John Campbell

Africa in Transition

Campbell tracks political and security developments across sub-Saharan Africa.

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If Nigeria Is So Rich, Why Are Nigerians So Poor?

by John Campbell
April 13, 2012

A man selling books at a roadside stall waits for customers in the Lagos Island district March 26, 2012. (Akintunde Akinleye/Courtesy Reuters) A man selling books at a roadside stall waits for customers in the Lagos Island district March 26, 2012. (Akintunde Akinleye/Courtesy Reuters)

Femi Awoyemi, in a lucid and thoughtful article in the April 5 Leadership (Abuja) highlights that more than ninety percent of Nigeria’s population is poor “and exists largely at the mercy of fate.” In his “Nigeria: Paradox of the Country’s Economic Growth and Poverty Levels,” he highlights the results of the Harmonized Nigeria Living Standards Survey prepared by the National Bureau of Statistics. This survey shows that that 69 percent of the population fits the “Nigeria poverty profile,” and that poverty and inequality have increased since 2003/2004. Yet, ostensibly the country’s economy is growing at the rate of seven percent a year.

If Nigeria is getting richer, how can Nigerians be getting poorer?

Drawing on the statistical data, Awoyemi observes that much of the growth is related to oil, telecoms, finance, the stock market and real estate. And civil servants and corrupt politicians are also doing well. Yet none of these industries are labor intensive and do little to reduce the country’s very high unemployment rate. A consequence is that the distribution of income is getting worse, not better.

Citing Central Bank governor Lamido Sanussi, Awoyemi observes that Nigeria’s macro-economic policies have encouraged import consumption rather than local production. To address increasing poverty, Nigeria needs a “growth inclusive” model that will emphasize domestic production of goods consumed and that will reduce unemployment.

Post a Comment 9 Comments

  • Posted by Maduka

    I agree more with Femi than I disagree, but I have a few points.

    1. All statistics here are suspect. These statistics are based on the last census which was adjudged to be inaccurate. For example, the population of Lagos was estimated to be 9.01 million and that of Kano was estimated at 9.38 million. Meanwhile, as far back as 1996 the population of Lagos was estimated to be 10.9 million (UN estimate).

    Today, most informed observers estimate the population of Lagos to be nearer 20 million than 10 million.

    If we cannot accurately account for how many Nigerians live in Nigeria, then how useful are our statistics?

    2. Neither MTN, nor Dangote pay much attention to Nigerian poverty statistics and the success of these businesses (and the growth of the retail sector) suggests that a significant proportion of the population have rising levels of disposable income.

    This growth may be uneven and may be more skewed towards Southern Nigeria, but we certainly don’t have enough data to categorically state that “poverty levels” nation-wide are increasing.

    The increase in the number of Nigerians who can afford white goods, generators and motor vehicles suggests that the trickle-down effect of economic growth is more significant than official statistics suggest.

    3. How much economic activity in Nigeria’s major urban centers in accurately captured by these statisticians? I once attended a presentation on Nigeria’s economic indices and it was full of meaningless and inaccurate statistics (the number of female parliamentarians was taken as a measure of “gender inclusiveness” and no one could provide an accurate estimate of economic activity in urban centers like Aba and Onitsha).

    In a nutshell, I think that poverty is on the rise in Northern Nigeria but I also suspect that the population of Northern Nigeria is overstated (I don’t believe Katsina State has a larger population than Oyo state which includes towns like Oyo and Ibadan, there is no comparable urban center in Katsina). This means that poverty rates nation-wide may be slightly over estimated.

    We need to create inclusive growth, but we also need to stop lying to ourselves and start producing accurate statistics.

  • Posted by Zainab

    The comment I made a few months ago on this blog on the post “A Tale of Two Nigerias” I guess still applies,

    Excerpts of that comment go thus:

    “…there are two Nigerias. The one that analysts and economists like to believe is experiencing economic growth of between 6-8% per annum with rising incomes and an educated middle class mostly restricted to the core of Abuja, Lagos and several other cities and the other half, the rest of Nigeria in the outskirts and slums of these cities and other parts of the country.

    I read some “funny” (its anything but funny) report sometime last year which claimed Nigeria’s middle class was growing. Some of us challenged such a study and the methodology used because surely it should be obvious to any keen observer, much less an “expert” that Nigeria’s middle class is doing anything but growing. Not surprisingly, the government capitalized on this report, using it to brag for a few weeks before holes were punctured in said report. You can read it here: http://www.thisdaylive.com/articles/survey-nigerias-middle-class-growing/99455/

    Now, the National Bureau of Statistics’ recent report released on the 13th of February reveals that poverty in Nigeria is GROWING despite the country’s “economic growth”. The report states that percentage of Nigerians living in absolute poverty rose to 60.9 percent in 2010, compared with 54.7 percent in 2004!!! I think some economists and analysts need to remember more than anyone that there is a distinction between economic growth and human development. The so-called economic growth, on closer analysis is a false bubble built around the capital intensive oil sector and oil revenues, there is little growth in the non-oil sector which has been neglected, and which incidentally is a larger employer of labour.”

