Poverty and Economic Growth in Nigeria: Issues and Policies

ABSTRACT

The Nigerian economy in recent times has recorded substantial growth. In spite of this, poverty persists unabated. This article examines issues surrounding the paradox of rising poverty amid high economic growth in Nigeria. It argues that the reasons for this absurdity include jobless growth, a non-pro-poor growth, and failure of poverty alleviation initiatives to address structural transformation required for a sustainable growth, employment generation, and bridging income gap within the economy. It is therefore recommended that focus should be placed on structural transformation, genuine commitment to good governance, fight against corruption, and provision of social protection for the poor and vulnerable.

KEYWORDS:

• Economic growth
• inequality
• Nigeria
• poverty

Notes

1. Different definitions of poverty exist in the literature, however, Cahyat, Gonner, and Haug (2007) note that poverty is “a situation in which an individual or a household has difficulty fulfilling its basic needs, lacks opportunities provided by an enabling environment to sustainably improve its wellbeing or is vulnerable to losing its current standard of living” (p. 2). Poor people face problems such as extreme vulnerability to ill health, absence of fundamental freedoms of action and choice, deprivations, inadequacies of food, clothing and shelter, education and health (World Bank (2001, pp. 1, 2). Other problems confronting the poor include: economic dislocation, natural disasters, ill treatment by institutions of the state, and powerlessness in influencing key decisions affecting their lives. Poverty is multidimensional. Eghenter (2013, p. 18) highlights the multiple dimensional aspect of poverty to include: “insecure assets, vulnerability and minimal safety net, powerlessness, inadequate or unstable employment, lack of access to natural resources, weak bargaining position.”

2. The possibility of correlation between the two variables. This implies that the two variables may be correlated since both appear the same regardless of the action of first differencing it.

3. United Nations Development Programme (2013) indicates that HDI is a summary measure of basic human development achievements covering long and healthy life, access to knowledge and a decent standard of living while IHDI discounts the three dimensions of HDI in order to eliminate effects of inequality. According to the agency, “HDI can be viewed as an index of ‘potential’ human development and the IHDI as an index of actual human development.”

4. MPI is an index of poverty for more than 100 developing countries, launched in 2010 in the Human Development Report, and updated in 2011 and 2013 (Conconi, 2014). It is a national measure covering three different dimensions (of health, education and living standard) and having 13 indicators (child mortality, food security, years of schooling, school attendance, electricity, sanitation, water, housing material, cooking fuel, road access, assets, land ownership and livestock ownership (Alkire, 2014). These indicators are weighted to compute the deprivation score. The cut-off score is set at 33.3% to differentiate between the poor and non-poor. A household or country is therefore seen to be multi-dimensionally poor if its deprivation score is equal to or greater than 33.3%. Additionally, a household or country whose deprivation score ranges from 20% to some close to 33.3% is vulnerable to or is at the risk of becoming multi-dimensionally poor. This index is comparable internationally and appears to be superior to previously employed measures.

5. The reason for this is that most of the farmers have no proper storage facilities, and their farm produces are taken to cities such as Lagos, Abuja, Port Harcourt, etc. and sold at ridiculous prices.

6. A non-income inequality manifests as disparity in the area of gender education, socio-economic group, political opportunity, health, basic amenities such as improved water source, energy, and so on.

7. Absolute pro-poor growth is the type that reduces absolute poverty while relative pro-poor growth reduces “inequality and relative poverty, meaning that growth must benefit the poor proportionately more than the non-poor” (Duclos & Verdier-Chouchane, 2010, pp. 5 & 6).