Poverty in Nigeria


had one of the world's highest economic growth rates, averaging 7.4% according to the Nigeria economic report released in July 2019 by the World Bank. Following the oil price collapse in 2014–2016, combined with negative production shocks, the gross domestic product growth rate dropped to 2.7% in 2015. In 2016 during its first recession in 25 years, the economy contracted by 1.6%. Poverty remains significant at 20.1% in Africa's biggest economy and with most billionaires and millionaires in Africa. For a country with massive wealth and a huge population to support commerce, a well-developed economy, and plenty of natural resources such as oil, the level of poverty remains unacceptable. However, poverty may have been overestimated due to the lack of information on the extremely huge informal sector of the economy, estimated at around 60% more, of the current GDP figures. As of 2018, Population growth rate is higher than economic growth rate, leading to a slow rise in poverty.  According to a 2018 report by the World Bank, almost half the population is living below the international poverty line, and unemployment peaked at 23.1%.
Poverty in Nigeria can also be caused by the political instability of the country.
However, these programs have largely failed to overcome the three reasons for this persistent poverty: income inequality, ethnic conflict, and political instability.

Income inequality

As at 2010, the Gini coefficient of Nigeria is rated medium, at 0.43. However, there are more rural poor than urban poor. This is correlated with differential access to infrastructure and amenities. This results from the composition of Nigeria's economy, especially the energy and agriculture sectors. Oil exports contribute significantly to government revenues; it contributes 9% to the GDP, and employs only a fraction of the population. Agriculture, however, contributes to about 17% of GDP, and employs about 30% of the population.
This incongruence is compounded by the fact that oil revenue is poorly distributed among the population, with higher government spending in urban areas than rurally. High unemployment rates renders personal incomes even more divergent. Moreover, the process of oil extraction has resulted in significant pollution, which further harms the agricultural sector. Additionally, agriculture growth as slowed also because of farmer-herdsmen clashes, revolts in the north-east, and floods.  The majority of Nigeria's better paying jobs are in capital-intensive sectors, but they are very scarce and limited. Only the places striving with economic activity and are very capital-intensive, possess law firms, small local businesses, and the governing powers.

Long-term ethnic conflict and civil unrest

Nigeria has historically experienced much ethnic conflict. With the return to civilian rule in 1999, militants from religious and ethnic groups have become markedly more violent. While this unrest has its roots in poverty and economic competition, its economic and human damages further escalate the problems of poverty. For instance, ethnic unrest and the displeasure to local communities with oil companies has contributed to the conflict over oil trade in the Niger Delta, which threatens the productivity of oil trade. Civil unrest might also have contributed to the adoption of populist policy measures which work in the short-run, but impede poverty alleviation efforts.

Political instability and corruption

Nigeria's large population and historic ethnic instability has led to the adoption of a federal government. The resultant fiscal decentralisation provides Nigeria's state and local governments considerable autonomy, including control over 50% of government revenues, as well as responsibility for providing public services.
The lack of a stringent regulatory and monitoring system has allowed for rampant corruption. This has hindered past poverty alleviation efforts to a large extent, since resources which could pay for public goods or directed towards investment are being misappropriated.
Nigerian corruption and poverty are interrelated and encourages each other. When looking at human development, Nigeria is at the bottom of the scale and corruption scores highest. Its existence is in all levels in the government – Local, State and even in the national departments. As a result of extreme corruption, even the poverty reduction programs suffer from no funding and have failed to give the needed remedy to this country. One of the reasons for the continued success of corruption is the encouragement that it receives from the government. Government shows tolerance towards corruption and corrupted official s to the extent that the officials facing indictment are pardoned and accepted into the society. Is there a remedy to eradicate corruption? The answer lies in the hands of Nigeria's federal government. They must get involved more and implant stronger reduction programs and ensure that it is being followed by all the officials and the departments. Just by eradication corruption, Nigeria could come of poverty. Taking care of corruption is taking care of poverty.

