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Is Nigeria truly world capital of poverty?

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The received wisdom out there is that the different economic indices available point to the fact that Nigeria is fast gaining notoriety as one country where poverty has literally become a metaphor of existence of sorts, no thanks to the poor standard of living, infrastructural deficit to mention but a few. Ibrahim Apekhade Yusuf in this report examines the issues

The truth is finally out: Nigeria has been declared world capital of poverty! But pray, is this the whole truth and nothing but the truth?

Of course, to government spin-doctors, such blanket remark is not to be taken seriously but treated as one of those cheap talks by political detractors out to undermine the government of the day.

But for discerning Nigerians, the truth is self-evident; the country is indeed in a big mess!  Of course, the contention is that the nation’s promising Gross Domestic Product (GDP) notwithstanding, it hardly matches the level of expected development.

GDP is the single most commonly referenced figure to cover the entirety of a national economy and its trajectory in a single statistic. Measured on the basis of purchasing power parities (PPP), GDP can be used for comparisons among peer countries.

Using purchasing power parity with GDP involves a decrease of bias in economy estimation as PPP takes into account the relative cost of local goods, services and inflation rates of the country.

There is no doubt that these damning verdicts have gained currency at different fora, in recent times, especially where discussion centres on the parlous state of the economy and all.

Experts’ viewpoints on state of economy

Not a few Nigerians will argue that the country’s socioeconomic well-being is anything to cheer about. Truth is, all the economic indicators show the country has gone south.

Like many commentators, former Deputy Governor, Central Bank of Nigeria (CBN), Dr. Kingsley Moghalu last Wednesday acknowledged the fact that the country was in dire straits.  And the erstwhile CBN boss put the blame squarely on lack of economic philosophy by the leaders to achieve high quality economic growth.

According to him, the country’s economy is managed mostly on an ad-hoc, reactive basis, even when it is clear that the wealth of nations is usually based on philosophical foundations.

Speaking on the theme titled, “The Secret of the Wealth of Nations and the Imperative of Economic Transformation” during the Centre for Financial Journalism (CFJ Nigeria)’s annual bullion lecture series in Lagos, Moghalu  revealed that, “According to the World Poverty Clock, Nigeria has overtaken India as the poverty capital of the world and that according to the African Development Bank (AfDB), 152 million Nigerians, out of an overall population of about 190 million, meet the criteria of absolute poverty which means that 80 per cent of Nigerians are extremely poor.”

He further said that Nigeria needs to become a developmental country with philosophical foundations so as to build a sustainable economic future and address the need for clear economic vision, situated on a philosophical framework from which economic policy should be derived.

Lamentably, he said, the pre-conditions for moving from the path of poverty to the path of prosperity is a function of the philosophical foundation for the Nigerian state, economic vision, innovation, economic complexity and institutions.

“The absence of a link between science, commercialised indigenous innovation, and economic and business activity is a fundamental obstacle between Nigeria and a quantum leap to prosperity. This gap is all the more tragic because science and technology is one area in which African countries such as Nigeria can quickly develop global competitive advantage over the Western world and even Asia,” the former CBN deputy stressed.

More damming verdicts

Also speaking at a public forum in Lagos recently, ex-Governor Peter Obi said, Nigeria was in dire need of socioeconomic turnaround.

Obi who was part of a panel at the maiden edition of Ripples Nigeria Dialogue, an initiative of the Ripples Centre for Data and Investigative Journalism (RCDIJ) observed that the country had not fared better compared to its contemporaries with whom she got independence.

While making reference to the statement credited to the Director General of Debt Management Office (DMO) that the nation’s debt is N21.7trillion, about $70billion, 17% of the GDP, it’s 17%, he described it scandalous.

“What we are going through today is the cumulative effect of leadership failure over the years.”

The former governor who attempted a comparative analysis of economic status of countries who started statehoods at the same time as Nigeria noted matter-of-factly that things have gone terribly bad for the country compared to her contemporaries.

“I always like on my own to be able to compare A-B. We started off the journey with countries like Malaysia, Indonesia; etc.These are multiethnic countries.”

