Poverty – A Systemic Failure Not a Personal One

Olaoluwa Awojoodu

Four out of every 10 Nigerians, more than 82.9 million people live in poverty according to a 2020 report from the National Bureau of Statistics (NBS). The World Poverty Clock estimated the figure to be 86.9 million in 2018, and the United Nations Development Programme (UNDP) reported in 2019 that 98 million Nigerians are living in multidimensional poverty. No matter the source, the indication remains that an alarming number of Nigerians are poor, one needs no reminder that in 2018, Nigeria overtook India, as the poverty capital of the world, and with the outbreak of COVID-19 making matters worse, many Nigerians lost their source of income or experienced income cuts. Given these circumstances, the World Bank predicts that an additional 15-20 million people could be pushed below the poverty line by 2022. This is an issue that deserves significant national attention and that should be dominating public discourse because of the sheer scale of the problem and the implications for Nigeria’s future.

Despite an increased number of government interventions aimed at alleviating poverty in Nigeria, the situation remains dire. The NBS measures poverty as an annual expenditure below N137,430, this means poor Nigerians are living on roughly N376.5 per day and below N11,452.5 monthly. 60% of this income is spent on food, the NBS records N81,767 as the annual food line, this means that N227 daily is spent on food, leaving only N149.5 for non-food basic needs, such as clothing, housing, education and health care, that is N55,663 annually. And you have to ask yourself, in a country where a sachet of tomato paste costs between N100-N150, a derica of rice costs between N500 – N1300, and a bag of 20 pure water sachets costs about N150, what can N227 really afford you?

Meanwhile, the World Bank has stated that rising prices (mostly driven by food) have pushed an estimated 7 million Nigerians below the poverty line in 2020 alone, and Enhancing Financial Innovation and Access (EFInA) reported that the livelihoods of 86 million Nigerians (80% of the 106 million adult population) were negatively affected by the pandemic.

What this means is that there are people who despite earning less than N400 a day, have had even that meagre amount reduced as a result. With the price of food on the rise and earnings reducing, many are spending over half of their income on food and water, leaving little to no room for other expenses and necessities such as education, healthcare and transportation and even less for business resilience. This is what multidimensional poverty looks like. In this reality, poverty goes beyond not having enough money. In Nigeria, millions of people do not have access to the most basic resources and social amenities: food, water, shelter, electricity, education, or financial services. Without which they are unable to counter poverty and as such, they are confined to the bottom of the socio-economic pyramid for generations to come. Poverty becomes a vicious cycle that very few escape from- one that is directly related to Nigeria’s worst development indicators – approximately 800,000 children and mothers die each year, one in 9 Nigerian children never reaches the age of five, and life expectancy is 55 years.

It is not enough to simply focus on the symptoms of poverty, it is lack of access to education, basic healthcare, quality nutrition, sanitation, infrastructure, and electricity, and degrading economic and environmental conditions that are the root causes of poverty. Each root cause has to be separately addressed by stakeholders for the desired overall outcome. Public spending must be reprioritised to support critical development expenditures, and a combination of direct poverty alleviation measures and broader economic development strategies must be deployed to protect vulnerable communities.

One can consider the Federal Government’s school feeding programme, a strategic intervention that increases enrolment rates while helping poor families reduce the burden of feeding. Its significance to Nigerians living in rural areas, where 52 out of every 100 people are living in poverty, cannot be overstated. Access to quality education is one of the most reliable ways of escaping poverty cycles. Households headed by individuals with no formal or primary education record higher incidences of poverty. More of such interventions are needed to have the desired impact of poverty reduction. It is only through the provision of welfare services, driven by the government with the support of the private sector, that Nigerians at the bottom of the pyramid will be able to break out of poverty traps. For example at E-Settlement, our financial services solution makes tangible contributions towards eradicating poverty and improving standards of living for vulnerable groups. Through our agent banking offering we are creating direct jobs, we are enabling MSME’s to thrive by providing access to solutions that help them transact businesses which the unbanked and underserved can access to funds to create a source of income.

For instance, redeploying funds from agencies with minimal developmental impact towards healthcare services will not only improve the quality of service but will also increase the capacity of the National Health Insurance Scheme. Insurance as a financial service is an important tool because the benefits of the service outweigh the cost of providing it. Increasing access to health insurance, significantly reduces the burden on the millions of Nigerians unable to afford basic healthcare and reduces financial shocks from unexpected health emergencies, it also allows them to engage their limited income in other productive ventures.

Nigeria’s broader revenue generation problem means that there are competing priorities for available funds. Consequently, whatever little funds are available must be channelled effectively and optimally by ensuring that pro-poor interventions and policies are targeted and speak to every day realities of the most vulnerable households. A lot can be achieved through the little available. The NBS data shows that households with a male head recorded a higher incidence of poverty than those with a female head. Nigeria also has one of the highest numbers of female entrepreneurs in the world. As such the provision of targeted microcredit facilities to these women, who mostly work in the informal economy and often do not have direct access to financial services that drive resilience in their livelihoods, can instigate a knock-on effect of improving developmental outcomes because women more than men spend their income on nutrition, health and education. By accessing credit, they are able to leverage additional funds and their incomes, to improve their livelihoods both at home and in their enterprises.

The simple truth is that hard work is not the solution to deprivation. We cannot depend on the success stories of a few unicorns who have been able to leapfrog destitute circumstances through hard work and good fortune. The volume and impact of poverty in Nigeria are far too great to not be considered a national emergency. One must remember that the most recent poverty data released by the NBS excludes Borno state, and does not reflect the number of children who are likely to remain poor far into adulthood without the requisite government intervention to break the cycle. In the long run, safety net programmes designed with the intention for the local context, including the provision of unemployment benefits, health insurance schemes, and broader-based access to financial services transform the lives of Nigerians at the bottom of the pyramid, engender class mobility and lead to better outcomes for all Nigerians.

…Awojoodu is the co-founder & CEO, E-Settlement Group