    There is a huge gap between economic growth and overall development. Even this much touted economic “growth” is disputable because as Awoyemi observes, the growth is not in the labour intensive sectors of the economy, rather in oil, real estate, telecoms etc which are capital intensive and hardly generate mass employment, for instance.

    In the April 2012 issue of the African Business magazine, out of a list of the top 250 companies in Africa, there are only FIVE (5) Nigerian companies in the top 50; and ONLY ONE (1) Nigerian company in the top 20 and top 10 respectively, which is Dangote Cement! The picture is glaringly clear.

  • Posted by John P. Causey, IV

    “Poverty reduction in the north would certainly remain an illusion so long we continue to deny women their rightful role in the economic processes by guaranteeing adequate empowerment like we have seen in our recent history”, Sanusi stressed.”

  • Posted by John P. Causey, IV

    One of the articles linked, describes an interesting point. It argues that unlocking the human capital potential in the Female demographic of the Northern part of Nigeria is the most effective and efficient manner for Nigeria to advance economically. Very interesting, and would have other (and perhaps greater) implications as well. The fact that a Central Bank Governor is speaking to these matters is intriguing.

    Quote from the article:
    “Poverty reduction in the north would certainly remain an illusion so long we continue to deny women their rightful role in the economic processes by guaranteeing adequate empowerment like we have seen in our recent history”, Sanusi stressed.”

  • Posted by Maduka

    Is Nigeria rich?

    There are more than 700 local government areas in Nigeria and at 90 pc of them do not generate any net revenue. All states in Nigeria except Lagos and the Oil producing states live on the “Federal dole”.

    If Nigeria was a small nation with a minuscule population saturated with Oil, then Nigeria could be rich. But Nigeria is a 160 million strong nation with a lot of competing demands for resources.

    So even if Nigeria’s revenue from Oil were shared equally without corruption, there wouldn’t be enough to go round.

    Why are Nigerians poor? Because the easy money from oil has weakened or destroyed the institutional capacity to deliver good governance. Citizens, for the most part, don’t pay taxes and the government, for the most part doesn’t bother too much with tax revenues.

    If the Nigerian elite had to organise productive activity, tax this activity and then sustain the state from these taxes, Nigeria would (a) have a working Federal system (b) have a more responsive government (c) have better infrastructure and (d) have a more robust democracy.

    We have to wait for at least twenty years for those conditions to be met. But when the oil runs out, will there be any point keeping Nigeria united?

  • Posted by Maduka

    Zainab is from the North, I am from the South-East and I live in Lagos. We may be seeing two different Nigerias.

    My parents live at Enugu (in the South East) and there is concrete, tangible evidence that disposable incomes for a large segment of the population (not all though) are rising. Just last year, the South Africans opened a super mall and they are doing a lot of good business.

    The same applies to Lagos where I live. Poverty rates are high, but the volume of traffic I meet when I drive to work every morning suggests that there is quite a bit of trickle down economic growth happening.

    Most of us who work in the consulting business grapple with our perceptions on the one hand and statistics on the other. The truth is that Nigerians are not as rich as we think them to be and they are not as poor as statistics would indicate.

    Northern Nigeria is a different issue. I spent a year at Ashaka in Gombe state (2002/03) and the poverty levels and literacy rates are appalling. In the North-East, female literacy rates could be as low as 20%. On the contrary, in the South East, they could be as high as 90%.

    It is more helpful to look at increasing levels of poverty on a regional basis. In some parts of the South, there might be a perception that poverty levels have risen, but the reality might be different. On the other hand, everyone agrees that poverty rates have risen in the North.

  • Posted by Ibrahim BELLO

    “From the equality of rights springs identity of our highest interests; you cannot subvert your neighbor’s rights without striking a dangerous blow at your own.” – Carl Schurz

    I commend you to read the original post here – http://www.proshareng.com/news/16762 and with regards to how this challenge impacts the North, here is a position – http://www.proshareng.com/news/16703

  • Posted by Blake

    I think the main discrepancy in these Nigeria statistics is the economic growth of between 6-8%. Yes, I believe that those involved in the oil sectors and the elite are growing at this rate, however this is not true of the country as a whole. So why are Nigerians getting poorer?Oil money has ruined the governments scope on its citizens and allows for way too much corruption in bribes, etc. The people don’t pay taxes and the government doesn’t care because they still receive their income from the oil sector. Regardless, the point remains that the Nigerian people are not receiving any benefits of this so called “growth”, and that the government must be to blame.

  • Posted by Austin Edoja-Peters

    We may as well fall prey to what I choose to describe as the “paralysis of analysis”. Beyond the engagement in academic and intellectual pontification the simple reality in my view is the glaring failure of governance by compassion. Compassion it is that will ensure the selfish ingratiates that mismanage the dynamics of governance in Nigeria and indeed Africa see that they are the worse off. There can be no social stability in an island of riches amidst damning levels of lack, deprivation and poverty in the human ecosystem. The organizing principle of Africa’s socioeconomic and political models as is will need to rapidly transform and it will have to start at the level of compassion. But the congenital level of greed particularly in Nigeria remains a major obstacle in this regard. We overcome this malignant malaise , we start our journey to a truly vibrant state of human conditions.

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