Is Nigeria in a poverty trap and population explosion?

on   /   in Broken Links 12:42 am   /   Comments

By Omoh Gabriel

Nigeria appears to be in what economists call a poverty trap, a vicious circle that takes hardwork and massive investment to break. The population is rising faster than the economy can cater for. It is thus breeding poverty and it is spreading like wild fire in the country.

Reverend Father Malthus, a socio-economic commentator postulated that ‘excessive increase in population keeps wages at subsistence level.’ The inter-relationship between population explosion and economic misery is already manifesting in Nigeria where the population growth has overwhelmed the economy.

Nigeria’s economic potential is well known. The country’s considerable resource endowment and coastal location ordinarily should allow the emergence of a strong growth pole for what journalists tagged Africa’s second largest economy.

Over the years, Nigeria has realised very little of this potential.  Instead, its history has been marked by economic stagnation associated with declining welfare and social instability with an ever rising population.

The Nigerian economic situation as it stands today, can be aptly described as an interlocking set of vicious circles that perpetuate economic stagnation, urban and rural poverty. One of these circles involves the savings – investment gap in Nigeria. In Nigeria, productivity is low because investment is low.

Investment is low because savings is low; savings is low because income is low; income is low because productivity is low. That is the situation bulk of the population is going through today except the few who have gotten hold of money one way or the other, fair or foul. Also, the country is being plunged into a population explosion that government has not done anything about.

Available statistics show that Nigeria’s nominal Gross Domestic Product in dollar terms was $48.2 billion in 2000, $51.2 billion in 2001, $49.163 billion in 2002,  $56.04 billion in 2003, $64.73 billion in 2004 and estimated to record $73.148 billion in 2005.

The real GDP growth was 2.8 per cent in 2000, 4.4 per cent in 2001, 3.3 per cent in 2002, 5.5 per cent in 2003, 6.1 per cent in 2004 and estimated at 3.9 for 2005. The GDP per capita has a record of $420 in 2000, $435 in 2001, $407 in 2002, $452 in 2003, $510 in 2004 and estimated at $562 in 2005. In the opinion of the World Bank, between 1965 and 1987, Nigeria’s Gross Domestic Savings decreased from 17 per cent to 10 per cent and lower in 2000.

In comparing 12 countries’ growth rate, it was discovered that during the two decades from 1965 to 1987, the World Bank found that Korea, with a population of 42 million in 1987, joined the rank of middle income countries by increasing its per capita income from US$650 to US$2,400.

During this same period, Malaysia and Brazil accomplished the same while Nigeria’s per capita income managed to record $510 in 2004 from the $440 in 1965 with a high population of 127 million in 2004. What this means is that Nigeria’s per capita rose by $60 in 40 years.

In 2001, it rose to $432, $407 in 2002, $452 in 2003 and rose further to $510 this year. This implies that in 2004, the welfare of Nigerians was not anywhere near what Indonesia, Malaysia and Brazil attained in 1987.

In the same period, the World Bank observed that Korea’s industrial share in GNP increased from 25 to 42 per cent; in Indonesia from 13 to 32 per cent and in Argentina about 42 per cent of GNP. By World Bank calculation, the most potent factor in economic growth is gross domestic savings.

From 1965 to 1986, Korea’s savings rate increased from eight to 35 per cent; for Indonesia from eight per cent to 24 per cent; for India from 16 per cent to 21 per cent. For Nigeria, it decreased from 17 per cent to 10 per cent and for Japan, it was maintained at 32 per cent.

The situation in Nigeria remains largely the same as savings has not improved beyond what it was in the 1980s if not worse now. Going by World Bank reckoning, while Korea achieved about 94 per cent level of secondary school and tertiary enrolment, Nigeria, during the same period (1965-1986), achieved 29 per cent and has now declined further. The implication is that while these other countries have reached a self-sustaining growth, Nigeria has been trapped in poverty.

In fact, a recent study shows that more than 70 per cent of Nigerians live below one dollar a day though government figure has contradicted this. The situation has not changed much by the reckoning of the average citizen. The proportion of Nigerians that were non-poor was much higher in the country in 1980, 72.8 per cent, compared to 1992 (57.3 per cent). It dropped significantly in 1996 to 34.4 per cent, falling further in 2010 to 31 per cent.”

The poverty data released by the National Bureau of Statistics on Monday last week suggested that 112 million Nigerians are poor going by the economic situation in the country in 2010. While 100 million are in absolute poverty, 12.6 million are moderately poor.

If this is true, it means that public policy in Nigeria has over the last three decades resulted in increased poverty despite the volume of resources devoted to poverty alleviation and the so- called annual growth of the nation’s economy. It is a paradox that despite the fact that the Nigerian economy is said to be growing at close to 8 per cent per annum, the proportion of Nigerians living in poverty is increasing every year.

Distributing the population into extremely poor, moderately poor and non-poor, show that the proportion of the extremely poor increased from 6.2 per cent in 1980 to 29.3 per cent in 1996 and then came down to 22.0 per cent in 2004 before reaching 38.7 per cent in 2010.

For the moderately poor, the picture was quite different as the proportion rose between 1980 and 1985 from 21.0 per cent to 34.2 per cent. It went down between 1996 and 2004, from 36.3 per cent to 32.4 per cent, and even further in 2010 to 30.3 per cent.

The Nigerian population was 65 million in 1980 and 17.1 million Nigerians were classified as poor. By 1955 the population rose to 75 million and those in poverty doubled to 34 million from the previous year’s figure. By 1992, the population had risen to 91.5 million while poverty figure rose to  39.2 million.

Four years later the population grew larger to 102.3 million and poverty almost doubled to 67.7 million persons. In 2004, out of a population of 126.3 million, 68.7 million were tagged poor. But in 2010, the figure of Nigerians in poverty increased to 112.47 million.

This certainly is unacceptable and policymakers must come up with policies to checkmate population growth and
poverty.

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