The face of poverty in Nigeria

It is 2:00 pm in the Northern Nigeria city of Sokoto and an army of middle-aged children dotted a stretch of the popular Kano Road like stars on a night sky.

They clutched bright coloured plastic bowls in their hands and not books or a school bag like you would see most of their peers around the world do at the close of school.

Among them is a young boy, Yunusa. The stench from his mouth complicated conversations with him more than his inability to speak English, Nigeria’s official language.

Yunusa is the fifth of seven children of his father who is a farmer. He has never seen the four walls of a classroom and has no real ambition to do so.

His reason is perhaps the clearest sign of the entrenched poverty in the state.

He implied that his educational aspirations must take a back seat to his daily struggle for survival and endless days of hunger.

 

While he may not plan to go to school for now, he does have an ambition to go to Lagos, Nigeria’s sprawling commercial capital.

His friends who left for Lagos returned with tales of how Lagosians were better off economically and could afford to give out higher cash than in Sokoto.

While Lagos has a poverty rate of 5 percent, which means only five in every 100 people in the state are classified as poor, Sokoto, the most impoverished state in the country, has a poverty rate of 88 percent, which means nearly 9 out of every 10 people are poor.

To be classified poor, it means these people must feed, clothe and shelter themselves by spending less than N380 daily. That’s less than the price of a 50cl bottle of water at Eko Hotel in Lagos.

Our discussions with Yunusa end abruptly as he darts after an outstretched arm holding a note of N5 from the window of a rickety pick-up truck.

Yunusa’s case is sad but is only one of the many manifestations of poverty in not just Sokoto State but in Nigeria.

The national average for poverty in Nigeria is 40 percent, which implies that four in every 10 Nigerians are poor and live under N380 per day.

Half of the country’s 36 states surpass the national average, with Sokoto, Taraba, Jigawa, Ebonyi, Adamawa and Zamfara states all above 75 percent.

“You are talking about N380 per day, but in this state, many people don’t have that amount of money to survive in a day,” said Ibrahim Abdullahi, an indigene of Sokoto State.

“In this state you will see someone who has gone the entire day and has not eaten anything, it is difficult to find people who have two square meals in a day never mind three and even those that do eat gabbage.” Abdullahi (above) also alluded to the painful impact of rising inflation on the people.

“People are suffering, we used to buy a measure (mudu) of rice for N600 but now it is over N1000 in the market and there is no money,” Abdullahi said.

Annual inflation in Nigeria accelerated to a 28 month high of 13.22 percent in August, according to NBS data. Food inflation, at 16 percent, is also at its highest in over two years.

The recent sharp increases have been attributed to the COVID-19 lockdown period which disrupted farming activities. Heavy flooding in the north, where Nigeria produces most of its food, as well as a currency devaluation that has made food imports more expensive and a controversial land border closure have contributed to rising food costs.

More poor people than populations of Spain and Canada combined

Nigeria, Africa’s most populous country, is home to the largest number of people living in extreme poverty globally.

Some 82.9 million Nigerians are poor, according to data by the state-funded National Bureau of Statistics (NBS). That’s 40.1 percent of the population and is more than the population of Spain and Canada combined.

There are fresh projections by economists surveyed by Business Day that the number of poor people could hit 90 million by the end of the year as the economy slips into its second recession in four years and the COVID-19 pandemic leads to job loses.

Depending on which data you look at, the number of poor people in Nigeria could already be as high as 90 million.

However, while the numbers may differ, Nigeria comfortably ranks as the country with the highest number of people even when the most benign number is factored.

Nigerians have grown progressively poorer over the last half a decade and replaced India as the poverty capital of the world in 2018, according to a report by Brookings Institution which tracked the level of poverty globally. Nigeria has the highest number of poor people despite having a population that is five times less than that of India.

If it is unable to change its current trajectory, Nigeria will be home to 110 million people living in extreme poverty by the year 2030, according to Homi Kharas, Kristofer Hamel and Martin Hofer, who worked on the Brookings poverty report. Their estimates of Nigerians living in poverty currently, 89 million, is higher than the 82.9 million reported by the NBS.

At the root of rising poverty is an economy that has not grown fast enough to match population growth.

When it was not contracting like in the whole of 2016, Africa’s largest economy has grown at a rate slower than population growth every year since 2015.

Impact of poverty on business

The perfect paradox: Big population but small market

Nigeria’s huge population, estimated at 200 million and forecast to double by 2050, makes Africa’s most populous country a compelling business case.

But that’s on paper.

In reality, the high poverty rate means Nigeria’s addressable market is a lot smaller.

When you back out the number of poor people, Nigeria’s addressable market shrinks by almost half. Half of Nigeria’s population of is about 100 million. But among these100 million people are also those who earn a fraction higher than N380 a day so are not included in the list of extremely poor people even though they aren’t significantly better off while there are others who have been battered by rising inflation and as such have weak purchasing power.

The once rising and thriving middle class is fast diminishing, further compressing the consumer market.

One indication that Nigeria’s addressable market may be even smaller than 100 million is data on financial inclusion. Only 48 million Nigerians have access to financial services, according to the Bill & Melinda Gates Foundation-backed Efina.

Rampant poverty and its negative impact on consumption is a drag for businesses as it affects the sales of their products and services and hurts profitability. For some small businesses, particularly those in the most poverty-ridden areas, the struggle to stay open ends in defeat.

Kabiru Saabi, a poultry farmer from Sokoto North Local Government, said many businesses have gone under as the poverty situation worsened.

“Many businesses have collapsed in Sokoto and that’s why you will see several empty shops,” said Saabi, who himself had a provisions store before he was forced to close shop after selling on credit to people who still owe him to this day.

