Nigerians & The Burden of Poverty

Posted by admin Headlines Sunday, January 23rd, 2011

CBN governor, Sanusi Lamido Sanusi says about 70 per cent of Nigerians are currently living below poverty line, Current figures from the National Population Commission (NPC), put Nigeria’s population at about 150 million, and 70 per cent of this figure is 105 million. Michael Oche writes on this negative trend.
The governor of Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi last year caused a row when he raised an alarm over the high cost of maintaining the National Assembly which he put at 25 per cent of the nation’s expenditure, saying if the trend was not checked, it would continue to stall the growth and development of the nation’s economy.

The poverty ration in Nigeria was previously put at 54 per cent. But excess government expenditure prior to the election may have propelled an increase in the poverty line. Despite its plentiful resources and oil wealth, poverty is widespread in Nigeria. The situation has worsened since the late 1990s, to the extent that the country is now considered to be one of the 20 poorest countries in the world. Over 70 per cent of the population is classified as poor, with 35 per cent living in absolute poverty.

Speaking at the 5th Annual Microfinance Conference and Entrepreneurship Awards recently in Abuja Sanusi said the scenario is unacceptable because it poses challenges to economic growth and development.

He said: “The number of people living below the poverty line has increased to about 70 per cent. The scenario is unacceptable to CBN because the trickle down effect is low and it may take longer time than anticipated”.

“There is little reason to believe that this wider diversion can be narrowed without much intensive effort.”

Majority of these poor people reside in rural areas and cut across youth, women and elderly people. It is estimated that 12 million out of the 150 million Nigerians are unemployed; youth and women form the chunk of this figures.

According to statistic, 49.9 percent of youth within the age of 15 and 24 years residing in the urban areas have no job while 39.6 percent of their counterparts in rural areas are also not employed.

Figures from the National Bureau of Statistics (NBS), put the number of unemployed women in the urban areas at 22 per cent and those in the rural areas at 24 per cent.

Recall that, at the climax to the PDP presidential primaries, former Vice President Atiku Abubakar, wrote President Goodluck Jonathan, warning that if implemented, the 2011 budget will make Nigeria worse economically, just as he said that Nigeria was broke.

Atiku alleged that Jonathan’s administration had been characterized with excessive borrowing which, according to him, was a negation of the Fiscal Responsibility Act.

“Mr. President, let me draw your attention to the simple meaning of your budget: not one kobo of our oil revenue (at a time of oil boom) is being spent on power and infrastructure”.

Atiku, in an 11-page letter personally sent to the president warned that any budget that was centred on consumption without corresponding investments in critical infrastructure, would in turn lead to a very serious economic disaster.

According to him, “at a time of unprecedented oil boom, you have presented Nigeria with a budget of consumption; a budget of debt accumulation to imperil the future; a budget that is rich in rhetoric and pedestrian initiatives but lacking in any bold step to lay the foundation for Nigeria’s development for the next 20 to 50 years.

“I almost wept for Nigeria after reading your 2011 budget, which is your first budget as the President of Nigeria. The rest of the world must be laughing at us. For a summary, you proposed a total expenditure of N4.22 trillion to be financed by a revenue estimate of N2.83 trillion, leaving a total deficit (new borrowing) of N1.4 trillion”.

“Mr. President, you plan to borrow 33 per cent of the entire budget, or 3.62 per cent of GDP which is higher than the 3 per cent stipulated in the Fiscal Responsibility Act. Your total debt service is N542 billion (which is higher than your total capital spending on power, roads, health and education put together). Your total recurrent expenditure (including debt service) is N3.023 trillion, meaning that with a revenue of N2.83 trillion, your government plans to borrow money to finance recurrent expenditure even if capital budget is zero. Your recurrent budget is 107 per cent of total revenue. Put differently, your capital budget is N1 trillion whereas, your deficit or planned borrowing is N1.4 trillion, meaning that even with a zero capital budget you plan to borrow about N400 billion to add to revenue to finance consumption. Mr. President, no one needs to be an economist to appreciate that this is a disaster.”

“If you continue to borrow at the average interest rate of 14 per cent by the 2012 budget, your borrowing in 2011 will add another N196 billion to debt service payment (and hence by 2012 debt service might be in excess of N738 billion). At the rate you are going, by 2015, debt service payment will be in excess of N1 trillion.”

Poverty is especially severe in rural areas, where social services and infrastructure are limited or non-existent. The great majority of those who live in rural areas are poor and depend on agriculture for food and income. About 90 per cent of the country’s food is produced by small-scale farmers cultivating tiny plots of land who depend on rainfall rather than irrigation systems. Surveys show that across the country, 44 per cent of male farmers and 72 per cent of female farmers cultivate less than 1 hecter per household. Women play a major role in the production, processing and marketing of food crops. The poorest groups eke out a subsistence living but often go short of food, particularly during the pre-harvest period. A high proportion of rural people suffer from malnutrition and other diseases related to poor nutrition. The HIV/AIDS pandemic has also taken a heavy toll among the rural population.

Rural infrastructure in Nigeria has long been neglected, while investments in health, education and water supply have largely been focused on the cities. As a result, the rural population has extremely limited access to services such as schools and health centres, and about half of the population lacks access to safe drinking water. Limited education opportunities and poor health perpetuate the poverty cycle.

The neglect of rural infrastructure has also reduced the profitability of producing for the markets. Nigeria’s rural road network is one of the least developed in sub-Saharan Africa. The poor tend to live in isolated villages that can become virtually inaccessible during the rainy seasons. When there is a post-harvest marketable surplus, it is not always easy to reach the markets. Limited accessibility has also cut off small-scale farmers from sources of inputs, equipment and new technology. Crop yields are low because farmers lack these inputs. In particular, inadequate access to fertilizer is a real problem in many parts of the country where farmers have to cope with diminishing soil fertility. The situation is aggravated by the fact that many farmers have access only to small parcels of land for cultivation.

As the population swells and puts pressure on diminishing resources, escalating environmental problems further threaten food production. Land degradation, as a result of extensive agriculture, deforestation and overgrazing, is already at an alarming level in many parts of the country. Drought has become common in the north, while in the south and south-east erosion provoked by heavy rains, floods and oil pollution is a major problem. Large parts of Nigeria’s primary forests, and the wildlife that they harbour, are disappearing.

Poverty and violence are often closely interconnected. Both religious and ethnic tensions continue to brew in different parts of Nigeria, erupting into outbreaks of violence and leading in turn to a situation of escalating poverty and malnutrition. The move towards political liberalization has allowed militants from religious and ethnic groups to express their frustrations freely, and with increasing violence, thousands have died over the past years in clashes between different ethnic and religious groups.

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