Tinkering On Policy Options For Nigeria’s Worsening Poverty Index

A woman walks on plastic waste in Lagos. Image: Yasuyoshi Chiba/AFP/Getty

BY OMONIYI SALAUDEEN

As an annual ritual, Thursday, October 17 marked yet another International Day for the Eradication of Poverty. This year’s event with the theme: “Acting together to empower children, their families and communities to end poverty” drew more attention on the most vulnerable. The objective of the anniversary is to protect the civil, political, economic, social and cultural rights of every individual to earn a decent living regardless of race, religion or abilities.

The commemoration of October 17 each year is to demonstrate how to achieve greater participation by enabling people from all walks of life to come together to respect the human rights and dignity of people living in poverty. In particular, the participation of children and young people has always been encouraged and supported as an integral part of October 17 observances at the United Nations and around the world. This is in recognition of the important roles children play by sharing and applying the valuable knowledge they have acquired from their personal daily struggle to overcome poverty.

The anniversary once again brought to the fore Nigeria’s worsening poverty index, which has continued to generate concern among the stakeholders. According to the latest world poverty report recently released by Oxfam International, the country’s poverty index has worsened with no fewer than 94,470,535 people living below the poverty threshold of N684 per day, representing an increase of 3.4 million from the previous year’s figure of 91 million.

The country’s Director, Mr Constant Tchona, who described the situation as pathetic, said Nigeria was off the tract to meet the Sustainable Development Goals (SDGs), adding that up to 25 per cent of the world’s extreme poor will live in Nigeria by 2030.

“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,” he postulated.

It will be recalled that President Muhammadu Buhari had in his second term inaugural speech indicated government’s intention to “lift 100 million Nigerians out of poverty over the next 10 years and set them on the path to prosperity’’ to “fundamentally shift Nigeria’s trajectory and place it among the world’s great nations.’’

However, other than remedial palliatives like ad-hoc stipends for the vulnerable and N-power programme, no appreciable progress has been made in this regard, which is why poverty has continued to be on the increase. The worrisome trend has been blamed on a number of government policies making life unbearable for the ordinary Nigerians. These include, among other things, rising inflation (more than two digits), increase in VAT from five per cent to 7.5 per cent, border closure, rising unemployment as well as general atmosphere of insecurity which has contributed to uncertainties in the investment climate.

All these combined with diminishing disposable income continue to exacerbate hunger and poverty in the land with dire consequences for the common man. In the wake of his re-election, President Buhari had conceded to the demand by the organized labour for a minimum wage of N30,000. But the hope was almost lost before the Federal Government negotiation team and the workers union eventually agreed on consequential adjustment.

The rising debt profile further adds to the hardship of the economy. Before the country got to this fragile state, some concerned experts had raised the alarm over the reckless manner with which the administration had been borrowing in the guise of infrastructure projects that are virtually invisible, but the warnings fell on deaf ears.

Available record shows that Nigeria’s total public debt rose from N17.28 trillion in 2017 to N24.41 trillion in 2018. The recent release by the DMO also indicates that after the first quarter of 2019, the country’s total debt further increased by 2.3 per cent and now stands at N24.95 trillion. According to the 2020 appropriation bill, which President Buhari submitted to the National Assembly, debt service alone is projected to gulp N2.45 trillion, an amount that is far higher than N2.14 trillion earmarked for capital expenditure.

In its aggressive policy to shore up the IGR, the Federal Inland Revenue recently announced a hike in the Value Added Tax (VAT) from 5.0 per cent to 7.2 per cent without considering its consequences on the purchasing power of the ordinary Nigerians. The tax regime has been predicated to bring more hardship to the common people, as producers of goods and services are bound to pass over the incidence on the poor consumers.

Speaking with Sunday Sun, Dr Austin Tam George, a political economist and former commissioner for information in Rivers State, faulted the policy initiative under the present condition of endemic job losses.

His words: “Right now, we have a new regime of taxes without a corresponding growth in job. You tax people who are taxable, you cannot tax the unemployed. The issue is do we have productive activity that can generate income? Is there any increase in disposable income? What we have is massive job losses. In fact, studies have shown that there are people who have given up on searching for jobs. Those people are no longer captured officially by the National Bureau of Statistics. So, the job statistics that we have right now are not even realistic. We have an endemic crisis of joblessness in this country.

