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Poverty, Anger & Instability in Nigeria - An Appraisal


Saturday, February 18, 2012 6:07 PM

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The NBS just released startling data on Poverty in Nigeria. It is disturbing to see that 61% of the population are living on less than US$1.00 per day. The percentage of people living in abject Poverty was 54% in 2004. Why is poverty rising as GDP growth is increasing in Nigeria ?.

In this edition of the FDC bi-monthly the link between Poverty anger and Instability is discussed in detail.

Also, in the banking space, whilst investors await the results of all banks for year-end 2011, we look at the implications of the UBA profit warning on the share price and stock market and the future of the competitive repositioning of this Pan-African bank and former offspring of Banque National de Paris. 

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The Link between Poverty, Anger and Instability in Nigeria
After a turbulent January of Protests and Strikes, and just as we began to settle down to analyse the underlying factors behind the Occupy Nigeria Movement of 2012, we were jolted by the data on poverty released by the Nigerian Bureau of Statistics (NBS).

The NBS says that 60.9% of the Nigerian population or approx. 100 million people are living in abject poverty. It went further to explain that this class of people live on less than $1 or N160 per day. What was more startling was that income inequality is increasing as GDP is growing. In other words, the rich are getting richer and the poor are sinking deeper into poverty.

In the past, we could have ignored the poverty data as lacking in integrity and relevance. But this time it is different for two reasons. Firstly, because, the new Statistician General in Nigeria, Yemi Kale is a credible and reputable professional with a high sense of integrity.

This means that these numbers are not manufactured or the figment of his imagination. The NBS had been notoriously out of date and lacked credibility. Secondly these num-bers cannot be ignored because income inequality is now becoming a source of political and social unrest in many developing countries including many in Sub-Sahara Africa and North Africa.

The NBS data shows that the percentage of Nigerians living in ab-ject poverty has increased from 54% in 2004 to 61% in 2010. This data and trend raises two fundamental questions. One is that why is the income disparity increasing and two is that what are the consequences of this unhealthy trend. The EIU (Economist Intelligence Unit) in its 2010 July report confirms that the gini co-efficient (the economic measure of income inequality) increased from 43 to 43.7 in 2011. Whenever income inequality is an in-creasing function of time, it is usually as a result of fundamental imperfections in the macro-economic structure of the country. It is also at times the consequence and fall out of state owned monopolies; regime sponsored oligarchs and an entrenched form of Crony capitalism.

Just look at the sordid revelations of how approx. N2trn was splashed around as petroleum subsidies to the good, the bad and the ugly during the House of Representatives public hearings. Almost 30% of total Government expenditure was thrown at non-productive consumption in the name of petroleum subsidy, leading to the view that to all intents and purposes it was open season in Abuja. 

The second question is, what are the consequences of this inequality and the financial and economic stratification of society. It is important to understand that the poverty is infinitely more intense in the North of Nigeria, Sokoto State has the highest poverty rate of 86.4% and Borno State has 77.7%. There is therefore the likely correlation between the poverty, the anger and the resentment of Government in that region.

The CBN governor has been courageous enough to start this very important conversation and debate about the link between poverty and group anger. This has not gone down well with some people. But what is wrong with a healthy debate, we don‘t have to agree on everything. I wish to refer readers to the popular book by Amy Chua, the Yale University professor titled the ‘World on Fire’.

In this book she discusses at length the impact of globalization. She argues that contrary to the widely held view that in reality, free markets outside the West do not spread wealth evenly and enrich the entire society. Instead they tend to concentrate glaring wealth in the hands of an outsider minority generating ethnic envy and hatred among frustrated impoverished majorities. She goes further to say that when democracy is added to this volatile mixture, the political consequences leads to powerful ethnocentric tendencies, anti-market pressures, instability and an authoritarian backlash and violence. One only needs to understand this slippery slope of poverty and political instability to understand why Nigeria must take the poverty threat seriously. There is an urgent need to tackle unemployment by incentivizing labour and capital intensive investments in the rural parts of Nigeria. The answer is not in allocating more money to inefficient and corrupt state Governments. The January protests were more against corruption, leakages, lack of transparency and inefficiency, than against legitimacy. The Government must now earn its credibility by identifying corruption and punishing high profile officials and culprits. It is only by a consistent, credible and pragmatic programme that goes to the structural causes of poverty that the Government can get back the trust of the people.

In conclusion, I will like to draw attention to the fact that mass poverty can lead to a class war especially in homogenous societies e.g. France during the French revolution, Romania after the fall of Communism. However in non-industrialized economies like Nigeria with ethnic and sectarian diversity, the class struggle could manifest itself in religious intolerance, ethnic xenophobia and threats to National Security. Mass poverty and a future without hope leads to widespread resentment and a public backlash against the Government, constituted authority and the elite. There are examples of how the resentment of the Niger Delta citizens transformed an environmental issue into a struggle for re-source control and finally into militancy, kidnapping, bunkering etc. We are witnessing the radicalization of the North East of Nigeria into religious intolerance and political brinkmanship. These threats to national security are probably the symptoms of long years of mass structural poverty in a society where hopelessness and despair are gradually displacing optimism and confidence. The time to think and talk is now but more important the time to act is yesterday.

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