Poverty reduction: Putting the cart before the horse

The federal government has slapped together a grandiose plan to wrestle Nigeria’s embarrassing poverty to the ground.
Poverty in Nigeria is a man-made calamity. It derives its fangs from a scandalous income distribution system that leaves a disproportionate share of the country’s enormous wealth in the hands of less than 5, 000 politicians and top civil servants.

The three tiers of government are responsible for the abject poverty in Nigeria. Ironically, the poverty reduction plan slapped together by the federal government is expected to be largely funded by the private sector and endowment funds.

The National Poverty Reduction with Growth Strategy (NPRGS) is a strange contrivance expected to reduce poverty by stimulating economic growth. Architects of the scheme expect to induce private investors to plough funds into strategic projects especially in agriculture where jobs would be created while at the same time mechanising Nigeria’s primitive food production process in a bid to combat the shameful spate of starvation enveloping the land from the north.

The federal government is targeting the Sovereign National Wealth Fund, insurance companies, pension fund and endowments as sources of funding the grandiose project.

Architects of NPRGS believe that the embarrassing poverty in Nigeria is the product of lethargic economic growth which could be reversed with concerted job creation escapade.

There are fears that NPRGS is wrongly conceptualized and ineptly capitalized. Those who think that poverty would be reduced in Nigeria with economic growth strategy should cast their minds back to the boom years between 2008 and 2014.

Average oil price for that period was $105 per barrel. During that period Nigeria’s economy grew at an average of six per cent per annum. Ironically Nigeria pushed 100 million people below poverty line during the economic boom and exceptional growth period.

Consequently, the perception that abject poverty is rooted in lethargic economic growth is a wrong concept and palliatives built on wrong concepts cannot engender the required soothing.

If the NPRGS is wrongly conceptualized, then its funding strategy is a calamitous spate of day-dreaming. The federal government expects private investors to shell out funds for investment in key sectors of the economy like agriculture and manufacturing to create jobs, accelerate economic growth and above all, lubricate Nigeria’s chaotic food chain and halt starvation and escalating food inflation.

Food inflation spiraled to 23 per cent in March. Economy watchers expect food inflation to climb perilously close to 30 per cent before the next harvest.

Food inflation is the consequence of Nigeria’s primitive farming method, extortion of motorists at hundreds of police check-points strewn across the nation and the high cost of evacuating scarce food items through dilapidated roads from Nigeria’s inaccessible rural farming communities.

The above anomalies conspire to price food items out of the reach of the poor, leaving millions on the throes of malnutrition. Food inflation is at the root of the disastrous starvation in Nigeria as a bag of beans that sold for N18, 000 last year, now sells for N56, 000.

Architects of NPRGS believe that the high cost of food items could be brought down as key investors plough funds into agriculture and produce more food items.

Unfortunately, there is something tragically wrong with that perception.

Designers of the strange poverty reduction strategy probably did not factor in the destructive capacity of Fulani herdsmen in their calculation of the productive capacity of the prospective investment in agriculture.

The herdsmen are huge disincentive to investment in agriculture. While Boko Haram has terrorized farmers in the north-east out of farms and drastically reduced agricultural output in the region, Fulani herdsmen are everywhere in Nigeria. They march their cattle into farms and watch them destroy crops cultivated by peasant farmers through hard manual labour. Even large-scale farms are not spared.

Directors of a leading Nigerian conglomerate that recently ventured into ethanol production can easily tell architects of NPRGS that no sane investor would plough his funds into the scheme’s agricultural project.

The company had a sad experience in Ekiti state where it invested N400 million in a 2, 000 hectare-cassava farm for its ethanol project. The herdsmen turned the vast cassava farm into their cattle ranch and reduced it to one massive wasteland.

Nigeria consumes 400 million liters of ethanol annually and produces less than 100 million liters locally at an abhorring rate of N450 per liter.  Imported ethanol from the U.S. enters the market after import duty at a paltry N219 per liter.

Fulani herdsmen have repulsed not only the adventurous conglomerate but other investors who would have taken the plunge if the pioneer investor had succeeded. The disaster of the conglomerate’s ethanol project and the ones visited on peasant farmers is a huge disincentive for investment in Nigeria’s tottering agricultural sector.

Grievous design miscalculations put NPRGS in the realm of other grandstanding projects of government. It is dead on arrival because the investment environment is just too hostile.

It is equally preposterous to expects serious investors to sink funds into NPRGS projects in manufacturing sector. Like it did to India on poverty in 2018, Nigeria has replaced DR Congo, Africa’s melting pot of dissension, as the nation with the highest number of people without access to electricity. Nigeria generates a scant 4, 000 megawatts (mw) of electricity for 207 million citizens.

Even with the doubling of power tariff that makes a kilowatt hour of electricity in Nigeria slightly more expensive than what obtains in Ghana, there are no signs that power supply would improve in the next five years.

It simply follows that the investors expected to besiege the manufacturing sector with projects that would create jobs and drive away poverty, are just not in a hurry to invest where they would spend half of the cost of the project on independent power generation. The investment environment in the manufacturing sector is even more hostile than agriculture.

Perhaps the greatest foe of NPRGS is Nigeria’s obdurate security crisis which is now putting the country on the throes of a civil war. Kidnappers have turned schools into cheap targets where students are abducted for huge ransom.

Unlike the governments that own the schools where the students were kidnapped, investors value their staff and would not put them in harm’s way. They simply would not invest where kidnappers reign supreme.

NPRGS is therefore a misadventure that puts the cart before the horse. Until insecurity, skewed income distribution and power problems are addressed, no one expects the scheme to reduce poverty. 

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