Estimated Cost of Lifting 100m Nigerians Out of Poverty in 10 Years Put at $1.6trn

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Sunday, May 02, 2021   /09:33 PM  / By Presidential Economic Advisory Council / Header Image Credit:  Presidential Economic Advisory Council

 

The Buhari administration's renewed and deepened focus on poverty reduction as a central concern of development is timely and appropriate. Over 80 million Nigerians are classified as poor, with more than 50 percent multi-dimensionally poor, because of their limited access to education, health, electricity and other basic services. Poverty has a structural character: Seventy two percent of the extremely poor live in Northern Nigeria where the predominant economic activity is low productivity subsistence agriculture and population growth, driven by higher than national average fertility rates, outpaces output growth. Poverty in the North is further worsened by the region's poor education outcomes.

 

The journey towards poverty reduction is therefore even more challenging than in June 2019, when Mr. President made the audacious pledge to lift 100 million Nigerians out of poverty within a decade. Following a thorough analysis of the country's poverty profile, economic conditions, and different development paradigms, the Presidential Economic Advisory Council (PEAC) is of the view that President Buhari's goal of lifting 100 million people out of poverty in a space of 10 years is achievable.

 

The National Poverty Reduction with Growth Strategy (NPRGS) herein proposed by PEAC to support Mr. President's aspiration is anchored on four pillars namely:


a. Macroeconomic stabilization policies to improve the capacity of the economy to absorb shocks and avoid disruptive adjustment;

b. Industrialization for Economic Growth and transformation of the economy from commodity dependent growth path to a diversified, industrialized, knowledge intensive and job creating economy;

c. Structural policies and institutional reforms to engender efficiency in service delivery, promote transparency and accountability in the management of fiscal resources, bridge the infrastructure gap, improve private sector development and mainstream gender; and

d. Redistributive Policies and Programmes to reduce levels of risk, vulnerability, shocks and deprivation. The latter include programmes aimed at enhancing incomes, job opportunities and wealth creation through vocational skills training, micro-credit and micro-enterprise development and livelihood diversification in the agricultural sector.

 

The economic programme assumes a gradual annual growth of GDP from 2.3 percent to 4.4 percent during 2019-2024, and 6 percent per annum during 2025 to 2030. During the period, the annual average reduction in poverty is projected to be around 11.2 million per annum, 80 percent of which will be in self-employment, and 20 percent in wage paying jobs. Redistributive and transfer programmes, which target the ultra-poor, include vocational skills, MSMEs support and livelihood diversification programmes. The education and skills embedded in these programmes, are expected to provide the exit routes for the extreme poor into the mainstream economy by 2023. In addition, the poverty gap between the North and the South is expected to narrow, as access to education, health, and qualitative standard of living is ramped up nationally and in the North in particular.

 

Over the 10-year programme period (2021-2031), the total cost of the execution/implementation of the policies and programmes underpinning this strategy is estimated at US$1.6 trillion, giving an annual average of about US$161 billion. This estimated cost covers the dual objective of lifting 100 million Nigerians out of poverty as well as of achieving all the country's development objectives in line with the Sustainable Development Goals 2030. As a middle-income country, around 50-60% ($80b - $97b) of financing needs is expected to be covered by government. The challenge, however, is that in the recent past, specifically in 2020, the total consolidated national budgetary resources (federal and state governments) was only around US$54 billion.

 

The PEAC is thus conscious of the fact that in the current situation, public sector financial resources are inadequate to fund the programme on a scale required to achieve the goals of poverty reduction and the SDGs. The capacity of the Nigerian governments to increase investment and thereby spur post-COVID recovery and job creation is significantly impaired. Further debt accumulation is not an option as the government is already over-burdened with debt service obligations. It becomes imperative, therefore, to create a vehicle to facilitate enhanced private capital investment in the country. In light of this, it is proposed to set up a Nigeria Investment and Growth Fund, to be promoted by the government but resourced from local and international private sector as an independent corporate institution. In addition to the Fund, a more immediate source of funding the programme will be the reduction in the size and cost of government that will free resources to priority expenditures in education, health, and human development.

 

The NPRGS emphasizes the principle of shared responsibility between the stakeholders that include the three tiers of government, the private sector, the civil society organisations and development partners. Such mutual ownership and the resulting collaboration in the design, resourcing, implementation and monitoring of the programme will ensure effectiveness, efficiency and dynamism in poverty reduction.

 

The institutional framework for delivery reflects the national focus of the strategy. A National Steering Committee (NSC), chaired by the Vice President, shall be the overarching body for anchoring collaborative efforts across Federal Ministries, Extra-Ministerial Departments and Agencies (MDAs), state and local governments, development partners, Civil Society Organisations (CSOs) and the private sector actors. The NSC shall provide oversight for the implementation of the NPRGS, which is expected to ensure policy coherence and consistency, promote efficiency and more effective delivery of projects, programmes and interventions. Members of the NSC shall include the Secretary to the Government of the Federation, Chief of Staff to the President, six governors to represent the geo-political zones and eight federal ministers. The Federal Ministry of Finance, Budget and National Planning shall serve as the Secretariat of the Steering Committee and shall monitor the implementation of the decisions of the Council. A Technical Working Group of the NSC to be Co-Chaired by the Minister of State Budget and National Planning and One State Governor, working with State Planning Commissioners as members, will improve horizontal and vertical coordination.

 

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