News Investigators/ The Independent Media and Policy Initiative (IMPI) has blamed poor management of Nigeria’s resources for the high poverty rate in the country over the years.
This according to the think tank is why more people fell below the poverty threshold during the multiple oil boom periods between 1980 and 2015.
In a policy statement signed by its Chairman Dr Omoniyi Akinsiju, IMPI argued that Nigeria’s poverty story was a case of a self inflicted economic malady as a result of inappropriate policies.
It said: “Poverty did not just happen in the Nigerian economic sphere; it was consequent upon a deliberately concocted mix of inappropriate policies deployed by a ruling elite that had no idea of how to manage the huge revenue earned from crude oil exports to impact growth and development.
”As some other oil-exporting countries have found out, a dramatic increase in revenues from a product such as oil, when not managed prudently, produces what has come to be called the “Dutch disease.” This phenomenon has adverse repercussions in other sectors of the economy. The disease is most pernicious when the revenue increase that starts the problem reverses itself. The immobility of resource flows compounds the problem.
”It begins with the increase in revenues, which causes an appreciation of the real effective exchange rate as seen in the early 1980s. This changes the relative profitability of tradable vs. non-tradable goods
”If oil revenues fall, as they did dramatically in Nigeria between 1980 and 1986, the economy is left with a highly capital-intensive production structure that can not pay for the new, higher level of imports.
”For Nigeria, the exchange rate appreciated fivefold, and the relative profitability of domestically produced and resourced goods fell. The country became a net importer of agricultural commodities, particularly food, after having been a major exporter of crops such as cocoa, palm oil, kernels, and rubber, and largely self-sufficient in food.
”Added to the “Dutch disease” was what came to be called the “Nigerian disease,” where so much labour was sucked out of the rural sector into non-tradable production by temporarily higher nominal wages in the urban sector, thus, agriculture was further constrained by the absence of sufficient male workers.
”Excessive mechanisation of agriculture by better-off farmers, due to subsidies and under-pricing of capital goods, further displaced labour in rural areas.
”The Misallocation of resources in agriculture also included the construction, but not completion, of huge irrigation dams, which drew capital into agriculture but produced few production benefits.
”Although the authorities attempted to compensate for the distorted domestic terms of trade through fertiliser and interest rate subsidies, these actions led to further inefficiencies in resource allocation, which tended to benefit large, better-off farmers but not small farmers who became poorer.
”Overall, the government’s investments were largely unprofitable, and few were in labour-intensive production, thereby creating relatively little employment.
”In fact, real wages in Nigeria, after rising sharply between 1972 and 1975, declined on average from 1976 to 1994, especially in urban areas and in the industrial sector, as the increase in the labour force exceeded demand.
”Thus, while the high oil revenues were potentially very positive, their management proved very destructive in terms of the negative impact these policies had on domestic production other than oil, and their limited impact on the generation of domestic employment and domestic income.”
IMPI noted that failure to put in place adequate protection for vulnerable Nigerians made it easier for many people to fall into poverty inspite of economic growth
.
”Following the collapse of oil prices in 1982 and the rise in real interest rates, Nigeria experienced rising inflation, strict rationing of foreign exchange, and the possibility of debt rescheduling. This coincided with the rise of parallel markets so that an illegal, floating-rate parallel market coexisted with an official, fixed-rate market. This marked the irreversible unravelling of a once-upon-a-time prosperous economy.
”Despite the government’s large expenditures on the social sectors during the oil boom years, it failed to put in place policies to ensure sustainability, or an adequate safety net to protect the most vulnerable groups, whose poverty worsened even during the recovery years of 1985 to 1992.
”A critical examination of the growth rate of Nigeria’s GDP shows that there has been an appreciable upward trend, particularly in the present democratic political dispensation. For instance, according to CBN, the annual growth rate of GDP in 2006 stood at 6.0 per cent, and this rose to 6.50 per cent in 2007.
”This trend declined in 2008 to 6.0 per cent and later jumped to 7.90 per cent in 2010. This development suffered a setback in 2011 and 2012 but made a reverse in 2013 and 2014, during which the growth rate of the economy stood at 6.90 per cent and 6.90 per cent respectively.
”Following the GDP rebasing by the President Jonathan administration in 2014, the annual growth rate later rose to 7.44 per cent. Looking at this appreciable economic growth in Nigeria during the year under review, one would have expected the rate of poverty in Nigeria to be at its minimum level but not so.
”Nigeria had emerged as a perennial jurisdiction of disproportional percentage of the poor and vulnerability relative to the larger population, with implications for a constrained economic-carrying capacity,” it said.
The think tank is however convinced that the Tinubu administration’s poverty-reduction initiatives are more likely to alleviate multi-dimensional poverty to the extent of proving World Bank’s estimate of 139 million poor Nigerians by the end of 2025 wrong.
“These include subsidized access to dialysis, one of the administration’s poverty reduction programmes which slashes the cost per session from ₦50,000 to ₦12,000. The subsidy is already being implemented in federal hospitals across the six geopolitical zone; agricultural loans and microfinance for farmers and small businesses up to ₦100,000 per beneficiary under FarmerMoni, a scheme designed to support small-scale farmers engaged in poultry, aquaculture, livestock rearing, and crop production and an expanded Home-Grown School Feeding Programme targeted at reaching 20 million children.
“Others are monthly Pension Increase of N32,000 for all retired federal employees under the Contributory Pension Scheme (CPS) from a N758 billion bond approved by President Tinubu; the Tertiary Institutions Staff Support Fund (TISSF) to provide financial support and professional development for staff of tertiary institutions across Nigeria and the Creative Economy Development Fund (CEDF), a scheme under which creative businesses across Nigeria can apply for grants, loans, and equity investments up to $100,000 to scale their operations.
“There is also a new national skills programme aimed at connecting 20 million young Nigerians to jobs, training, and entrepreneurship opportunities by 2030; a World Bank-supported vocational programme known as Innovation Development and Effectiveness in Acquisition of Skills (IDEAS) domiciled in the education ministry to train 30,000 youths in 36 skill areas as well as cash transfer for 15 million vulnerable Nigerians and their families and Digital Access and Livelihood Initiative (DALI), a demand-driven national talent pipeline designed to link foundational and work-readiness training directly to guaranteed jobs or enterprise pathways,” it added.
Think tank blames historically poor management of resources on Nigeria’s high poverty prevalence
