The process of poverty reduction is embedded in a broad range of socio-economic activities to which transportation provides intermediate inputs. Poverty can be measured in absolute and relative terms. Absolute poverty is defined with a minimum subsistence level and a poverty line specifies a dollar amount necessary to sustain livelihood (primarily minimum nutrition). It is also characterized by many non-income conditions such as malnutrition, ill health, illiteracy and lack of access to basic social amenities.
The extent of absolute poverty for a country or a region can be defined by the number or fraction of people living below the poverty line and an individual is regarded as poor if his or her income falls below the poverty line. Relative poverty is about where people at the bottom stand relative to people elsewhere in the income distribution index level, usually around the middle. A relative poverty measure might be the fraction of the people with income less than half of median income level and reduction of absolute poverty can be achieved either directly through income redistribution or indirectly through per capita income growth.
The direct approach focuses on the provision of basic education, nutrition, health, access to employment and product markets for the poor. It arises from recognition that the very poor generally do not have sufficient resources to meet basic human needs and because of the lack of human capital, in many cases they may not be able to take adequate advantage of the economic opportunities generated by national economic growth. Direct interventions to assist the poor can vary from being essentially re-distributive transfers to being warranted on efficiency grounds alone, while the indirect approach addresses poverty through investments and policies that foster economic growth, enhances the performance of markets, facilitate flexibility of adjustments, increases the efficiency of resource allocation and the gains from overall growth of GDP. Per capita income are expected to bring benefits to the population as a whole including the poor in the forms of jobs creation, economic, social opportunities and basic human necessities.
A large body of empirical evidence shows that sustained national economic growth generally contributes to the alleviation of absolute poverty and poverty reduction policies are heavily affected by the relative emphasis that a country attaches to promoting growth and raising the real incomes of the poor. The relative emphasis has much to do with the gravity of poverty, levels of national incomes and the nature of the political process for public choices. Therefore, the combination of the two approaches varies and is highly influenced by the specific circumstances at a particular point in time.
A new report by the World Poverty Clock shows Nigeria has overtaken India as the country with the most extreme poor people in the world, while India has a population seven times larger than Nigeria’s. It is very unfortunate to see this current situation in our nation and this struggle to lift more citizens out of extreme poverty is an indictment on successive Nigerian governments which mismanaged the vast oil riches through incompetence, corruption, lack of awareness on how to diversify the economy and take advantage of the huge natural resources the nation is blessed with. 86.9 million Nigerians now living in extreme poverty represents nearly 50% of its estimated 180 million population. As Nigeria faces a major population boom—it will become the world’s third largest country by 2050—it’s problem will likely worsen if deliberate steps are not taken to stop it, although having large swathes of people still living in extreme poverty is an Africa-wide problem and its high time the leaders of Africa come together once and for all to put an end to this challenge.
In line with the direct and indirect approaches to poverty reduction, developmental projects in the transport sector can roughly be divided into three categories projects that focus on poverty, projects oriented toward efficiency and growth, efficiency- and growth-oriented projects with components that focus on addressing poverty. The concern of this article is a more detailed understanding of how transportation improvements can either focus on addressing poverty or on growth, contribute to poverty reduction.
In general, a transport project is expected to contribute to poverty reduction through its indirect impacts and stimulation of economic growth or its direct impact on personal welfare of the poor. The exact impact the project would have on poverty reduction hinges on both the type of infrastructure or services, the areas and people the project would serve. This also depends on the operating environment of the project particularly market structures and government policies and regulations.
In general, local access roads in poor rural and urban areas make only a modest contribution to national income growth, but they have a direct and significant impact on the daily life of the poor. On the other hand, inter-city transport modes such as trunk roads, air, rail and shipping are of strategic significance to a national economy which were provided with the objectives to stimulate and facilitate national income growth. Their impacts on poverty reduction are very significant. Such modes creates jobs and business opportunities.
The process through which the benefits of transport investments and policies lead to improvements in the standard of living of the low-income groups often involves many links. The final general equilibrium outcomes and incidence pattern across various groups are often very difficult to predict.
Investments in the transport sector improve access to economic opportunities by reducing transport costs. The provision of transport market structures brings about competition, which is reflected in a reduction in prices for both freight and passenger services. Again, under competitive conditions, significant predictable consequences will arise. These include lower market prices for final products (both rural products and consumer goods), spatial extension of the market (due to the transport-induced changes in production and consumption patterns), higher personal mobility and stimulation of growth efficiency in the system.
The provision of transport services, including the construction and maintenance of transport infrastructure generates demand for labour and provides income-earning opportunities for the poor. If a transport project generates jobs for the poor who are otherwise unemployed or under-employed, it contributes to the reduction of poverty. In many developing countries, the construction aspect of transport sector development is often viewed equally as important as the service aspect of the sector in promoting economic growth. We must be aware that transport may have adverse impact on the poor. For example transport investment typically involves some environmental impact and if the effect is negative, the poor are the least able to respond, adjust or compensate; they may be the most vulnerable and the most ‘at risk’ and so special consideration must be given to them.
Transportation generally contributes to the alleviation of absolute poverty and so understanding the role of transportation investments in economic growth is central to an appreciation of the role of transport in poverty reduction. It provides intermediate services to facilitate interactions between productive activities and the micro-economic mechanisms through which the benefits of transport investment are translated into income growth and are well recognized in this article, which are reduction in the cost of assembling intermediate inputs for production (raw materials, energy, labour, other intermediate products and information) from different locations directly reducing the cost of production, reduced cost and improved quality in transport services also reduces the delivered price of products and hence promotes regional and international trade, making it possible for commercialization of agricultural products, specialization of industries, for production and employment to expand by utilising scale economies. Transport investment contributes to economic diversification as well, which enables utilization of economies of scope and increases the economy’s ability to handle risks.
It is recognised globally that poverty has many roots which are pervasive and has devastated many African nations and it needs to be addressed as fast as possible because of its far reaching effect, such as malnutrition, ill health, illiteracy and very low standard of living. This is a grave danger to human existence and should be a great concern to global and African leaders especially. My recommendation is for huge investments in the transport sector as one of the key ways of solving the problem and to give citizens quality life.
Festus Okotie
