Discrimination stoking poverty in Nigeria
Lack of enlightenment, poor adaptation of technology and poor telecommunication infrastructure have been identified as reasons for financial exclusion in Nigeria.
This lack of financial inclusion caused Nigeria to lack behind its sub Saharan African (SSA) country peers.
Many of our colleagues in the SSA like Kenya, Ghana, Ivory Coast and Senegal are better than us in terms of global system of mobile communication skills education and adaptation of technology.
Every telecom company in Kenya has helped financial penetration through free skills training and financial inclusion.
Here, financial inclusion means free training, open access to grants, interest free loans and scholarships in the purchase and training of telecom users in a country. Since there are no such provisions, not even loans targeted at telecom industrialisation in Nigeria, we have become home to the world’s extremely poor people.
The core of financial discrimination which stokes poverty in Nigeria is poor enlightenment which discourages citizens from having bank accounts.
Without a bank account an individual lacks access to loans, grants and scholarships. Moreover, insecurity created by the activities of herdsmen and Boko Haram has scattered the people, rendering peaceful coexistence impossible.
And looking at the unemployment rate, people are losing jobs in droves.
With the current inflationary trend, the weak purchasing power being experienced is the reason why the number of bankable adults is decreasing.
According to the World Bank Fintec Database 2017—Nigeria receded in financial inclusion between 2014 and 2017 with a large percentage of bankable adults dropping by 4 per cent to 39 per cent, while the SSA average increased by more than 8 percentage points to 43 per cent.
Kenya improved from 74.7 per cent between 2014 and 2017 to 81.6 per cent.
Ivory Coast improved to 41.3 from 34.3 per cent and South Africa receded to 69.2 per cent from 70.3 per cent.
In the 2016 World Bank report on Financial Sector Deepening, the introduction of MPESA in Kenya changed the game as the population of adults that are financially excluded reduced to 17 per cent from 23 per cent within a decade.
Thus, the communication gap between the banks and the Central Bank of Nigeria (CBN) should be addressed.
For in Kenya every bank integrated with MPESSA (the mobile money app) for ease of money transfer.
The telecom companies then recruited agents across the cities to distribute the products.
This Kenyan model should be studied and emulated by policymakers at the CBN and the Federal Ministry of Communications.
In adopting this model, let the CBN intervene by laying down the rule.
In South Africa, more than 70 per cent of adults have bank transaction accounts.
That is more than what obtains in Brazil, Chile, India, Mexico, Russia and its life insurance adoption rate is higher than wealthier countries such as Italy and Spain. Ivory Coast has experienced a mobile money revolution.
Now there are more adults with mobile money accounts, 24.3 per cent than with bank accounts.
In fact, Ivory Coast has the fifth highest rate of mobile money accounts in the world, behind 58 per cent for Kenya, 37 per cent for Somalia, 35 per cent for Uganda and 32 per cent for Tanzania.
Last month, the CBN said it isn’t on track to reach its target of increasing financial inclusion in Nigeria to 80 per cent by 2020.
Therefore, it adopted a refreshed strategy by signing a cooperation agreement with the Nigerian Communications Commission to improve the penetration of financial services using mobile phones.
The consequences are, according to the World Poverty Clock given by the U.S. Brookings Institution, that Nigeria has overtaken India as number one in the world poverty rating.
Out of Nigeria’s 180 million people, close to 50 per cent are deemed extremely poor.
Another report also says Nigeria has over 87 million people living in abject poverty.
Incidentally the World Poverty Clock is a civil society organisation created by Data Lab in Austria and funded by the Germany to monitor poverty across the globe.
More so, Brookings’ 2018 quarter one projects Nigeria having 73 million poor people; the country with the largest number of extremely poor people in the world.
Brookings conducts research that leads to new ways of solving social problems.
Its recent report ranks countries according to their Gross Domestic Product (GDP) based on their purchasing power parity per capita.
This means the total value of goods and services produced is divided by your total population while the value of the product is defined by the purchasing power parity of your currency.
However, what is worrying about the report is that extreme poverty is growing in Nigeria by six people every minute, while poverty in India continues to fall.
The report also noted that by December 2018, 3.2 million people will join poverty ranks in Africa.
The Brookings also found that extreme poverty in the world today is an African affair since Africans account for two-thirds of extremely poor people in the world.
And that if the trend persists, Africans will ultimately account for 90 per cent of the world poor by 2030.
Moreover, the American Central Intelligence Agency Factbook suggests that Nigerians currently living on less than$1 a day have grown from 34 per cent between 1992 and 1999 to 67 per cent by 2018.
Even though our own National Bureau of Statistics reported no fewer than 112 million Nigerians lived below poverty line as at 2016.
It was for these reasons that at the investiture of the new president of the Chartered Institute of Stockbrokers late last month, two economists flayed the planned growth of the Nigerian economy by two per cent as being ridiculous.
According to the duo Uche Uwaleke and Biodun Adedipe, with Nigeria’s 2.6 per cent population growth per year, failure to grow our economy at between 5 and 7 per cent from now will spell doom to the country.
However, to achieve sustainable growth, the economists noted, developing the capital market remains the key policy issue for Nigerian prosperity.
Accordingly, introducing an array of market products to hedge countless risks by the bourse is the way forward.
Although the Buhari administration has operated in denial of extreme poverty in Nigeria, from the economic indices enumerated above, it is clear Nigerians have never been this poor and desperate in their history.
Sadly, this is due unsympathetic leadership and poor policy options.
The problem was exacerbated on the onset when Buhari allowed the economy to drift.
Thus, investors were forced to repatriate their investments, halting new projects and thereby creating severe job losses, hyperinflation and the dislocation in the economy.
What’s more, the government’s import substitution policy resulting in the banning of imported rice as a way of promoting local industries is one of the factors leading Nigeria into extreme poverty.
The world’s standard of lifting people out of poverty by ensuring their disposable incomes are enough to buy them food and shelter was rejected.
The result of poor policy has been high price of food leading to greater poverty.
No wonder an OECD report avers that “Nigerians would save 30 per cent of their income if they bought their food at Indian prices.”
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