Instead of putting more tax burden on the poverty-stricken populace, he advised the government to focus more attention on job creation. “I think the emphasis should be on stimulus spending. We should make sure we stimulate the economy by getting involved in infrastructural spending so that people can get job. The dependency ratio in Nigeria is almost a community to one working individual. When you tax that individual, life becomes difficult for those who are employed and completely unbearable for those who are not employed. So, it doesn’t matter how many taxes you are imaginatively coming up with, but how many people are getting the jobs and productively engaged. They are over taxing those who are employed and making life unbearable for those looking for job,” he posited.

Also suggesting ways to rejuvenate the economy to lift the people out of poverty, he added: “In economics, the best strategy to lift people out of poverty is job creation. You can’t lift people out of poverty by giving them N5,000 on every market day. You lift them out of poverty by creating condition for job creation so that people can find their ways in life.

“Lula da Silva created job in Brazil during his eight years tenure as president and lifted 20 million people out of poverty. And for the first time, Brazil over took the United Kingdom as the sixth largest economy in the world. Except we create condition that will engage people creatively, we are not likely to lift people out of poverty because it is productive activities that will generate income. With income, people will have purchasing power. For now, we don’t have those conditions. Instead, what we are having is massive job losses. You can’t have such condition and say you want to lift million out of poverty. There has to be extensive and imaginative expenditure on education, training and mentorship programme so that people can find their ways in life. We don’t have those conditions now. Our people are poorer now than they were in 1960.”

A former Minister of Transport, Ebenezer Babatope, also lamented the outrage of poverty in the country, saying “poverty in Nigeria is a tragedy. That the Minister of Agriculture in this present government could say that Nigerians are not poor is funny and absurd. Nobody is blaming Buhari for the totality of what is happening in Nigeria today. I was a member of the political party that produced government for 16 years. Therefore, I cannot say that everything should be heaped on Buhari.

“But we should have the courage to say the truth at all times. That minister ought to be removed immediately. We are extremely poor in this country. Nigerians are finding it difficult to eat three square meals per day. All of us must sit down together to find a way to rescue our country from this terrible dilemma. It is a terrible dilemma, it’s a terrible tragedy.”

He dismissed the promised by President Buhari to lift 100 million people out of poverty as an ambitious policy statement. “It is good to be ambitious, but I cannot see any policy in place that can lift 100 million Nigerian out of poverty. We are waiting for his miracle. When that miracle happens, I will be one of those who will applaud him,” he said.

The National Chairman of the UPP, Chief Chekwas Okorie, also weighed in on the alternative policy option to achieve poverty eradication, suggesting expansion of economy through job creation.

He said: “First of all, N30,000 is not sufficient to lift anybody out of poverty. Moreover, the civil servants who are earning salaries are less than five per cent of the total population. So, when they talk about lifting people out of poverty, I am looking beyond minimum wage.

“What the government needs to do in that direction is to expand the economy. It is when you expand the economy that you create opportunities for jobs. What I have observed is that with the impetus agriculture is receiving, more and more people are beginning to see agriculture as business. I am also quite impressed by the Minister of Works and Housing’s presentation at the National Assembly where he proposed a N10 trillion bond for infrastructural development. This bond is to be generated internally not outside the country. With approval of the National Assembly, there will be massive development of infrastructure in the economy.”

But in contrast to George’s submission, Okorie declared that the government was on course in its effort to reposition the economy.

He explained: “The other thing is that the border closure has made a lot of revelations. People are complaining of increase in prices of some food commodities, but the money being made from the price increase is not going out of Nigeria. Farmers are now going to the bank smiling. What I can see is that the president is laying the foundation for a strong economic growth. The real change is beginning to occur. Nigeria is now rated as one of the topmost countries in the easy of doing business. All I can say is that the president must be resilient and unwavering in his policy implementation. It is not going to be easy, but we are on the right course.”

Many observers believe that the drive to rescue the economy from the doldrums must have informed the decision by the Federal Government to change its economic advisory team to Economic Advisory Council (EAC).

This, they say, is a tacit acknowledgement that the Economic Recovery and Growth Plan is far from being achieved.

SOURCE: SUN NEWS