Nigeria, our beloved country is often referred to as the “Giant of Africa.” Yet, this giant of Africa is paradoxically grappling with a staggering level of poverty, which from statistics is growing by the day despite so-called palliatives thrown at it over the years.
Since the Obasanjo years when the term palliative was coined and introduced into Nigeria’s lexicon, all succeeding governments in Nigeria have followed that route, yet poverty’s advance and onslaught against the populace is unceasing.
This then brings to question the wisdom of continuing to thread in the same direction that has brought the nation no respite.
As every economist knows, throwing money at problems solves them not. Rather, money thrown at problems tends to exacerbate the wahala.
Many studies have shown this. The cobra effect has shown this clearly. When people in India were paid money to hunt down cobras, the authorities noticed that rather than abate, more and more cobras were being killed and tendered. In fact, more snakes were being killed when with the slaughter, their population should have reduced. On closer study, it was discovered that people were just breeding cobra and, killing them for the bounty.
Clearly, when money is applied wrongly to a problem, in many instances, the problem gets worse. This is exactly what is happening to poverty in Nigeria as a result of palliatives and so-called empowerment.
First off, every sociologist knows that not everyone in society can be a productive entrepreneur. When you give non entrepreneurs money, they tend to shunt to consumption rather than to production. This is what has happened to all the money showered on SMEs over the years.
Furthermore, palliatives tend to induce a dependency syndrome which is the root of what is now known and called “entitlement mentality” in our society.
Obviously, these palliatives have ended up achieving the opposite effect. Rather than eradicate poverty, it had deepened it instead to a point where 70% of our populace are considered multi dimensionally poor.
Palliatives have not eradicated poverty, instead, it has created a huge population that is waiting for government handouts.
The recent removal of the fuel subsidy had triggered widespread anger, accentuating the urgent need to review the concept of palliatives.
Borrowing For Palliatives
Recently, the Tinubu Administration’s plan to borrow $400 million for these palliatives had sparked debates on the sustainability of such measures.
The $400 million would bring to $1.2 billion the amount the Federal Government is borrowing from the World Bank for the conditional cash transfer to vulnerable Nigerians as it had earlier secured a loan of $800 million for the same purpose.
The news of the government’s plan to borrow $400 million jolted many Nigerians, who were told that the removal of fuel subsidy would enable the government to save more money to spend on infrastructure and other necessities. But while the masses are still adjusting to life without fuel subsidy, the government, which has insisted that subsidy on petrol did not return, has already borrowed $1.95 billion between June and September 2023. The fresh $400 million loan alongside the $3 billion borrowed by the Nigerian National Petroleum Company Limited (NNPCL) will bring Tinubu’s external borrowing to over $5.350 billion. That is about N4.1 trillion.
President Tinubu had taken a $700 million loan to expand the Adolescent Girls Initiative for Learning and Empowerment (AGILE) projects to 11 states. The international financial institution earlier in June approved the first loan of $750 million for Nigeria to boost the country’s power sector through the Power Sector Recovery Performance-Based Operation. Another $500 million loan has been taken under the Nigeria for Women Programme Scale Up (NFWP-SU). With the increasing borrowing, each Nigerian is now owing above N400,000 as Nigeria’s indebtedness to the World Bank moved from $6.29 billion in 2015 to $13.46 billion in 2022. Nigeria’s total debt has jumped from N87.4 trillion in the second quarter of 2023 to about N91.5 trillion currently.
In August the Federal Government had approved N5 billion for each state and the Federal Capital Territory (FCT) to enable them to procure food items for distribution to the poor in their respective states. It had been alleged that much of the money ended up in the pockets of state governors who allegedly converted some of the money to United States dollars. This ended up worsening the state of the value of the naira in the international arena.
There are also widely reported allegations that in most of the states the foodstuff that was bought by the state governments, including the ones supplied by federal government, were diverted to markets by government officials saddled with the responsibility of distributing it.
In any case the palliatives were like a drop in the ocean in a country of over 220million people. There are viral videos of people fighting over few available bags of rice, with a ward in a local government getting a paltry bag of rice for thousands of citizens.
It was really disgraceful what Nigerians and the rest of the world had seen in the distribution of the so-called palliatives.
Having established that the government’s palliatives are colossal failure and waste of scarce resources, we need to understand the root causes of Nigeria’s poverty crisis, and seek comprehensive, sustainable solutions to uplift the nation from its status as the poverty capital of the world.
The Root Of Nigeria’s Poverty
We need to understand Nigeria’s poverty challenge, if we are to properly address it or we will continue to chase shadows. Nigeria’s wealth of natural resources, particularly oil, has not translated into widespread prosperity for its citizens. The nation faces multifaceted challenges, including systemic corruption, inadequate infrastructure, poor governance, and a burgeoning population. These issues contribute to the alarming poverty rates and hinder the effective distribution of resources.
In response to the public outcry, the government has proposed borrowing millions of dollars to implement palliatives, including cash transfers and social intervention programmes. While these measures aim to provide immediate relief, questions arise about the sustainability of borrowing for short-term solutions and the potential long-term consequences on the nation’s economy.
Sustainable Solutions To Alleviate Poverty
Diversification of the economy is at the epicentre of the alleviation of the disabling poverty in the country. Nigeria’s overreliance on oil revenue makes its economy vulnerable to global oil price fluctuations. Diversifying the economy by actual investing in agriculture, education, technology, and other sectors can create alternative revenue streams, fostering economic resilience.
Adequate infrastructure is pivotal for economic growth and poverty reduction. Focused investments in roads, electricity, healthcare, and sanitation can create an enabling environment for businesses to thrive and improve overall living standards.
Government-led initiatives and partnerships with the private sector can spur job creation. Supporting small and medium enterprises (SMEs) and fostering entrepreneurship can provide sustainable employment opportunities, while establishing robust social safety nets, such as comprehensive healthcare and targeted poverty alleviation programmes, can provide a safety cushion for vulnerable populations.
Nigeria stands at a critical juncture in its fight against poverty. While the current palliative measures may provide temporary relief, a comprehensive, sustainable approach is imperative to address the root causes of poverty. The government’s role in fostering transparency, combating corruption, and investing in diversified economic sectors is pivotal. By embracing a multifaceted strategy that prioritizes education, infrastructure, job creation, and community empowerment, Nigeria can pave the way for a brighter and more prosperous future for its citizens.
MAY NIGERIA REBOUND
