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NIGERIA NOTES: Accelerating poverty reduction in Nigeria

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NIGERIA NOTES: Accelerating poverty reduction in Nigeria

By Ladipo Adamolekun

The number of extremely poor people continues to rise in Sub-Saharan Africa while falling rapidly in all other regions. By 2030, forecasts indicate that nearly 9 in 10 of the extremely poor will live in Sub-Saharan Africa.

– D. Wadhwa, World Bank Blogs, September 19th, 2018

Preamble

On Democracy Day 2019, President Buhari announced the ambitious goal of lifting one hundred million Nigerians out of poverty within a decade. This was an apparent riposte to the country’s recent emergence as the world’s poverty capital.

He asserted that the goal was attainable and cited some success stories: “China has done it. India has done it. Indonesia has done it. Nigeria can do it. These are all countries characterised by huge burdens of population. We can do it”.

However, given the progressive increase in the number of Nigerians living in extreme poverty (on less than USD1.90, about 700 naira a day) under successive governments since 1999, it makes eminent sense to turn “Nigeria can do it” into a question: Can Nigeria do it? Can Nigeria successfully lift 100 million out of poverty by 2030?

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According to the forecasts of international development organisations (notably the African Development Bank, the World Bank, and the UNDP), the answer to the question is an emphatic “No”. This negative answer is reflected in the quotation atop this essay and has been underscored by the World Bank’s latest forecast that 30 million more Nigerians will live in extreme poverty by 2030 (see Punch, editorial, December 9th, 2019).

In these circumstances, the obvious challenge for Nigeria is to focus sharply on making significant progress towards achieving some measure of poverty reduction by 2030. In other words, there is an urgent need to accelerate poverty reduction in the country.

Drawing on insights in a recent publication, Accelerating Poverty Reduction in Africa (2019) by Kathleen Beegle and Luc Christiaensen, economists at the World Bank, I will highlight lessons that Nigeria can learn with respect to poverty reduction during the next decade. First, the bad news.

According to the authors, poverty in Africa declined from 54 percent in 1990 to 41 percent in 2015 but the number of poor persons increased from 278 million in 1990 to 413 million in 2015. The forecast for 2030 is equally depressing: whilst the poverty rate is expected to decline to 23 percent, Africa’s share of global poverty would increase to 90 percent!

Against this backdrop, the authors focus on four “principles of engagement” and four “primary areas for policy action”. The principles of engagement are: “put the poor in the driver’s seat of poverty reduction”; “strive for an integration of interventions to overcome complementarity of constraints and exploit synergies”; “leverage and leapfrog with technology”; and “address gender inequalities”.

And the primary areas for policy action are: “accelerate the fertility transition”; “leverage the food system”; “mitigate fragility”; and “address the poverty financing gap”.

I will highlight the authors’ main points with respect to two of the principles of engagement and two of the policy action areas and provide brief comments on their implications for Nigeria. Like the Last Word, I draw attention to the emphasis in the book on the link between political leadership and poverty reduction.

Principles of Engagement

Leverage and leapfrog with technology: According to the authors, rapidly spreading digital technologies and solar power provide opportunities for tackling the poverty challenge in Africa.

However, they correctly stress that lack of access to reliable information, communication technology (ICT), electricity, and transport infrastructure and services will limit the impact of these technologies. They recommend public policies in three areas: (i) removing regulatory barriers to the technologies’ adaptation and diffusion to rural areas where a majority of the poor life and work; (ii) investing in both foundational and digital skills formation; and (iii) creating an appropriate environment to run and maintain the technologies.

Without question, Nigeria currently lags behind some African countries that are actively seeking to leverage and leapfrog with technology (for example, Kenya, Rwanda, and South Africa).

Two major explanatory factors are epileptic electricity (huge budgetary allocations from the early 2000s to date have been largely wasted) and grossly inadequate funding of education and skills acquisition. There is a need for serious attention to all the three recommendations in the book at both the federal and state levels.

Address gender inequalities: The authors provide a list of disadvantages encountered by women in Africa: significantly lower human capital endowments; less access to labour markets; lower wages; more limited access or title to productive assets (for example, land and credit); and fewer political and legal rights.

And they highlight the serious negative consequence: gender inequality can trap women in poverty and generate a vicious cycle for their children

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Notwithstanding some differences across Nigeria’s different cultural groups, the overall verdict that women face serious disadvantages compared to men would be valid across the states of the federation.

I strongly commend the advice of the Nigerian head of the African Development Bank (Akinwumi Adesina) to Nigerian governments at all levels: “Smart nations invest in women, girls…”, Vanguard, December 5th, 2019.

Nigerian governments that would like to qualify as “smart” a la Adesinashould, without delay, formulate and implement policies focused on removing the gender inequalities highlighted here.

Policy Action Areas

Accelerate the fertility transition: The authors stress the need for a decline in infertility. They make the point that this can be achieved through the promotion of female education and the adoption of family planning.

They link the decline in fertility to demographic changes that can increase both the share of the working-age population and female labour force participation.

I would confidently assert that awareness of all the points made by the authors is high or very high in Nigeria but policy champions in the centre of government (CoG) – the apex of the executive arm of government – at both the federal and state levels have been lacking.

For example, President Buhari correctly mentioned China and Indonesia as countries that have achieved significant poverty reduction in spite of “huge burdens of the population” in the citation in the opening paragraph of this essay.

However, he is yet to articulate and push the implementation of Nigerian variations on any of the specific policy actions highlighted in this book. In contrast, China, India, and Indonesia that he cited as role models have adopted and implemented varying versions of the policy actions and this has contributed to their poverty reduction achievements.

Leverage the food system: The authors focus on various aspects of agricultural development that can contribute to poverty reduction: raising both smallholder crop productivity and labour productivity of smallholders that would result in an increased income of rural poor and reduced price of staple food for the urban poor.

They also highlight the critical importance of access to cash to purchase inputs and the need for public investment in agricultural research and extension, irrigation, and rural infrastructure.

I would argue that the Buhari administration has prioritized agricultural development more than any of his predecessors during the post-1999 period with some positive results to show (for example, increased rice production and access to cash for middle to large-scale farmers via the Central Bank of Nigeria).

However, to date, agricultural development in rural areas where the majority of the farming population reside has not received adequate attention: rural population lack access to cash; agricultural extension is largely ineffective and above all, rural infrastructure is in a very poor condition, especially poor roads and lack of electricity.

Overall, then, there is a need for increased attention by Nigerian governments to how best agricultural development policies and programmes can contribute to poverty reduction.

Last Word

My last word is the link pointed up in the book between political leadership and poverty reduction:“Overlaying persistent poverty in Africa is a story of political leadership – the incentives and will of elites at both the local [sub-national] and national levels to pursue pro-poor policies” (bold and italics added).

Political leadership that leads to improved rules, institutions, and processes is contrasted with the political leadership in countries with weak institutions, high levels of corruption and poor public services.

While the former would tend to embrace pro-poor spending and policies including attention to improved public services (notably education and health), the latter is characterized by adverse political incentives that favour the elites and discriminate against the poor.

Professor Ladipo Adamolekun writes from Iju, Akure North, Ondo State.

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