Minister of state for Budget and National Planning, Prince Clem Ikanade Agba
By Prince Clem Ikanade Agba
PETER Drucker, the management guru, is often quoted as having said: “You can’t manage what you can’t measure.” But I wish to follow up with an addition that is as relevant and critical, which is: “If you can’t measure it, you can’t improve it.” These quotes are important premises for this discourse.
On November 17, 2022, the Federal Government launched a new tool for measuring poverty in Nigeria, which found that 63 percent of people – 133 million Nigerians out of an estimated population of 211 million – are multidimensionally poor. This new tool: Multidimensional Poverty Index, MPI, has been deployed in over 100 countries and defines poverty as the overlapping combination of deprivations that people can face in several areas of their lives. This is markedly different from the narrow focus on only monetary poverty measurements.
In fact, it is not only the hitherto narrow focus on monetary poverty measurement that the MPI has exposed, it has also exposed how largely unaccountable subnational governments have been in the management of public finance. What have been the contributions of state and local governments to poverty alleviation? It is patently unfair to leave the Federal Government alone to take on the task of poverty alleviation in the country.
For instance, if you want to invest in agriculture, you need land, and this land belongs to the states. Unfortunately, the states are not investing in their rural areas. They spend money in urban areas, borrowing, for instance, to build airports and other unnecessary projects, and competing with one another to construct flyovers in their capitals.
These funds should have been invested in building solid rural roads, especially in the agro-corridors, to cut down on post-harvest losses, which are currently put at 60 percent of total yields. Enhancing the food supply chain from rural to urban areas will ensure food availability and security as well as help address the problem of inflation.
It is important to note that while the recently launched Nigeria Multidimensional Poverty Index, MPI, (2022) provides a new perspective on poverty, it complements rather than replaces monetary poverty data. Likewise, it does not measure the same households in its sample as Nigeria’s monetary poverty line, but through its 15 indicators grouped under the four dimensions of health, education, living standards, and work and shocks, it sheds further light on the lived experience and nature of poverty for Nigerian households. Monetary versus MPI, which is better?
While their results differ, both provide a holistic insight into the poverty status of the country. The proportion of the estimated 211 million population in Nigeria who are multidimensionally poor is higher at 63 percent (133 million) than the proportion of the population (40.1 percent) living below Nigeria’s poverty line of Naira 137,430 per person per year, based on the 2018–19 Nigeria Living Standards Survey, NLSS, by the National Bureau of Statistics, NBS. Notwithstanding the lower 2018 monetary poverty figures, the monetary poverty status of Nigeria remains lower as of today.
Based on the World Data Lab poverty model, and a poverty threshold of $1.90, the World Poverty Clock calculates that in Nigeria, people living in extreme poverty in monetary terms are 69.9 million, or 32 percent of the estimated population of 215 million used for its projections.
These figures are important to highlight in the first place in order to lay the foundation for the facts stated below: Nigeria is NOT the world’s poorest country, either in multidimensional or monetary terms. According to the World Bank, currently, the top 10 countries with the highest monetary poverty rates in the world are: South Sudan (82.30 percent); Equatorial Guinea (76.70 percent); Madagascar (70.70 percent); Guinea-Bissau (69.30 percent); Eritrea (69.00 percent); Sao Tome and Principe (66.70 percent); Burundi (64.90 percent); Democratic Republic of the Congo (63.90 percent); Central African Republic (62.00 percent); and Guatemala (59.30 percent). Meanwhile, according to the Global MPI, conducted in 111 countries and released in September 2022 by UNDP and the Oxford Poverty Human Development Initiative, OPHI, India has by far the largest number of poor people worldwide at 22.8 crore.
The global MPI is an internationally comparable index computed by OPHI and the UNDP on multidimensional poverty, using data available across the 100+ countries being studied. The Nigeria Multidimensional Poverty Index, MPI, (2022) was conducted in the 109 senatorial districts across the 36 states, including the Federal Capital Territory, FCT.
As detailed in the report, the highest contributors to the 133 million poor people are those living in rural areas; that is, within local government areas and at ward levels. The national result shows that 132.92 percent of approximately 133 million people are poor; rural areas contribute 105.98 million to this figure, while urban areas contribute 26.94 million.
These rural areas contributing the most to the country’s poverty status are outside of the Federal Government’s obligations but sit squarely within the jurisdiction and legal responsibilities of sub-national government, that is, state governors and local government chairmen and councilors. The surveys were conducted at primary healthcare centres, PHCs, for the MPI health dimension; and in primary schools for the education dimension. PHCs and primary schools are the responsibilities of the sub-national government.
The Federal Government now has, with the deployment of the MPI measurement tool and these findings placed in the hands of state governors, LGA councillors, the legislature, the private sector, and other key stakeholders, a policy tool to help address the overlapping, multi-sectoral deprivations that people face.
It is only when the sub-national government collaborates with the Federal Government and adopts this data-driven and evidence-based approach to governance that we can truly and positively change the trajectory of poverty in our country. President Muhammadu Buhari remains unwavering in his commitment to eradicating extreme poverty in all its forms; hence, beyond the deployment of the MPI survey, the Federal Government has begun using the results as a policy tool.
The 2023 budgeting process aligned resource allocations with the findings of the Nigeria MPI (2022) results. Dimensions with the highest contribution to deprivations were prioritised in the 2023 budget: security, education, health, infrastructure, and related social development and poverty-reduction activities. These sectors, identified as “dimensions” in the MPI, are the top five priority sectors in the 2023 national budget, accounting for N8.074 trillion of the total N20.5 trillion national budget.
* Prince Agba is Minister of State for Finance, Budget and National Planning and supervises the National Bureau of Statistics (NBS).