Nigeria’s economic policy of subsidising poverty

In the face of severe economic challenges, the Nigerian government is often very confused about the best line of action. Since 2018 when Nigeria overtook India as the poverty capital of the world, the government has been trying to find poverty alleviation measures to curb the menace. The only problem is that within the scope […]

In the face of severe economic challenges, the Nigerian government is often very confused about the best line of action. Since 2018 when Nigeria overtook India as the poverty capital of the world, the government has been trying to find poverty alleviation measures to curb the menace. The only problem is that within the scope of their trying, the government seemed to be very averse to reasonable and sustainable plans to curb the number of poverty-stricken population or even address the adverse effect of inflation on society, by just concentrating on sharing palliatives. 

The term palliative in Nigeria has taken so many forms and definitions. All of which are often not within the context within which it is originally defined. A palliative can be defined as an action that is intended to make the effects of a problem less severe but does not actually solve the problem. And this has been the government’s strategy for addressing economic outcries of Nigerians over the years. Instead of rolling out sustainable and carefully curated economic policies that will ensure that the standards of living can be improved, the rapid response strategy is always an unconditional cash transfer. This, unfortunately, is usually because cash transfers often play to the political side of governance but not to the policy angle.

The political actors can easily boast of huge amounts of money shared to gain political scores, but these actions do not in any way offset the poverty index or even improve the standards of living of citizens in the country.

When the Tinubu administration came in, it commenced its work by going after all forms of government subsidies. First, there was the removal of the petrol subsidy. Then there is the increment of school fees across all levels of education, and there has been speculation on the removal of electricity subsidies as well. These policies have hit Nigerians very hard. The Tinubu administration is running on a “no subsidy mantra”. 

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However, as part of the responsibilities of government to ensure the well-being of its citizens, the government has been grappling with alleviation measures to cushion the effects that these policies (fuel subsidy removal particularly) have had on the standard of living and purchasing power of Nigerians. While there is a plethora of ideas and suggestions out there from experts on best approaches and global best practices, the government has, however, announced that it is taking a $800 million loan from the World Bank, out of which, it intends to share N8,000 to 12 million households (selected from the social register) within six months as palliatives again. One wonders if this is not a subsidy in a way as well. Poverty subsidisation. 

Beyond the nuances of what cash palliatives mean in the Nigerian polity, if precedence has taught the citizens anything, it is that cash transfer initiatives are a con strategy of stealing from the poor to empower the rich because often, this money ends up in the pockets of a few highly placed Nigerians. From the skewed dataset that makes up the social register to the untransparent means of cash disbursement, Nigerians are in for a long haul if the government does go ahead with this policy.

Cash transfer programmes have been widely promoted as a means of palliative and poverty alleviation. In Nigeria, initiatives such as TraderMoni and other unconditional cash transfer programmes have been implemented with the aim of providing immediate relief to those in need. However, despite the initial appeal of cash transfers, there are significant drawbacks that make them an unsustainable and ineffective approach to poverty alleviation.

While it may often seem as though cash transfers can offer immediate assistance to those in dire need, they often fail to address the root causes of poverty. Instead of empowering beneficiaries to escape poverty, these programmes can foster a sense of dependency on government aid. Recipients may become reliant on regular cash handouts, making it challenging for them to break free from the cycle of poverty in the long run.

It is also important to note that these kinds of actions place a substantial strain on government finances, especially because the programmes need to be carefully designed and implemented. The experience that we have had with TraderMoni is a case in point. The programme, which was designed to provide small loans to traders and artisans, faced challenges when it came to implementation. The government could not replenish the monies expended on the programme, leading to no impact and significant collapse. 

So, what, then, can the government do? It is important to note that political points can be scored from different activities without having to result in cash transfers. For example, investing in infrastructure. Infrastructural development is one of the easiest ways to score political points from the masses and still has a meaningful impact. For example, if the government invests in mass transit as a strategy to cushion the effect of fuel subsidy removal, it will keep the credit of something that can be tangibly seen and create a meaningful impact.

At N150 million per bus, the proposed N96 billion to be shared in six months to “vulnerable Nigerians” can purchase 640 buses that can be used as mass transit. These buses will create jobs and also help subsidise intracity transport costs in major cities across the federation. 

As it stands, Nigeria is hanging very precariously. The coffers of the nation are depleting faster than its earnings, and we cannot tolerate another round of careless exigent policies that have no lasting impact. While it can be argued that cash distribution provides some form of relief, it is not a panacea for poverty alleviation in any way. We cannot alleviate poverty by subsidising it. 

 

Suleiman wrote from Abuja.