Specifically, he said, “In 1980, Malaysia, as a country per capital, which is what you can actually use to measure better than GDP is $1, 660; that’s what they earned then. Indonesia was $490, Nigeria was $875. South Korea was $1740. In year 2017, Malaysia’s per capital income rose to $10,000 per capital. Indonesia moved to about $4,000. Of course, South Korea moved from $1740 to $27,000. But Nigeria is curiously under $2,000. So it means we have actually remained on the same spot and maintained our position just like we did over 35 years ago. That is not progressive at all.”

In terms of savings, he said, “Malaysia has $3b in 1980; Indonesia had $5billion; South Korea $3billion; today Malaysia is $125billion, Indonesia is $110billion; South Korea is $265billion. But Nigeria is merely celebrating $46billion. That’s if we’re even sure.”

Like Obi, famous economist, Bismarck Rewane has observed that the federal government needs to step up efforts aimed at reigniting the growth in the key sectors of the economy, in order to achieve full recovery from the lingering economic downturn assailing the populace.

Rewane, who sits atop as Chief Executive Officer, Financial Derivatives Company Limited, made this submission in Lagos at the BUSINESS EYE Annual Roundtable Discussion tagged, ‘Ensuring Sustainable Recovery and Growth in a Fragile Economy.’

Taking a retrospective look at the nation’s fundamentals and growth trajectory in the past few months, Rewane said the 1.92 per cent GDP growth rate recorded by the economy in the fourth quarter of 2017 was something to cheer about but said there was an urgent need on the part of the federal government to be proactive and ensure that genuine recovery is attained.

Rewane stressed that the Nigerian situation is slowly getting better in terms of the economic outlook, yet requires commitment, hard-work and also that demand for good governance is key to achieving the desired growth deserved in the country.

According to him, there is need for accountability and transparency in governance in both the public and private sectors of the economy. He maintained that things are not deteriorating, but getting better yet on snail speed.

The rate of GDP improvement is not enough to match the country’s population growth rate and unemployment rate; so there is much more to be done before we can get to where we should be. “Every individuals and government has to know what he can offer that will make life worth living,” Rewane submitted.

He continued: “The growth rate is way below optimal, and is insufficient to create more jobs for the 14.2 per cent of Nigerians who want to work but can’t find jobs. It is sustainable, but it means that a lot more work needs to be done and it’s too early to start celebrating.”

Echoing similar sentiments, the Chief Executive Officer, Proshare, Olufemi Awoyemi, said the federal government borrowing to pay salaries is sensitive to economic strategies for the Nigerian population.

He said two-thirds of 36 states are unable to pay salaries of civil servants, and several are heavily indebted. “An essential step to achieving a social democratic welfare state is the need to re-engineer the government through effective governance, accountability, transparency and value-for-money. The Buhari administration has shown no desire to engage with this objective.”

According to him, a reduction of personnel cost by 15 percent, and statutory transfers, overheads and other service votes by a third would yield close to N1 trillion in savings. “It has been estimated that savings of over N700 billion could be realised from the implementation of the Oronsaye report on civil service and parastatals,” said Awoyemi.

Even outsiders don’t feel good about Nigeria

Interestingly, outsiders also agree that the country needs to be ingenious as far as the economic situation is concerned.

One of the strident calls came from no other person than the co-chair of the Bill and Melinda Gates Foundation, Bill Gates.

The world’s billionaire took a swipe at the Economic Recovery and Growth Plan, launched by President Muhammadu Buhari in 2017, saying it hardly reflects Nigerians’ needs.

Gates spoke at the Aso Rock Presidential Villa in Abuja Thursday at the special National Economic Council on Investment in Human Capital, with the theme, “Human Capital Investment in Supporting Pro-poor and Economic Growth Agenda.”

He said though the ERGP identifies investing in people as one of its three strategic objectives, its “execution priorities don’t fully reflect people’s needs, prioritizing physical capital over human capital.”

Gates emphasised that investment in infrastructure and competitiveness must involve investments in people.

“To anchor the economy over the long term, Investments in infrastructure and competitiveness must go hand in hand with investments in people. People without roads, poets and factories can’t flourish. And roads, ports and factories without skilled workers to build and manage them can’t sustain an economy,” he said.

Gates said though Nigeria has unmatched economic potential, what becomes of such potential depends on the choices made by Nigerian leaders.

“The most important choice you can make is to maximise your greatest resource, the Nigerian people. Nigeria will thrive when every Nigerian is able to thrive.

