Economic Renaissance by Henry Boyo
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Nigerians recently lamented the way the national football team, the Super Eagles, crashed out of the on-going World Cup in Russia. Nonetheless, the well known Nigeria penchant for always daring to stand out, ‘at any cost’, may have been embellished by last week’s announcement that Nigeria had overtaken India as number one in the world poverty rating. Out of Nigeria’s estimated total 170 million people, close to 50 percent are reportedly deemed as extremely poor.
In fact, a recent report, based on the ‘World Poverty Clock’, by the Brookings Institution shows that Nigeria now has over 87 million people living in abject poverty. Incidentally, the ‘World Poverty Clock’ was created by Data Lab, a non – governmental organisation based in Vienna, Austria and funded by the German Government, to monitor real time poverty data across more than 100 countries. Indeed, the Brookings’ 2018 Q1 projections show that “Nigeria has already overtaken India, which has 73 million poor people, as the country with the largest number of extremely poor worldwide.
Notably, Brookings Institution is a Washington DC based, “nonprofit public policy organisation, which conducts in-depth research that leads to new ideas for solving social problems at the local, national and global levels”. The institute’s recent report ranks the world’s countries according to their Gross Domestic Product, based on their respective Purchasing Power Parity per Capita (this simply means that the total value of goods and services produced nationally is divided by the total population, while the value of that product is defined by the relative purchasing power parity of the National currency).
What is clearly worrying from the report is that “extreme poverty is growing in Nigeria by six people every minute, while poverty in India, conversely, continues to fall. The report, also noted that by December 2018 (6 months hence), an estimated 3.2 million, more people, will join the poverty ranks in Africa.
Nonetheless, Nigeria’s Minister for Trade and Investments, Okechukwu Enelamah told State House Correspondents after the Federal Executive meeting on Wednesday June 27 2018 that the indices used in arriving at the report’s conclusions ‘might’ have been compiled when Nigeria was in economic recession (i.e. between August 2016 – September 2017).
The Minister, therefore, advised that “Nigerians need not lose sleep because of the report”. Conversely, Enelamah urged the Press Corps to remember that “if you are in a recession, what it means is that although your population is growing, people don’t stop procreating. Your growth ‘factor’ (‘falters’), which means that in theory, depending on how they run the numbers, you will be going the other way”.
The minister probably would have avoided his convoluted explanation, if he had the courage to confront the truth by simply checking out the parameters, including the timing and assumptions which predicated the damning report in the first place.
Instructively, however, according to the Brookings Institution, each April and October the ‘World Poverty Clock Data’ are updated, to take into account new Household Surveys (including an additional 97 surveys made available in April 2018) with new projections on each country’s economic growth culled from IMF’s World Economic Outlook. Apparently, such data, “form the basic building blocks for poverty trajectories computed for 188 countries and territories, both developed and developing, across the world”.
The Brookings study also found that extreme poverty in today’s world is largely about Africa and that Africans account for about two-thirds of the world’s extreme poor. The report, therefore, warns that if current trend persists, they (Africans) will ultimately account for 90 per cent of the world’s poor by 2030.
Nonetheless, despite the usual unfounded optimism of government functionaries, should Nigerians accept the minister’s rejection of the odious verdict of Nigeria’s pole position amongst the world’s poorest people?
Incidentally, the CIA World Factbook sources suggest that the number of Nigerians currently living on less than the International poverty baseline of $1.90/day has steadily grown from 34 per cent between 1992 and 1999 to 60 per cent (2000-6), 70 per cent (2007-10) and 60 per cent (2011-16) to 67 per cent by 2018. Notwithstanding, in 2016 our own National Bureau of Statistics reported that no fewer than 112 million Nigerians lived below the poverty line.
In reality, the average Nigerian readily regrets that life has not only progressively become “tougher” over the years, but survival has certainly become much more challenging lately, with well over 30 million ‘professional’ job seekers and millions of children deprived of formal education and the necessary skills to earn a living and remain useful, rather than constitute an oppressive public burden, with a potentially parasitic and disruptive force on national security and the economy. Furthermore, Bill Gates, the accomplished international philanthropist, who has already sunk over $1bn into critical health and made other related interventions in Nigeria, also noted with dismay, during his recent visit to Nigeria, that “per capita GDP will decline, if current education and health trends continue, with flat per capita growth”. Ultimately, according to Gates, economic growth may not match a concurrent higher population growth rate (see “Bill and Melinda Gates: Thank you for your love for Nigeria” at www.betternigerianow.com).
Nigeria will, no doubt, have to contend with the issue of population control, particularly, if Nigeria’s GDP continues to be sluggish, relative to population growth. Curiously, however, even a casual appraisal will clearly testify that deepening poverty has existed, inexplicably and simultaneously, with rising balance of payments surplus and relatively bountiful foreign reserves. Thus, we have become inexplicably poorer whenever Nigeria’s domiciliary account becomes increasingly buoyant. The richer we become in foreign currency, sadly, the poorer our people become. In this event, it is arguable that even a 50 per cent drop in population growth rate, as often recommended, may only have a marginal and ameliorative impact on the poverty level.
Similarly, the more dollars the Central Bank of Nigeria claims to have as reserves, the greater, ironically, seems to be the pressure on the exchange rate of the naira. For example, between 1995 and 1998, the naira rate remained at N80 per $1 with only $4bn reserves and barely four months’ imports cover. Conversely, the naira has inexplicably and steadily depreciated, despite an exceptionally buoyant reserve base and significantly extended imports cover for most of the years, such that the CBN is endlessly encouraged to willfully sell dollars to all and sundry, including BDCs at face value, even when the Federal Government still goes cap-in-hand to borrow the same dollars externally at cut-throat international rates for such sovereign debt.
Regrettably, weaker naira exchange rates are counterproductive as they drive higher fuel prices and subsidies values, while the resultant double digit inflation rates will further squeeze consumer demand and propel higher cost of borrowing for businesses. Ultimately, a collateral reduction in domestic production will result in an adverse shrinking impact on employment opportunities.
So, where do we go from here? Surely, with an International poverty base of $1.90/day, more Nigerians will still earn below poverty wages, even if N65,000 becomes the new minimum wage.
Invariably, 50 per cent of Nigeria’s population and certainly well over 100 million of the next generation will live their lives in abject poverty, if the purchasing power of the majority of Nigerians continues to shrink. Instructively, the Brookings poverty ranking is based on per capita purchasing power of a country’s GDP i.e. on how much would each person get if the GDP is shared equally amongst the total population, while the per capita domestic value is expressed as the purchasing parity value of an International currency, such as the dollar. As a result, the weaker the applicable naira exchange rate, the poorer Nigerians will become.
Unfortunately, even if the price of crude oil unexpectedly approaches $200/barrel, the naira rate will still, as witnessed in the past, remain under pressure; a horrendous paradox, indeed. Sadly, this horrid reality will persist, as long as the naira rate is habitually determined in auctions of dollar rations in a domestic money market that the CBN will not deny is eternally and deliberately flushed with surplus naira.
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