Innovative Economic Solutions to Unlock Mass Prosperity

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Monday, June 01, 2020 / 03:20 AM / by Dr Yemi Kale / Header Image Credit: CIO.com

 

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Introduction to the Survey

  • Poverty computation in Nigeria and Globally: Relative, Dollar a Day, Multi-Dimensional and Absolute
  • This nationwide consumption and expenditure survey was conducted between 2018 and 2019 (in partnership with the World Bank), to measure poverty and inequality, as well as generate a wide range of socio-economic indicators.

    • Multiple user - CPI re-weighting, GDP rebasing, Social intervention

 

  • Data was collected across 12 months using GPS-enabled electronic devices, with a comprehensive data quality assurance mechanism in place.
  • Enable online real time data processing
  • With a response rate of 98 percent, the results are presented without Borno State, which is excluded due to security difficulties accessing many parts of the state.

 

Poverty Line & Incidence

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Country Comparisons - Poverty Line

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Poverty is a clear factor of industrialization (productivity) and population, regional disparities notwithstanding. Nigeria has the lowest poverty line, and the lowest GDP per capita, even though it is the largest economy in Africa.

 

  • Nigerians at the poverty line spend almost 3x as much on food as they do on non-food essential items. Significantly different from counterparts in South Africa and in Egypt - an indication of agricultural productivity, and reliance on food imports and the impact on prices.
  • Egypt has the lowest poverty rate, even though it has a lower poverty line & GDP per capita, compared to SA & it's poor population spend significantly less on food when compared to both Nigeria & SA, indicating the importance of local agricultural productivity

 

Poverty - State Ranking

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Poverty & Income Distribution

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Nationally GINI coefficient is relatively low - 35.1% and evenly distributed, however poverty is largely regional with key factors being urban vs. rural dwelling


  • Poverty in rural areas (52.1%) is nearly 3x that of urban areas (18%).
  • 14 states have mid to extreme poverty rates - Jigawa, Sokoto, & Taraba have severe poverty rates.
  • Plateau records the highest income inequality in the country & more than half of its population live below the poverty rate.
  • Kaduna has the 2nd highest incidence of income inequality,

 

Consumption Expenditure - State Ranking

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Covid-19 likely to cause a severe squeeze on consumption nationally due to movement restrictions, low expectations on income, and erosion in the value of assets - severe risk of food insecurity & extreme poverty at bottom ten states.


  • Large disparities exists amongst states' consumption expenditure patterns - the states with the top 5 consumption expenditure total 34% of the nation's total consumption, the bottom ten states account for less than 5% of the total.
  • States in the bottom 10 for consumption expenditure will be highly vulnerable to loss of access to essential food and basic non-food items.

 

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Poverty Rate, Household Size, And Dependency Ratio

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Danger Of A Large, Poor, Uneducated Population

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State Revenue And Unemployment

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Stimulating Growth: Addressing Unemployment

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Unemployment and poverty appear closely related, but employment strategies will differ amongst states.

 

  • In states facing unemployment there's a need to stimulate demand for labour and skills relevant to the states' specific dominant economic activities
  • In states facing underemployment, strategies could aim to improve output per worker, e.g. by improving access to mechanized agricultural production.
  • Attracting investments into the state, for example through ease of doing business initiatives also plays a key role in boosting employment and quality of employment.

 

Stimulating Growth: Increasing Sector Formalization

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Stimulating Growth: Taxing To Foster Development

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  • Fiscal capacity: the extent to which states can generate revenue given their taxation system
  • Lower poverty states appear to have greater ability to generate taxes from economic activity than high poverty states
  • Importance of designing an appropriate taxation system to extract revenue from economic activities, boosting internally generated revenue, which are then applied to poverty reducing development projects.

 

Conclusion 

  • Nigeria remains Africa's largest economy, but per capita income is rather low for a country of this size, and the level of poverty presents a major development challenge.
  • The recently released poverty data reveals policy-relevant insights to inform interventions aimed at resolving the poverty situation in the country, particularly at sub-national level.

 

  • Three solutions are proposed to address poverty from the state level:
    • Address unemployment
    • Increase formalization of the informal sector
    • Design appropriate tax systems to extract revenue from economic activities

 

  • The contribution of education and family size to poverty reduction represents an important opportunity for policymakers to fast-track poverty reduction

 

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