Investing in Nigeria’s poor (1) By Opeyemi Agbaje


Vice President Yemi Osinbajo is reported to have claimed recently that 110 million Nigerians have been impoverished by previous Nigerian governments. I am not surprised that his statement has not attracted the kind of furious debate such a statement would be expected to provoke, because I have made similar statements, in not quite the same words, for more than a decade to barely any response from those who should normally be interested. The point is that Nigeria’s elite – politicians, business persons, government, even media – scrupulously avoid discussions about how policy affects the poor, except on those occasions (such as regarding fuel subsidies or university fees!) when patently middle-class benefits are extracted from the state in the name of the poor!
In “Taking reforms to the social sector” published in BusinessDay on 17 October, 2005, I wrote of the Obasanjo regime: “Having to some extent created a basic structural framework for economic reform, I would argue that government must now increase its attention to the social sector – education, health, unemployment, rural infrastructure and urban squalor –otherwise the ultimate goal of poverty reduction will not be achieved. At the end of it all, the goal of all public policy (economic reform included) is the improvement in the quality of life at the level of the individual citizen; on a sustainable basis…ignoring the people may result in a massive backlash against economic reform.” That predicted backlash has of course occurred and Nigeria’s government has not impressed its people in spite of strong economic growth and macroeconomic reforms as the populace sniggers metaphorically, “What is in it for us?”

In that article, I urged policy interventions in those areas that affect the poor: “Government is better off taking the initiative with appropriate interventions in the education, health, social welfare, public transportation and rural infrastructure areas to improve the quality of life of the average Nigerian. Unfortunately, instead of the imperative of poverty reduction, there seems to be an emerging trend towards ‘crony capitalism’ where government appears to be misunderstanding the free enterprise economy to mean empowering a few millionaires and billionaires to become multi-billionaires, rather than strengthening and growing the middle class – a trend that may yet discredit the reform programme.”

I made the same point years later in this column in “The progressive agenda” published on February 2, 2011 and repeated two weeks later on February 16, 2011, calling for “investments in the socio-economic rights of the citizenry, especially public education and health services, full employment, mass housing and urban mass transit; improvement in public infrastructure, particularly transport and power”.

Last year I wrote a three-part serial titled “Why Nigerians are poor”. It was based on a lecture I delivered at the Third Annual Bola Tinubu Colloquium on March 29, 2011 on “The economy: Why it’s not working for the majority” in which I explained the structural, policy, socio-economic and constitutional foundations (yes, Nigeria’s pseudo-federal structure which disempowers states at the expense of a wasteful and inefficient Abuja bureaucracy contributes to increasing poverty!) of Nigeria’s worsening social crises. In Part 1 published on February 12, 2014, I wrote: “I have identified problems with our economic structure which perpetuate poverty, unemployment, inequality and social exclusion in Nigeria – with the pattern of domestic production (otherwise called GDP), government spending, exclusion of MSMEs from financial sector lending and dominance of oil of gas by the public sector through an un-restructured NNPC.” In the second part published on February 19, 2014, I wrote: “I have often wondered what kind of elite hopes for ‘peace and security’ in a nation in which there are one hundred million people living in poverty. It is highly unlikely, indeed probably impossible, for Nigeria to enjoy sustainable peace or law and order until we address the lopsided economic growth that creates billionaires in units and poverty and destitution in hundreds of millions!”

I also examined other causes of increasing poverty, unemployment and inequality including low industrialisation due to inefficiencies in power; transportation; money, credit and finance, particularly interest rates, inflation and absence of long-term finance; corruption, sub-optimising human capital through poor state of education, health and other social services, and policy and implementation failures – failure to leverage oil and gas for diversification; failure to modernise agriculture; ineffective industrial policy (or none at times); and absence of functional urban mass transit systems. In the final part on February 26, 2014, I made the point that “the evidence is irrefutable that Nigeria’s immense endowments have not benefitted the vast majority of its people – approximately 70 percent of the population is poor; about 30 percent are unemployed; 40 percent of the youths have no jobs; 30 percent of our people remain illiterate; life expectancy is just 52 years; and the country exhibits poor human development with HDI of 0.471”. I also argued that “we require aggressive social policy – it should be clear that the primary role of government is to help the poor and vulnerable. We need public education reforms, investments in public health, and creation of sustainable financing structures for both health and education. Government must also consider the provision of unemployment support.” Unfortunately, having failed to invest in empowering the poor through sixteen years of economic growth, we now have to redress the situation at a most difficult period when oil prices and government revenues are down and economic growth is slowing!

In “Poverty and the flow of capital” published on March 26, 2014, exactly one month after the series referred to above, I returned to the subject, making the precise point our vice president now makes, thus: “Government in Nigeria is not primarily a system of offering social services to the citizenry, especially the poor. It does not by-and-large provide security for the common man; and it fails to prevent breach of its laws, especially by the rich, strong and powerful. In short, Nigeria’s governments do not perform, at least not successfully, the critical functions for which governments and thus politics were established. Instead, politics is essentially a vehicle for seeking capture of state resources which are obtained primarily from extractive resources. It is not a coincidence that the richest Nigerians are present, past or ‘present-continuous’ officeholders and their friends, agents and associates. Nigeria’s corruption is offensive not just because it denies the public services and infrastructure, but because it subverts the flow of capital, putting enormous resources in the hands of a few, who then hide those resources in physical, monetary or other assets within or outside the country, turning resources which should have generated wealth for all into essentially ‘dead capital’.”