Nigeria can take a cue from China, Vietnam and India as it embarks on its poverty reduction goal, especially since these countries also had to contend with widespread poverty in the past.
Nigeria’s President, Muhammadu Buhari recently inaugurated the Steering Committee of the National Poverty Reduction with Growth Strategy (NPRGS) to achieve an ambitious goal of lifting 100 million Nigerians out of poverty within a decade.
China, India and Vietnam all show it is possible to reduce poverty drastically, lifting more than half of their population out of poverty. BusinessDay studied each of these countries and found three distinct ways they were able to reduce poverty.
It was by achieving strong economic growth, human capital development and through social welfare programs.
Their stories hold lessons that Nigeria can learn from to achieve its goal of lifting half its population from poverty.
China’s miracle
China has contributed to over 70 percent of the poverty reduction across the world, making itself a country with the most people lifted out of poverty in the world. According to the 1.9 dollars poverty line, China has lifted 850 million people out of poverty, with the percentage of people living in extreme poverty falling from 88 percent to 1.85 percent by the end of 2020.
The Chinese people have transformed China from a poverty-stricken and backward nation to a country of prosperity. The country, which could not meet the needs of its people, has developed into the world’s second-largest economy, the largest trader of goods, the largest industrial country and the largest holder of foreign exchange.
China’s rapid reduction in poverty went hand in hand with a long period of sustained economic growth and this fuelled a massive increase in incomes. From a GDP of 367.8 billion yuan in 1978, it has grown to more than 100 trillion yuan by 2020. China has also increased its per capita
There was also much focus on the poorest rural areas. The government has relocated millions of people from remote villages into apartment complexes. Although this strategy has been largely criticized as the people could not choose where they wanted to live or the jobs they wanted.
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The Chinese president, Xi Jinping has continually emphasized how education is key in breaking the inter-generational transmission of poverty. Since 2011, China’s budgetary spending on education has remained 4 percent of GDP. In 2018 alone, nearly 100 million students from families with financial difficulties were subsidized nationwide. According to Standard Chartered projects, by 2030, around 27 percent of China’s workforce will have a university education – that’s about the same as Germany today.
Secondary vocational schools played an instrumental role in the country’s poverty alleviation plans, helping upskilling and integrating young people into the labor market and providing high-quality technical skills. This helped to reduce the rate of unemployed people.
Vietnam’s Đổi Mới strategy
Vietnam is another country that has also seen a dramatic fall in extreme poverty rates over a similar period. Vietnam succeeded in reducing its extreme poverty rate from 61.3 percent to 1.9 percent from 1990 to 2018, putting it roughly on par with China. However, because the population of Vietnam is a small fraction of China’s, its success in reducing poverty only accounts for about 3.2 percent of global poverty compared to China’s 70 percent.
After World War II, the Vietnam economy was left badly shaken and left in ruins. It key growth infrastructures such as rail, bridges, roads, and canals were destroyed. The war created more than ten million internal refugees, one million war widows, more than 750,000 orphans, 350,000 disabled war veterans, and left three million people unemployed.
The turning point came when the Vietnamese government introduced a policy in 1986 called, Đổi Mới which means “a market economy with socialist orientation.” The term đổi mới itself is a general term with wide use in the Vietnamese language meaning “innovate” or “renovate”. This led to a series of initiatives that not only officially sanctioned private businesses again, but also gave them the beginnings of a legal framework, allowed businesses to flourish again.
Just like China turning point began with economic growth, the economic and political reforms under Đổi Mới spurred rapid economic growth transforming what was then one of the world’s poorest nations into a lower-middle-income country.
Between 2002 and 2018, GDP per capita increased by 2.7 times, reaching over US$2,700 in 2019, and more than 45 million people out of its 96.5 million people were lifted out of poverty.
Vietnam poverty reduction also came on the back of educational reforms designed to equalize opportunities and develop workforce skills. Viet Nam is a highly egalitarian society where women, farmers, ethnic minorities and the disabled have more equal access to education, healthcare and other social benefits than their counterparts in some other countries of the region.
Vietnam’s human capital index (HCI) stands at 0.69, meaning a child born in Vietnam today will be 69 percent as productive when she grows up as she could be if she enjoyed complete education and full health. According to the World Bank, from 1993 to 2017, the infant mortality rate decreased from 32.6 to 16.7 (per 1,000 live births). Between 1990 and 2016, life expectancy increased from 70.5 to 76.3 years, and is the highest in the region for countries at a similar income level.
The economy of Vietnam has done a lot to increase the provision of basic services. It has increased the number of its population with access to electricity from 14 percent in 1993 to 99 percent over 2016.Access to clean water in rural areas has also improved, up from 17 percent in 1993 to 70 percent in 2016, while that figure for urban areas is above 95 percent.
VietNam already has a fairly extensive set of social protection programmes in place which has played an essential role in sustainable poverty reduction. Some of the social protection programs include social insurance, health insurance and unemployment insurance. The social assistance targets beneficiaries including the elderly aged 85 and over or living alone, the disabled, mentally disabled patients, single parents, orphans and others.
India no longer home to the world’s poorest
India with a population of 1.2 billion is no longer home to the highest number of extremely poor people in the world as India worked to reduce its number of poor people leaving the spot Nigeria in 2018.
According to the Brookings Institution, Nigeria had about 87 million people in extreme poverty, compared with India’s 73 million.
According to the United Nations, over 640 million people across India were in multidimensional poverty in 2005/2006 and that fell steeply to more than 365 million by 2016/2017, an impressive reduction of 271 million people.
India’s rapid economic growth rate is one of the main reasons for a record decline in poverty. Its growth rate rose from 7.9 percent in 2005 to 8.25 percent in 2016, according to the World Bank. In this period, per capita GDP grew from Rs 38,750 to Rs 88,746, and India became a lower-middle-income economy.
Also, improved nutrition, better sanitation and increased asset ownership have halved India’s poverty rate between 2005-06 and 2015-16, according to a study by the Oxford University.
During the last two decades, India has implemented several social protection programs with the aim to improve living standards, and these have helped the Indian government in poverty reduction. Such welfare programs include Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) aimed to guarantee a right to work and the Midday Meal Scheme in government schools where school children were given free lunch.
However, the economic recession caused by the Covid-19 pandemic pushed 75 million more people in India into poverty last year, an analysis by Pew Research Center showed.
This is the second article of a series by BusinessDay on how Nigeria can reduce poverty.
