Despite recent advancements in economics science, many individuals remain uneducated in basic economic theory and confused by the vast array of economic statistics reported in the database of statutory organisations like the World Bank (IMF), particularly how much government intervention is sufficient for eradicating poverty at various categorisations. This ambiguity in assessing past government interventions in terms of the strength of institutions for poverty eradication is detrimental for optimum policy and best practices. There is a need for a historical perspective that captures and conveys institutional trends and their relations with aggregate Poverty in Africa most populous black nation Nigeria. A consistent and transparent indicator of institutional capacities could redefine strategies towards zero poverty as outlined in the Sustainable development goals of the United Nations.
From a theoretical standpoint, one can treat institutions as an aggregate index that broadly measures the attributes of growth and development without accounting for every single nuance related to the concept of poverty. With institutions capable of influencing aggregate poverty level through market inefficiencies and resources misallocation, institutions could be structured in a manner that is not socially optimum but relatively private gains and benefits.
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In Nigeria, where problems of cronyism are at their peak, it essential to gauge the quantitative relevance of institutions for variations in aggregate poverty levels. Political structure and democratic dispensation in Nigeria favour the allocation of legitimate and illegitimate rewards to cronies leading to an uncompetitive market structure favouring the rich. Inequality in the allotment of political power to the educated might create inequity in income distribution, resulting in the uneducated being trapped in poverty. Poverty depends on how well people are represented in the political processes that establish, guarantee and contest people’s entitlements.
It is in policy and research interest to also establish the lag causative order in institutions and poverty relations. Evidence has been advanced that the type of institutions in place in a country or region determines the observable poverty level. In other ways, the depth of poverty in the land determines the capacity of the residents to revolt and force new institutions in place.
This ambiguity calls for a better understanding of the causative structure in institutions and poverty relations such that policy conducive for optimum poverty reduction can be advanced. The categorisation of poverty along the absolute or relative dimensions extends to poverty’s social, economic, or political rudiments. It becomes apparent to illuminate obscure relations in the institutions-poverty relations to reach a meaningful conclusion conducive to optimum policy and practices.
Dr Ibrahim A. Adekunle is a lecturer at the Babcock Business School (BBS), Babcock University (BU), Ilishan-Remo, Ogun State, Nigeria
