Before Nigeria sinks deeper into poverty
The World Bank’s latest Economic Update on the Nigerian economy, which indicated that the poverty rate in Nigeria could even worsen beyond what it currently is, except a new trajectory of development is followed should not be ignored by authorities in the country. The World Bank’s Economic Update also projected that given the current vulnerable growth of the economy, an additional 30 million Nigerians would join the extreme poverty trap, which will make the country a very pitiable place to live in. The global bank’s projection is premised on the fact that the country’s population growth is currently unabated, recording a growth rate higher than the current GDP growth rate of about 2.2 per cent.
According to the bank’s estimates, the additional population increase over the next 10 years is put at about 35 million. Other factors that appear inhibiting poverty reduction in the country include the lack of meaningful productivity growth across sector of the economy exacerbated by both domestic and global risks thus making even the current GDP growth rate very vulnerable. Cases of economic uncertainty resulting from insecurity to lives and property, the threat to domestic agricultural production from the invasion of farmlands by herdsmen and their cattle, the continuation of the unwholesome subsidy of petroleum products, the overbearing impact of debt service payments on the country’s revenue and the uncertainties of the global oil market and other threatening trade developments tend to suggest that economic growth in the present and foreseeable future is indeed fragile and vulnerable.
In addressing the issue of poverty reduction and disappointing the naysayers of this administration, what the government should focus on is how to reduce the prevalence of poverty in the short term, in the first instance. Yes, though it is good to dream, where the dream appears grossly unrealistic then some further evaluation of strategy is considered necessary.
Going down memory lane, it can be recalled that in 2016, when the administration’s medium term 2017-2020 Economic Recovery and Growth Plan, ERGP was being crafted, the projected GDP growth rate by the end of 2020 was set at seven per cent. This projection appeared unrealistic, for an economy coming out of a recession and with its economic growth very fragile. Though a number of economic experts called the attention of policy makers to this, yet the government was adamant, that it was achievable and thus went ahead and launched the ERGP. To date, virtually all the projections under the ERGP, including GDP growth rate, inflation, unemployment rate and many others have fallen below expectation – implying that the ERGP has failed to deliver as projected. In fact, the projected international price for crude oil, an exogenous factor, was one of the few indicators that exceeded expectation. So, this administration has been making promises and projections, which invariably turn out to be unreliable. How then can 100 million Nigerians be lifted out of poverty in 10 years? If earlier promises and projections by the administration have not turned out right, what is the guarantee that this one will? Is the promise a mere political gimmick or one based on a well thought out strategy? With the benefit of hindsight, the former appears to be the case.
The suggestions proffered by the World Bank in the evaluation of the situation needs to be taken seriously. First, the administration should come up with a new strategy to address the incidence of pervasive poverty. This should promote policy stability, transparency and predictability. Where government policy is not predictable, it would not permit the private sector to make meaningful investments that would lead to job creation and poverty reduction. Second, the focus on infrastructural development should be better structured than it appears presently. If more public debts are to be procured to finance infrastructural development, it should be specifically project-tied. Then, the support for small and medium-sized enterprises, SMEs, should be intensified by providing adequate finance for their operations. In the same vein, the operating environment for SMEs should be made conducive for them. The growth of SMEs has been adjudged to be the secret of the growth as well as poverty reduction of the Asian economies.
Let’s draw some insight from history, in this regard. In his Democracy Day speech on June 12, 2019, President Muhammadu Buhari announced that, “with leadership and a sense of purpose, we can lift 100 million Nigerians out of poverty in 10 years.” While many have wondered whether the President is planning to extend his stay in office beyond the four years of his second term in office, others have expressed concern as to how realistic that dream would be given the current precarious state of the economy and the country current designation as the poverty capital of the world, having overtaken India in that regard, by having the highest number of extremely poor people worldwide.
Nigeria’s leader should tell the nation how he intends to address the issue of poverty under his watch, aside from creating a new Ministry of Humanitarian Services and the conditional cash transfer schemes, among others. In as much as there is nothing wrong in dreaming about the future, such dreams should be based on some realistic strategic action plans. It is more realistic for the President to dream on possible poverty reduction targets up to 2023 when he is in charge, as the situation beyond then could be fluid since the administration after 2023 may not share in the vision of the present administration. It is better to focus on the present and avoid unnecessary insinuations in some circles about uncertain political future. Growth process should not be in the realm of speculation. There should be action and deliverables today. That will define the future. Only good trees of today can produce good fruits tomorrow.
The present challenges are enormous. Effort should therefore be placed first on taking Nigeria out of the tag of being the poverty capital of the world within the next three years and then other strategies to further eradicate poverty can be embarked upon. That appears to be the way forward in enhancing the living standards of the ordinary Nigerian.
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