Tuesday, August 23, 2011

Its not bad luck , its the system

Nigeria is one of the most unequal nations in Africa and the world. And like many other resource-rich nations, 'growth’ has not led to sustainable job opportunities. The so-called economic growth only benefits a narrow band of Nigerians – whether under dictatorships or democratic rule.

Nigeria’s population is three times that of South Africa, its economy is second to theirs in Africa. Nigeria are the 37th largest economy in the world, and 11th in terms of labour force (about 48 million, according to 2010 estimates). So how come its one of the most impoverished countries in Africa and the 25th poorest in the world? Global average income is about $25 per person per day. In Nigeria, about half live under $2 a day – on the threshold of poverty. Two-thirds of the population lives under or around $1.25 a day – in extreme poverty. Twenty centuries after the development of scripts and the numeric systems, about 44% of the population still lack basic literacy and numeracy skills.

While the economy grew, the incomes of the poor have not, even with the new minimum wage. This is especially true of the rural and urban poor who together, account for much of Nigerian poverty. At current rates, it is estimated that by 2015, Nigeria will have more poor people than India and China who have more than a billion people each. In fact, the World Bank includes Nigeria in the list of top 15 places with the highest incidence of poverty. Of our 162 million people, 90 million live below the poverty level of $2 a day, despite billions of dollars in oil revenues. Of that 90 million poor people, 60 million are dependants.

In 1980 only an estimated 27 percent of Nigerians lived in poverty. By 1990, it had grown to 70 percent. In 2010, over 58 percent of the population lived under the new poverty threshold of $1.25 a day.

Nigeria’s poor are in two distinct groups: the working and non-working population. Poverty is prevalent in both rural and urban areas, though large numbers of rural folk constantly migrate to urban areas in search of work. This is not unconnected to the fact that typical households in rural areas only cultivate 1 hectare of land annually which is only capable of producing about N80, 000 worth of food crops. From this, the household may earn N80, 000 ($500) or N219 per day, for a family of 6-7 people. Each member of that family lives on approximately N32-37 per day. Supplementary income from cattle, fishing or other wage labour, does not amount to much. There are few activities in the rural areas that create jobs apart from labour intensive agriculture; even this is seasonal. The landless farm labourers have little to do in the off-season, unless they seek work in the urban areas.

The urban poor – mostly uneducated and unskilled migrants from rural poverty – only have their physical bodies as capital. Urban wages may be higher than the rural, (for the same kind of work, urban wage rate can be 50–100% higher), but workers sometimes end up poorer because most of their meager earnings is consumed by the higher costs of living. With the new minimum wage, the typical urban poor earns between N18,000-20,000 (or N240,000 annually). This translates to approximately N658 per day and in the smaller urban household of 4 would amount to N164 per person per day - less than the poverty line of N200 a day.

Charity, welfare and aid initiatives are not enough, nor do they work. Even if poverty alleviation funds were collected through taxation or voluntary contributions, it is highly doubtful if they can be efficiently delivered. Reliance on luck will not take us any further than where we are.

Adapted from an article by Nasir El-Rufai, a former federal minister, in the Daily Independent

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