Sonnie Ekwowusi argues that the economy has to be managed differently
Last week the Oxfam International (founded with the objective of reducing poverty and injustice in the world) raised a fresh alarm to the effect that Nigeria is still the poverty capital of the world. Oxfam says that no fewer than 94 million Nigerians live below extreme poverty.
Oxfam is not saying anything new. Already in 2018, the African Development Bank (AfDB), in its 2018 Nigeria Economic Outlook, had revealed that about 152 million Nigerians live on less than $2 a day, representing about 70 per cent of the country’s estimated population of 200 million. And in June 2018, the World Poverty Clock named Nigeria the poverty capital of the world with statistics showing that 87 million people live in abject poverty. Poverty walks the streets in Nigeria.
So, it is no news that Nigeria has overtaken India and is currently the poverty capital of the world. What perhaps is news is that Nigeria’s frightening poverty statistics, instead of diminishing, is increasing day by day. This might have prompted Oxfam to raise the fresh alarm last week. According to the representative of OXFAM in Nigeria, Mr. Constant Tchona, “The number of people that live below extreme poverty as at April was 91, 501, 377, making Nigeria the World Capital of Poverty.
As if that was not bad enough, at the moment, six months later, the number had jumped to 94, 470, 533 people. What this means is that we have added 2,969, 158 people into extreme poverty. By comparison, this number is more than the population of Gambia and Cape Verde combined. At the current rate, Nigeria is not only off track to meet the Sustainable Development Goals (SDGs) but many now believe that up to 25 per cent of the world’s extreme poor will live in Nigeria by 2030.”
Definitely Mr. Tchona is not raising a false alarm. Already Nigeria has been ranked by the BBC as a country with the highest number of out-of-school children in the world. Nigeria has been ranked by the World Health Organization (WHO) as a country with the 3rd highest infant mortality rate in the world. Nigeria has been ranked as a country with the worst police in the world. Northern Nigeria has been ranked as the worst region in the world with the highest number of illiterates.
Nigeria has been ranked as one of the most dangerous places in the world to give birth to. Nigeria is the 4th country in the world with the worst maternal mortality rate. In 2018 Nigeria was named by the World Bank as one of the seven countries with worst human capital index. In the same 2018, the Global Hunger Index (GHI) ranked Nigeria 103rd out of the 119 hungriest countries. Therefore it is not surprising that Nigeria is now the poverty capital of the world.
The logical question in the light of the above is: how can Nigeria be lifted out of poverty? President Buhari has promised that he would “lift 100 million Nigerians out of poverty over the next 10 years and set them on the path to prosperity”. “Lifting 100 million Nigerians out of poverty” is just a convenient catchphrase to give the impression that government is doing something. But the truth of the matter is that such a catchphrase is not synonymous with economic prosperity. Unfortunately the ‘sending money” theory (over-borrowing and reliance on foreign aid) embraced by the government cannot lift even two million Nigerians out of poverty.
Unlike the 20th century development economics, the 21st century approach to economic development is more concerned about the welfare of the people rather than about government rhetoric. The 21st century economic approach is focused on the opportunity which the government is offering to the people to help them escape from poverty. In his classical essay with the title, “A new Way of Thinking about Economic Development: The Origins of the Road to Prosperity,” Marc A. Miles persuasively argues, and, I verily believe it to be true, that the goal of the 21st approach to economic development is to get the government to remove the economic barriers such as strangulating taxation, high value added tax (VAT) (as the government in Nigeria is currently arbitrarily imposing on the citizenry) high import tariffs, lack of property rights, lack of rule of law, unfair trade regulations, shutting down important trade borders (as we witnessing in Nigeria at the moment) and so forth.
These economic barriers inhibit people from freely using their God-given abilities to satisfy their basic human needs such as ordinary electricity supply, drinking water, shelter, ordinary hygiene, primary health and so forth. “In technical terms, writes Miles, it is not the level of poverty that is most vicious, but rather the absence of change or opportunity to escape that poverty. Where the 20th century approach produced a vicious circle of aid, default, and dependency on foreign governments, the IMF, or World Bank, the 21st century approach holds out the prospect that countries can generate growth and prosperity themselves, without foreign interference”. Think of a country like Nigeria where, in addition to the presence of the aforementioned economic barriers, the rule of law is weak (because the judicial system is susceptible to political interference) coupled with the fact there are prolonged regulatory uncertainty, sweeping economic changes and growing social unrest.
Unless these barriers are removed Nigerians will continue to be entrapped in the vicious circle of poverty. Differently put, without adopting economic policies that foster economic freedom—absence of coercion or constraint through legislation, trade policy, fiscal burden, government intervention and monetary policy that limit people’s production, distribution, consumption of goods and services potential- a county cannot lift her poor citizens out of poverty.
In her incisive work, “Why Economic Freedom, Not aid, is the Answer to Poverty,” Ana Isabel Eira, former senior policy analyst on international Economics at the Heritage Foundation, Washington D.C., United States writes that for years experts from many fields-sociology, economics, politics, world affairs and international relations-had debated and agreed that the most effective means to lift the 70% of the world population who live in poverty out of poverty, is through economic freedom built on a strong rule of law.
In this context the real role of government is to cultivate the enabling environment in which the people can achieve their potential by using their God-given talents to create wealth for themselves. Often leaders of poor countries like Nigeria support the “sending money theory” which increases a country’s debt burden. And Nigeria’s debt burden will further increase with Buhari’s 2020 N10.33 trillion Budget which will be mainly financed through borrowing or foreign aid).
Rather than give markets a chance to succeed, these leaders of poor countries claim that opening markets does not work. With outstretched hands, they look upon society as a product of their creative genius forgetting that the society existed before them. Hiding under protectionism they plunder their society. They take what belongs to the state or others and give them to their friends or cronies. They set up roadblocks or obstacles or barriers that inhibit individuals from reaching economic prosperity. Unless these roadblocks and barriers are dismantled poor people in poor countries like Nigeria will never be lifted out of poverty.