BusinessDay

Urban poverty shows Nigerians need social security, jobs

Economic activities are gradually picking up in Nigeria but the pace is not enough for jobs to be rapidly created, or for those who were disengaged to find replacements. This is especially for urban dwellers who are the most hit by the COVID-19 pandemic, compared with their rural counterparts.

This is likely to see some of those urban dwellers adding to the 7 million people the pandemic has pushed below the poverty line.

Though the Nigerian government has introduced some social security programmes aimed at lifting people out of poverty, the impact has been insignificant. Experts say that Nigeria needs the right investment environment to create jobs that will complement the existing social security programmes.

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Ayodele Akinwunmi, senior relationship manager, corporate banking group, FSDH Merchant Bank, says when the number of unemployed and poor people is rising, it may be difficult for the government to include them into the social safety nets.

“We need to ensure that we have the right and adequate investment environment for people to go back to their businesses and jobs. So that the social security programmes will now augment the programmes of the actual investments that we have on ground,” Akinwunmi states.

Similarly, Omotola Abimbola, an investment analyst at Lagos-based Chapel Hill Denham, notes that the government does not have the capacity to embark on very extensive social security programmes. “When you are paying 90 percent of your income to servicing debt, it is not the time to expand your social security net. So, we just need to create more job opportunities in the economy to complement the programmes,” Abimbola says.

The absence of functioning and inclusive social security programmes that are targeted at reducing risks via social insurance and social assistance, especially towards the most vulnerable individuals in a society, has made Africa’s biggest economy vulnerable to the economic impacts of the pandemic.

According to a National Bureau of Statistics (NBS) survey, the share of respondents who have seen a recovery in jobs is higher in the rural areas than urban areas due to their engagement in agriculture. As of December 2020, those working increased to 91 percent from 47 percent in April/May 2020, while for urban areas, it increased to 80 percent from 35 percent.

Also, the pandemic made richer households to take new loans to pay for majorly food items than poorer households. From the NBS August 2020 survey, 26 percent of those in the richer class took loans followed by the 25 percent of the middle class and 22 percent of the richest class.

Apart from loss of jobs and falling incomes, urban dwellers are also faced with rising prices more than rural ones, leaving them going hungry. Since the last one-year, urban inflation has risen to 18.35 percent in June 2021 from 13.18 percent.

Kemi, who lost her job as a cleaner in the local airport in Lagos, said she had to cut down on the number of times her family of three ate daily so as to cope with the rise in food prices.

“It has not been easy to feed my family. At the moment I go to people’s houses to wash their clothes but it is not enough. We had to cut down on our meals,” she complained.

Similarly, Ikenna, a teacher married with two children struggles to feed, pay the school fees of his children or meet up with the N5,000 monthly allowance he sends home for his mother’s upkeep. This is due to the accelerating inflation that has reduced the purchasing power of his stagnated income.

“With the spike in prices, those in the urban areas will feel the impact of the pandemic more than the rural areas because their earning capacity is low and the incomes are falling,” Moses Ojo, a Lagos-based economic analyst, notes.

Although governments at different levels in Nigeria scaled up social protection programmes by distributing relief palliatives and expanding a pre-existing cash transfer programme, only a tiny fraction of Nigerians benefited from those relief measures.

A survey conducted by SBM Intelligence reported that only 1.2 percent of Nigerians received COVID-19 relief palliatives.

In June 2020, the Federal Government introduced the N2.3 trillion Economic Sustainability Plan to combat the negative consequences of the pandemic. So far, the government said it had disbursed N500 billion under the plan as at May 2021.

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