Economic Evolution

The management of oil revenues impacted the economy and the level of poverty in Nigeria by a considerable amount, leading up to 1985.  As result of the profiting oil businesses, much of the oil revenues were spent expecting that the oil prices would continue to increase.  This aggressive spending led to the rise of per capita income from N1,200 in 1972 to nearly N2,900 in 1980, according to 1987 prices. So when the oil revenue crumbled the real capital income decreased heavily and Nigeria's economy took a big hit.  During this shift to a focus on the oil boom, the agricultural sector, where the majority of people made a living, had a sharp drop occur. Throughout this oil boom period, naira increased, and agricultural exports dropped by almost half the value and half the volume. Non-agricultural wages dropped massively as the labour workers increased in non-agricultural jobs because of the steady migration to more urban areas.  As these wages decreased, agriculture thrived temporarily but eventually ended up declining as well. As a result, the gap created by the oil boom of agricultural and non-agricultural profits finally stabilized. The economy began to decline in the 1980s due to a sharp decline in oil prices in 1982 and agriculture continued to deteriorate. As a result, wages continued to decline and unemployment grew further in the mid 1980s.

Defining Poverty

Economic Measures

Officially, there is no poverty line put in place for Nigeria but for the sake of poverty analysis, the mean per capita household is used.  So, there are two poverty lines that are used to classify where people stand financially. The upper poverty line is N395.41 per person annually, which is two-thirds of the mean value of consumption.  The lower poverty line is N197.71 per person annually, which is one-third of the mean value of consumption. If you fall under the lower poverty line you are considered extremely poor, while if you fall under the upper poverty line are considered moderately poor.  The Poverty Line in Nigeria, which is the amount of income in which anybody below is classified as in poverty. The poverty line being defined is less than the minimum wage of labour workers in 1985, which contributes to the faulty economy.

Vulnerability to Poverty

People that are presently not in poverty and those currently in poverty, will be considered vulnerable to poverty.  Household vulnerability is classified by the chances or risk that a household will either fall under the poverty line or if already poor, remain in poverty.  If a household has 50% or more odds of falling into poverty or staying in poverty, they are considered to be vulnerable to poverty. The three groupings of vulnerability to poverty is: the permanent poor due to temporary abnormal events occurring, those becoming poor because of predictable events, and those who become poor because of damage to the economy that affected the household's profits.  The three main terminologies adopted to classify poverty is Vulnerability as Expected Poverty, Vulnerability as Low Expected Utility and Vulnerability as Uninsured Exposure to Risk. In Nigeria, those most at risk of poverty and financially insecure are widows, orphans, the physically challenged, and migrants. The likeliness of poverty in rural areas of Nigeria is higher with those of household characteristics such as the number of people living in a household, education level, and production.  Another determining factor of vulnerability to poverty is food poverty, which is sometimes considered the root of all poverty. The vulnerability of food poverty varies across the urban/rural and geo-political zones throughout Nigeria. Altogether, 61.68% of Nigerians are vulnerable to food poverty, so measures should be taken to increase food production and food distribution.

Child Poverty

One of the terrible effects of Nigeria's poverty problems is the result of child poverty.  A study made in 2001 from the Harmonized Nigeria Living Standard Survey and the 2011 Multiple Indicator Cluster Survey indicates that 23.22% of children are currently in extreme poverty and 70.31% of children in the country are in overall child poverty.  Education, health, nutrition, water, and sanitation are classified as child deprivation in Nigeria. Similarly to the main concentrations of extreme poverty in Nigeria, the majority of child poverty takes place in rural areas rather than urban areas.  Action was taken on this problem when rule switched to democratic to fight child poverty and deprivation from the Child Rights Act in 2003, which was intended to guarantee welfare and basic living standards for children in Nigeria. However, the fact that many children are still in poverty and are suffering, the Child Rights Act wasn't as successful as it seemed to be.

Government programmes

There have been attempts at poverty alleviation, most notably with the following programmes: