Poverty and Policies

BY KAYODE KOMOLAFE

In his macro-economic analysis on ARISE TV last Saturday morning, Professor Ken Ife highlighted some of the remarkable policy steps taken by the government which he repeatedly said “no one talks about” in the public sphere.

The economist, who is a regular guest of the television station, is the coordinator of the 2021-2025 Medium Term Development Plan of the federal government. It is hoped that the system would absorb some of the ideas which Ife has professed in the making of the development plan.

From his vantage position as a professional economist, Ife also plays the role of a public intellectual competently as he offers technical insights in an accessible language on the economic policies of the administration of President Muhammadu Buhari.

Before relating Ife’s professional submission to the actual poverty situation in Nigeria, two prefatory points might be apposite to the discussion.

First, the interventions of scholars such as Ife are reminiscent of the days when governments valued the inputs of Nigerian professional economists in policy formulation and articulation. In the First and Second Republics as well as during military rule professional economists were involved in putting together plans and strategies. Hence you cannot tell the full stories of past development plans without mentioning, for instance, the names of eminent economists such as Dr. Pius Okigbo and Professor Ojetunji Aboyade. On a broader scale, the universities are the centres for the production of knowledge in the various disciplines including economics. But the government has hardly been optimising the use of the knowledge produced in the universities as inputs to policymaking. What with the official contempt for scholarship in Nigeria, the state does not seem to value the ideas from the universities. Whatever happened to the government’s reliance on bodies such as the Nigerian Institute for Social and Economic Research (NISER) for ideas? Do research institutes have any role to play in drawing up development plans anymore? In fact, the voice of the Nigerian Economic Society ought to be more organisationally distinct and louder at this time when workable ideas are needed to resolve the socio-economic crisis facing the nation.

Secondly, watching Ife talk on television as an expert in his field could also remind the public of the huge gap created by the lack of policy articulation which ought to be filled by the Buhari administration.

By the nature of their respective assignments, government officials and their experts are expected to lead debates in the public sphere on policies. Members of the public, (experts and non-experts alike), in turn should make constructive criticisms of the policies in the interest of development of the people. For instance, when the Structural Adjustment Programme (SAP) was introduced 35 years ago by the government of President Ibrahim Babangida, the debate on the merits and the demerits of the programme were led by the administration officials who were professional economists formidably supported by other experts. These included Dr. Kalu Idika Kalu and Dr. Chu Okongwu (who were ministers holding economic portfolios) and Chief Olu Falae, who as the Secretary to the federal government was deeply involved in the policy articulation. Both Kalu and Okongwu had the background of the Bretton Woods institutions. Unfortunately, instead of leading public debates on some of the socio-economic policies some officials of this administration are provoking debates on the anachronistic idea of open grazing for cattle and authoritarian attempts to circumscribe human freedom by means of even non-existing laws. As a result, the nation is polarised at a time unity is sorely needed to tackle the crisis in the land.

In effect, the administration is unwittingly diverting attention of the public from what is happening in the realm of economic management by its misadventures in the politics of diversity and the gross incompetence in the security sector. The public focus seems to be on those areas- insecurity and the threat to national integration – which are the weak points for the administration.
Little surprise that “no one talks about” the economic policies as Professor Ife put it during the programme earlier referred to in this discussion.

Ife explained these policies that would be embodied in the proposed development plan in a way not many administration officials have done in recent past as follows: There were some plans in the past such as Vision 2010 and Vision 2020. Those target years have, of course become history. Some of the past plans had no mechanism for measuring performance. This is expected to be corrected in the present plans. Unlike previous plans, the present one places a lot of premiums on the role of science and technology – bioeconomy (which, for instance, accounts for 2.4 trillion euros in the German economy), digital technology, innovation etc. Comparisons could be made with Brazil, Malaysia and Singapore on the central role of science and technology in the economy. There is the irony that the economy is not deriving full benefits of even a rise in oil prices because the revenues are held “hostage” by importation of fuel in a country exporting crude oil. So, the focus on agriculture is only logical in the circumstance.

It is acknowledged that the plan faces the “headwinds of debt, food inflation and insecurity.” There is an organic link between these aspects of the crisis. Food prices constitute a major component of inflation in the economy. With bandits and other criminals making farmlands unsafe, food insecurity stares the nation in the face. Besides, “Nigeria actually feeds more than 200 million people” because of the food outflow from Nigeria to Niger, Mali, Benin and the Cameroons. Yet the Anchor Borrowers Programme driven by the Central Bank of Nigeria (CBN) has made significant impacts. Peasant farmers now use their BVN to have access to capital without collaterals. There is the mapping of the lands for “vertical and horizontal traceability.” The advances in the agricultural sector have been “dramatic.” The government should involve the local governments to decentralise the activities which the CBN has begun. Hectares of lands could be acquired by the local farmers and shared to farmers.

Another point made by Ife was the justification of the huge indebtedness of Nigeria on the ground that “a foundation is being laid for infrastructural development” with the loans. He added that “this government has not defaulted” in servicing of the loans. Penalty for default in loan servicing represented about 40% of the debt trap which Nigeria exited in 2005 with the payment of over $12 billion. For instance, before this administration the last major investment in the railway was done by the colonialists in 1927. Previous administrations began the railways projects and initiated the process of sourcing for loans. The Buhari administration has now completed some of the railways projects to the acclamation of even some of its critics.

Ife also attributed the progress made in the domestic production of of fertilizers to overall agricultural policy. Incidentally, the Dangote Fertilizer Plant has the capacity to meet local demands as well to export. Alhaji Aliko Dangote said yesterday that the plant would export fertilizer to Brazil and the United States. For long, the supply of fertilizer has remained a critical factor in the implementation of agricultural policies in food production. In 2018, Nigeria’s consumption of fertiliser per hectare of arable land was estimated to be 20kg. This is a low estimate compared with 73 kg in South Africa and 393 kg in China.

According to Ife, this administration has wisely opted to complete some of the inherited public works projects. He said: “One good thing about this government is that public works projects have not been abandoned; …. contractors were sent back to the sites.” Although some of the projects are far from being completed, yet the perennial problems associated with abandoned projects have been avoided. In the view of the economist, the policies should be better structured so that some of these projects would be handled based on Public Private Partnership (PPP).

To fund the projects that should be executed to accomplish the plan, Ife spoke on the efforts of the government to source funds and generate revenues. He spoke on the tax structure and the burden on the taxpayers who also incur heavy energy costs and other expenses due to lack of infrastructure. Ife said the debt to GDP ratio could still be considered as comfortable. The problem to worry about should be the generation of revenues, according to the economist.

All told, Nigeria is still regarded as the poverty capital of the world. Beyond the figures and macro-economic projections, however, the reality is that poverty remains the lot of millions of Nigeria. It is instructive that Professor Ife did not make undue assertion in this regard as an expert. In the present Nigerian condition, the ultimate measurement of economic performance is poverty reduction. An economy in which the lives of tens of millions are defined by ignorance, disease and misery cannot be said to be working in humane terms. This is regardless of what the official and non-official experts say to the contrary.

In his Democracy Day broadcast, Buhari said: “In the last two years we lifted 10.5 million people out of poverty – farmers, small-scale traders, artisans, market women and the like.” That was actually Number 37 in his 59-point message to the nation on June 12. While experts and non-experts were still digesting the full import of the official announcement of poverty reduction, the World Bank released a report on Nigeria three days later entitled Nigeria Economic Update: Resilience through Reforms. The World Bank duly acknowledged that Nigeria has exited its “deepest recession in four decades,” in the report. However, the Bank seemed to have a different reading of the poverty situation in Nigeria: “In 2020, rising prices alone – even without incorporating the direct impacts of COVID-19 on welfare – may have pushed an estimated 7 million Nigerians into poverty.”

Perhaps, it is socially pointless disputing the poverty figures. It may be more important to ponder in qualitative terms the consequences of burgeoning poverty on the streets. Poverty is more meaningfully gauged with the barometer of the streets rather than the one on the pages of official publications. The government and its experts may need to consider the political economy approach to the socio-economic crisis facing Nigeria.

In any case, the Buhari administration has on its agenda the lifting of 100 million people out of poverty in 10 years.

Only yesterday, the President inaugurated a steering committee on poverty reduction. The committee which includes some state governors, and some members of the federal cabinet is to be chaired by Vice President Yemi Osinbajo.

According to Buhari, the National Steering Committee (NSC) of the National Poverty Reduction with Growth Strategy (NPRGS) is expected to “translate our good intention into positive impact of the average Nigerian so that we create an appreciative impact on the poverty situation in our country.”

To achieve this purpose, the committee will have oversight functions on ministries, departments and agencies in the implementation of policies in a collaborative fashion. This is important because the Buhari administration has hitherto been plagued with dysfunctionality. Collaboration has hardly been a culture of ministries, departments and agencies.

Besides, the government also plans to establish a private equity fund, the Nigeria Investment and Growth Fund (NIG-Fund) to mobilise resources in a sustainable manner for the purpose.
In this respect, Nigeria is rightly drawing inspiration from India which lifted more that 270 million people out of poverty in 10 years beginning from 2006. By the way, India used to be called the poverty capital of the world. China has the record of lifting more than 770 million out poverty through “targeted poverty reduction.”.

Basically, poverty reduction is a philosophical issue. It involves asserting the humanity of the people in policymaking. It means that people should be the centre of development. Poverty reduction goes beyond bandying about statistics in official statements. The process must be owned by the people.

So, to achieve poverty reduction sustainably there should a defined philosophy of economic development. Those who drive the policies must be convinced about the government’s idea of development. For instance, you cannot reduce poverty significantly in the Nigerian context when the mindset of policymakers is that the state has no role to play in the economy. China and India did not achieve their feats in poverty reduction by leaving their peoples to the mercy of phantom market forces. Those who do not philosophically find inequality and social injustice revolting cannot practically implement a poverty reduction strategy to any appreciable degree. The matter is deeper than merely calculating growth rates periodically.

The first step is for the government to have clarity of purpose about competent economic management as a duty of the state.

“To achieve poverty reduction sustainably there should a defined philosophy of economic development”