Economic Growth Inequality And Poverty In Nigeria

ECONOMIC GROWTH INEQUALITY AND POVERTY IN NIGERIA

CHAPTER ONE: INTRODUCTION

1:1 BACKGROUND TO THE STUDY

The growth pattern of the Nigerian economy has been quite sluggish over the last two decades. This fact is however connected to the highly increasing level of poverty, which is further exacerbated by the pandemic problem of inequality.

According to the UNDP Millennium Human Development Report (2001), “Nigerian economy has been suffering from severe and persistent regression since the mid-1980’s. Its GDP, which was US $93.3bn in 1980 is now currently about one-quarter of what it was a quarter of century ago.” The movement backward has been so fast, that Nigeria, which was ranked 20th in terms of size of its GDP currently ranked 57th.

Moreover, associated with this serious economic retrogression in terms of GDP, is the deepening level of poverty in the country. For example, according to NHDR (1998), it was estimated that 48.5 percent of the country’s total population (i.e. about 55.0 million) live below the poverty line; current estimates put the percentage at between 66 and 70 percent (i.e. about 70 million people). It was also presented in the millennium report of the UNDP that the prevailing poverty situation in the country is further deepened and exacerbated by the persisting inequality as regard access to wealth, income and productive resources.

The situation is so worrisome that the relevance of the Nigerian economy at the global level is continuously shrinking. According to UNDP Human Development Report (2001), “Nigeria’s current contribution to global GDP is rather infinitesimal вЂ"0.22 percent, whereas in the 1960’s it was 0.55 percent.” This fact, further portray Nigeria’s declining economic performance, resulting in a lackluster growth pattern.

The above situation therefore, calls for an immediate policy effort to fine-tune the economy in the direction of a reduced poverty and inequality levels that will generate sufficient growth to revamp and bolster the economy.

According to Ayagi (1990), Orthodox theory of Economic Growth places much emphasis on the growth rate of Gross Domestic Product (GDP) per capita, so that it should give way to the paradigm of human development with emphasis on poverty reduction.

1:2 STATEMENT OF THE PROBLEM

Growth is a fundamental requisite to development. This informs why in Nigeria growth had continued to dominate the main thrust of government’s paramount development objective. Essentially, economic growths are associated with policies of reduced poverty and inequality among the mass majority.

However, like many other countries, Nigeria was historically a colony of a centre called Britain. This colonial experience influenced Nigeria to pattern her pursuance of economic growth both substantively and procedurally inline with the colonial legacy. But this line of thinking resulted in almost complete negation of some of the major economic crisis in the country вЂ" such as poverty and inequality. The low Gross National Product (GNP) reflects the existence of these problems at high rates.

According to World Development Report (WDR 1994), Nigeria was amongst the low-income countries with GNP per capita $310 in 1992. Similarly, the NHDR (2001) on the basis of 1999 data, ranks Nigeria 57th in terms of GNP, while on per capita GNP basis it ranks 187th. And on the basis of purchasing power parity (PPP $) it ranks 51st, while on per capita purchasing power parity (PPP $) it ranks 194th. Its human development ranking are equally very low. Human Development Index (HDI) in 2000 puts it at 151st position, whilst its Gender Development Index (GDI) is a little better at 124th position. Yet this is a country that ranks 6th and 7th as oil exporter and producer and ranks 10th as the most populous country in the world.

Further analysis as revealed by the Economic Policy Watch (2002) shows that the growth rate in Nigeria is sluggish; poverty and inequality are widespread, deep and severe. Seven years ago, the NHDR rated Nigeria 136th in Human Development Index (HDI), the country currently ranks 151st out of 174 countries. This confirms the deepening poverty level of over 70%. In 1996, 65.6% of Nigerians live below the poverty line. This presents a marked deterioration from the previous level of 27.2% in 1980; 46.3% in 1985 and 42.8% in 1992.

The problem lies in the fact that poverty is measured not only by low income but also malnutrition, poor health, clothing, shelter, and lack of other essentials of life. According to Chege (1992), Nigeria became worst than the early post-colonial period. In the 1980’s the Agricultural sector declined in productivity by 1.3% while population grew by 3.1%, thus creating severe food shortage and a fall in per capita income and living standard.

According to CBN (1997), the population growth rate of Nigeria averaged 2.83% from 1993 to 1997 as compared to a developed country like U.S. of which population growth rate is averaged 1.00%. The life expectancy at birth years is also averaged to 52 within these years. The adult literacy rate (%) is averaged to 56, and human development index to 0.387. Also according to NHDR (2001), the life expectancy for an average Nigerian stood brutish at 51 years at birth.

Moreover, according to Okigbo (1986), Nigeria’s debt was $1billion in January 1978, persistently rose to $21.2billion in 1986. Similarly, according to CBN (1997), the external debt outstanding (N million) rose from 28,718.2 in 1993 to 595,931.6 in 1997, and according to Obasanjo (2000), the external debt is approximated to $40.3billion; this includes external debt service payments. Of recent the NHDR (2001) reports that Nigeria’s external and internal debts in (% terms) stood at 54 and 46 per cents, while as a percentage of GDP, they are 22 and 19 percents respectively.

All the above threatening figures put together, seem to establish the inescapable picture of a country that is one of the poorest in the world. Perhaps, according NHDR (2001), Nigeria is the only country in the world that presented such a paradox of being both a larger oil exporter and amongst the poorest nations at the same time.

In a nutshell, the above presentations points to the critical stance of the Nigerian economy, and therefore call for giant policy measures to revamp and bolster the economy. This however, requires a constructive macro-economic policy approaches that will