• Thursday, July 18, 2024
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How Nigeria’s high poverty rate can be tackled – Elumelu

How Nigeria’s high poverty rate can be tackled – Elumelu

Tony Elumelu, founder and chairman, Heirs Holdings, has identified four critical areas that will significantly and positively impact Nigeria’s drive towards poverty alleviation.

These areas are positioning SMEs to thrive; leadership, governance and structure; promoting financial literacy and inclusion; and tackling unemployment.

In his paper at the 9th Lagos public relations stakeholders’ conference on leadership and poverty eradication, in Lagos recently, he said poverty remains the greatest enemy of humanity. “Apart from breeding hunger, poverty also opens up a flood of crime and conflicts.”

Represented by Niyi Onifade, MD/CEO, Heirs Life, he said that everyone needs to be involved in the fight against poverty in the country.

“As corporate citizens, we have a moral obligation to lead the fight against this enemy. But it is not a one-man’s fight, or for the government alone. It is a fight that must be owned and fought by every single one of us. Government alone cannot provide all the economic and social needs of a country.”

On using SMEs to tackle poverty, Elumelu explained that the “government must create an environment and structure to enable capital flow freely across the country. The best way to do this is to incentivise the free movement of capital through the growth and development of small business enterprises.”

“SMEs are the lifeblood of any economy and countries that prioritise the success of SMEs position themselves for wealth creation. For instance, the development of countries like China, Germany, France, and others can be attributed to the success of their SMEs.”

Available data show that SMEs in Nigeria contribute up to 48 percent of national GDP. SMEs account for 96 percent of businesses, and provide 84 percent of employment.

In a country of over 200 million people with 40 percent of the population classified as youths below the age of 35 years, SMEs can create meaningful employment opportunities that will stall the alarming talent drain across the country. SMEs have the capacity to create opportunities for people to feed themselves and care for their families, he said.

Read also: How poverty, insecurity crippling Nigeria’s economy and businesses

He noted that the success of any country is a testament to its leadership and its governance structure. “To drive financial inclusion, regulators and our leaders have a key role to play. Restrictive policies should be relaxed to encourage more people, especially rural dwellers, access financial services.

Regulatory requirements should be flexible and favourable to financial providers, which would then allow them create more value-adding products and services for people.

“More importantly, our leadership must create rules and regulations that encourage growth and not stifle creativity. Poverty alleviation must consist of deliberate programmes that reach the grassroots, and dogged commitment to implementing and tracking the plans, must not be the same as usual.”

On the need for promotion of financial literacy and inclusion, he explained that, “financial inclusion and social welfare programmes have been identified globally as a panacea for poverty eradication.

“When people have access to financial services such as credits, loans, savings, life insurance, and others, they can fend for themselves and run sustainable businesses that would create a ripple effect in the country’s GDP.

He noted that access to these financial tools remains limited in Nigeria. “We are still one of the top three unbanked countries in the world with 40 percent of our population living without access to financial services.

“In terms of access to life insurance which could guarantee financial security for people and their loved ones, the insurance penetration rate is way below 2 percent in our country. This, therefore, exposes a larger share of our population to risks, and even creates a huge class of people who remain dependent on the small percentage that seems to be well-off.

He also said that Nigeria cannot successfully eradicate poverty without directly tackling unemployment. “Statistics show that the unemployment rate in Nigeria has increased from 27.1 percent in the second quarter of 2020 to an estimated 33 percent in 2022. This is alarming!

“Unemployment is undoubtedly a root cause of poverty. When people have no jobs, they get hungry and angry. They also become easy tools for criminal activities.

In his paper, Segun Jayi-Kadir, director-general of MAN said driving industrial progress will drastically reduce the poverty level in the country through the creation of jobs.