said for the next eight years, your income per capita in dollar terms is going to be declining.”

According to Rewane, Nigeria has a GDP of $405 billion, compared to India’s $2.3 trillion. “India has a population of 1.3 billion people and Nigeria has a population of 186 million. So, Nigeria’s population is one-sixth the population of India,” he stated. “Nigeria has a population growth rate of 2.6 per cent, while India has a population growth rate of 1.2 per cent.

Rewane said, “India is a diversified economy and has massive investments in infrastructure, Nigeria is a natural wealth economy where income and revenues are being shared rather than being ploughed back.”

Likewise, a former Executive Director of the Asset Management Corporation of Nigeria (AMCON), Mr. Kola Ayeye, pointed out that population growth in Nigeria presently was above three per cent and a substantial number of the country’s population living below poverty line should be of concern to policy makers in the country.

Ayeye, who is presently the Group Managing Director of Growth and Development Limited (GDL), said, “The kind of growth rate we should be celebrating should be close to two digits. So, that should give you an indication of how far we are from where we ought to be.
“Where per capita income in less than $2,500 and where a substantial part of the population is still living below poverty line and the population growth rate is more than three per cent,”

Confronting Poverty

In order to address the rising incidence of poverty in Nigeria, Soludo noted that the Nigerian economy, if properly managed, should have been growing at an annual rate of about 12 per cent.

While proffering solution to the challenge of poverty in Africa, President of the World Bank Group, Jim Yong Kim, said to achieve the World Bank’s twin goals — ending extreme poverty by 2030 and boosting shared prosperity among the poorest 40 per cent in low- and middle-income countries — “there is more than enough work to go around.”

“We estimate that the world needs an additional $1 to 1.5 trillion dollars every year to be invested in infrastructure – roads, bridges, railways, airports, and energy plants.

“By 2030, we will most likely also need 40 per cent more energy and face a 40 per cent shortfall of water – pressures that may well be further accelerated by climate change.”

Kim, however, hailed the substantial development progress over the past 25 years.
“Today – with 7.3 billion people — an estimated 12 present live in poverty. Over the past 25 years, the world has gone from nearly 2 billion people living in extreme poverty to fewer than 1 billion.”

However, Kim noted that there are still nearly a billion people living on less than $1.25 a day.
“Few of us can even imagine what this must be like. Let’s remember what poverty is. Poverty is 2.5 billion people not having access to financial accounts. Poverty is 1.4 billion people without access to electricity.

“Poverty is also putting your children to bed without food. And poverty is not going to school because everyone in the family needs to earn a few cents each day.”

To meet this challenge, Kim outlined a strategy to end extreme poverty, based on the best global knowledge now available, that he summed up in three words: Grow, Invest, and Insure.

“The world economy needs to grow faster, and grow more sustainably. It needs to grow in a way that makes sure some of our vast wealth goes to the poor.”

“The second part of the strategy is to invest – and by that, I mean especially to invest in people through education and health.”
“The final part of the strategy is to insure. This means governments providing social safety nets as well as building systems to protect against disasters and the rapid spread of disease.”

Senior Lecturer at the Department of Economics, Lagos State University, Dr. Ibrahim Bakare, argued that the existence of poverty in a society means individuals and groups are drawn into unequal relations with others who are more powerful or have more privileged positions through which they have an advantage. He stressed the need for human capital development as well as the formulation of sound macro-economic policies to tackle poverty.

“This is a global scourge affecting different countries in order of relativity and it is very high in less developed countries than in developed countries,” Bakare said.

Clearly, the basis for attainment in society as well as for social and economic mobility has often been access to education. Indeed, quality education is vital in creating an equitable and just society as well as in tackling poverty.
Many believe government needs to create an environment that promotes productivity, improves human capital, and ensures adequate access to finance, in order to end extreme poverty in the country.