He said if the government does not invest in people’s health, education and opportunities, there would be a sharp limit to how the country could grow.

He said Nigerian government’s revenue “as a percentage of its GDP is by far the lowest in the world, at six percent. That makes investing in your people difficult.”

He said his foundation was working with the Nigerian Governors Forum to help states track internally generated revenue.

Gates said his foundation had committed over $1.6 billion in Nigeria so far and planned to increase its commitment.

He said Nigeria would thrive better with strong investment in health and education, rather than concentrate on physical infrastructure, to the detriment of human capital development

Gates said though the World Bank’s World Development Report showed direct link between the level of education and improvements in employment, productivity and wages, Nigeria’s case showed that half of nation’s children could not read and write.

Vice President Yemi Osinbajo, who presided over the session, said Nigeria had strong economic growth and development ambitions, encapsulated in the ERGP.

He said all the lofty ambitions in the plan could only be achieved through the determined application of human skill and effort.

“And for that effort to be meaningful and productive it has to come from people who are healthy, educated, and who are, and feel empowered. It is this realisation that has helped ensure that one of the primary planks of the ERGP is ‘Investing in our people’. And it is for this reason that we are expanding the reach and quality of our healthcare, through the National Health Insurance Scheme (NHIS); and working to guarantee basic education for all persons, whilst also upgrading and modernising the quality of secondary and post-secondary education.

“And because this is the 21st century, we know that is also important to ensure that our young people are being prepared for the economies of the future, not the past. This means that STEM education is critical, and that technology must lie at the heart of every one of our educational offerings,” he said.

Osinbajo observed that high oil prices and economic growth of previous years had failed to translate into a better life for most Nigerians.

He said grand corruption prevented investments in healthcare and education and infrastructure as well as shamelessly robbed government policies of most of their intended impact.

He said the present administration was aware of Nigeria’s problems and prepared to tackle the challenges Dangote Foundation as well as Bill and Melinda Gates Foundation outlined.

The vice president described the government’s Social Investment Programme as key component of the Economic Recovery and Growth Plan.

Economic outlook in the eyes of NBS

It may be recalled that the Statistician General for the Federation/Chief Executive, National Bureau of Statistics, NBS, Dr. Yemi Kale had last month released the full year 2017 Gross Domestic Product growth rate for the country with the economy growing by 0.82 per cent in 2017.

The 0.82 per cent growth in GDP is an improvement over the contraction of -1.58 per cent which the economy recorded in 2016 during the period of recession.

The bureau in the report which was made available to our correspondent said the economy further consolidated its recovery from recession with GDP growing by 1.92 per cent in the fourth quarter of 2017, as against 1.4 per cent in the third quarter.

It said, “The nation’s GDP grew in Q4 2017 by 1.92 per cent year-on-year in real terms, maintaining its positive growth since the emergence of the economy from recession in Q2 2017.

“This growth is compared to a contraction of –1.73 per cent recorded in Q4 2016 and a growth of 1.40 per cent recorded in Q3 2017. Quarter on quarter, real GDP growth was 4.29 per cent.

“The year 2017 recorded a real annual growth rate of 0.83 per cent higher than –1.58 per cent  recorded in 2016.”

The NBS report said the economy in the fourth quarter recorded aggregate GDP of N31.2tn in nominal terms. This, it added, is higher when compared to N29.16tn in the corresponding fourth quarter of 2016.

In the fourth quarter of 2017, the report  said oil production averaged 1.91million barrels per day, adding that this is 0.12 million barrels lower than the daily average production recorded in the third quarter of 2017.

For the non-oil sector, the NBS report said it grew by 1.45 per cent in real terms during the fourth quarter of 2017.

The report said the non-oil sector recorded an annual growth rate of 0.47 per cent compared to –0.22 per cent in 2016.

The growth in the non-oil sector, according to the report, was driven mainly by agriculture (crop), trade, transportation and storage.

In real terms, the non-oil sector contributed 92.83 per cent to the nation’s GDP, lower from the 93.25 per cent share recorded in the fourth quarter of 2016.

Laudable as the above NBS indices show, many Nigerians are convinced that these are mere platitudes as such they don’t really amount to anything given the lingering credit crunch.

 

The post Is Nigeria truly world capital of poverty? appeared first on The Nation Nigeria.

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