Many people cannot even afford their basic needs and that makes the state unattractive for business, according to Saabi, pictured above.

“How can any business survive without a market for their goods and services?” Saabi asked.

For Aliyu Musa, a footwear maker in Sokoto, businesses are not doing well and his family of five is bearing the brunt.

“We are hoping on God because you can run for days without making any sales. The land is dry,” he said.

The trend of struggling businesses in Sokoto is rampant across the country.

Degun Agboade, the president and chairman of council at the Nigerian Association of Small and Medium Enterprises (NASME) said several members have had to close shop as they struggle to make enough sales to cover their operating costs.

“The market looks big until it doesn’t when you factor the number of people living in extreme poverty,” Agboade who presides over the biggest cluster of small businesses in the country, said.

In addition to the high poverty rate and weak consumer disposable income, “businesses must also contend with decrepit infrastructure, porous borders, and high cost of finance,” Agboade said.

The COVID-19 pandemic has made things even worse for both households and businesses.

To slow the spread of the virus, the Federal Government imposed targeted lockdown measures in areas with rapid increase of Covid-19 cases. The states in which the federal government imposed the targeted lockdown included Lagos, Ogun, and the Federal Capital Territory in Abuja. Some states in the country imposed partial lockdown and closure of interstate borders.

During this period which lasted two months, movement was restricted in some parts of the country and that disrupted business activity.

To alleviate the effects of the lockdown, the Federal Government rolled out palliatives from food stuffs to cash hand-outs for targeted groups.

However, the people we interviewed claimed they received no palliatives.

“As for me I did not see anybody that got the palliative, if there is any; they should come out to say so and show us evidence of receiving palliatives,” Abdullahi Muazu, a former school teacher who was laid off last year said.

“If the situation continues, I do not know how the people can be lifted out of poverty when businesses are collapsing,” Muazu, who feeds off occasional private lessons for secondary students, said.

“We have politicians and traditional rulers who are aware of the situation of the people, but they are unable to do anything about the harsh situation of the state,” Muazu said.

Impact of Poverty on governance

Cash and Carry politics

Nigeria’s high poverty rate means vote buying is common as electorates sell their franchise in return for cash and food items.

The Nigerian civil society situation room group, which monitored the last elections, said vote buying was rampant with the cost of a single ballot ranging from between N3,000 and N5,000. That’s a lot of money for people who live on less than N380 daily.

Abdullahi Muazu, who spoke to BusinessDay in the Asarakawa area of the Sokoto metropolis, said several people in his area sold their votes for less than N2,000.

“For someone who has not eaten properly in days, (his immediate need is food or money to buy it, not who wins an election),” Muazu said. “So it makes the decision to sell your vote straightforward,” he said.

Vote buying is not new and has dogged Nigerian elections for decades. It has evolved from enticing impoverished voters with stock fish and bags of rice in the First Republic to the now widely used cash hand-outs anywhere between $10 (N3,060) and $50 (N15,300).

With rising job losses and rampant poverty, the cheaper cost of vote buying increases Nigeria’s risk of selecting leaders lacking in the qualities required to set the country on the path of inclusive economic growth and better living standards for the people.

“Nigerian politicians are deliberate about keeping people poor so that they can always buy their votes on a cheap,” a political scientist who did not want to be named said.

“It means it is easier to entice them to sell their votes, but the risk that electorates will be worsening their plight in the long run by selling their votes to undeserving politicians is very high,” he added.

Muazu, who says poverty in Sokoto state in particular, is at its peak, said “The politicians only mobilize people to support them to come to power after which they abandon them in abject penury.”

How Buhari’s 10-year plan to lift 100 million out of poverty can work

Nigeria has often attached great importance to poverty eradication but has achieved very little in combating it.

On May, 2019, President Muhammadu Buhari said he was recommitting himself to poverty eradication after a dull first term of four years where poverty was on the rise.
The target is to lift 100 million Nigerians out of poverty within a 10-year period.

Buhari said the government would devote efforts towards human capital development, efficient management of resources, greater financial inclusion, and transformation of the agricultural sector to ensure food security. He also plans to strengthen existing social safety nets.

While the President’s ambition is commendable, it requires purposeful leadership, recognising that government cannot do it alone.

It requires a clear understanding of the causes of this pervasive poverty level, one of which is lack of income, especially income generated from employment that people can depend on to meet their needs. And incomes are earned from jobs generated by businesses. Thus, above all, it requires a commitment to a private sector-led economic growth.

As the past four years have shown a government-only approach through social investment programmes won’t work. Neither more debt nor the recovery of Abacha loot will do.

Lifting 100 million Nigerians out of poverty is thus a commitment to a private sector-led growth plan.

Nigeria yearns for a credible plan that translates the intention of the President into concrete goals that can lift an average of 10 million Nigerians out of poverty every year for the next decade.

The urgency and capital required to achieve this goal calls for a mix of fiscal, monetary and industrial policies that can remove the bottlenecks in the economy and boost output of goods and services, and breathe life into comatose firms strewn around the country. It is these companies that will reduce unemployment in the country and curb poverty.

Nigeria can take a cue from two countries, China and India.

China, the most populous nation, has stunned the world with its anti-poverty programme. In 1978, 90 percent of its population lived below the extreme poverty line; by 2014 99 percent of the population lived above that line. China has set a target of eliminating extreme poverty by 2020, and to achieve this, it set to lift 10 million people out of poverty each year from 2016.

Between 2005 and 2016, India pulled 270 million of its people out of extreme poverty through a rapid increase of good and services produced to become a middle income nation.
Nigeria must learn from others who have been in the same position it is today if it must succeed in rescuing the large swaths of people sinking in poverty.