by Tunde Andrew
The recently announced re-based GDP figures that increased the estimated size of the Nigerian economy has again drawn attention to official poverty statistics. Data from the last comprehensive household survey (NHLSS) in 2009/2010 indicated that the official poverty rate remained stubbornly high at 46% of the population (adult equivalent approach), or 62% in strictly per capita terms.
This indicates only a slight decline from 48% and 64%, respectively, that were recorded from the NHLSS in 2003/2004. These poverty numbers raise two major economic questions. Firstly, why has the rapid economic growth in Nigeria not generated greater poverty reduction?
Second, how could an economy of the size and wealth of Nigeria have such high poverty rates? The country’s performance is at odds with the general international trend of poverty reduction, in particular in other countries experiencing rapid economic growth like Nigeria.
From the report, it appears increasingly likely that consumption of Nigerians was underestimated in the 2009/2010 NHLSS. A World Bank report of 2013 raised the hypothesis that consumption may have been significantly underestimated in the 2009/2010 NHLSS. This report noted an unusual sharp decline in monthly consumption in this survey in early 2010 relative to the second half of 2009 that would seem to have little economic rationale. The newly re-based GDP numbers increase suspicions in this regard, as the average level of consumption reported in this survey would appear to be inconsistent with the newly estimated size of the Nigerian economy.
What the report does, is that it provides a partial reassessment of poverty in Nigeria based on recent information. This note makes use of new National Bureau of Statistics (NBS) data, that has become available on the web from two smaller General Household Surveys (GHS) in panel format conducted in 2010/2011 and 2012/2013. It should be emphasized that this reassessment is only a very partial analysis, and its confirmation or refutation will need to come from the next comprehensive HNLSS in 2014/2015 by NBS.
John Litwack, the World Bank’s Acting Country Manager and Lead Economist, said that the decrease represents a dramatic drop from an estimated poverty rate of 62.2% recorded between 2009 and 2010 based on the Harmonised Nigeria Living Standard Statistics (HNLSS).
“The poverty rates per capital from the General Household Survey (GHS) panel between 2012 and 2013 is 33.1% with 44.9% in the rural areas and 12.6% in the urban areas. This indicates lower poverty rates compared to 35.2% recorded between 2010 and 2011 with 46.3% in the rural areas and 15.8% in the urban centre.”
He said that an estimated 60 per cent of the Nigerian population lived below 140 per cent of the poverty line, which is close to two dollars per day.
Explaining the disparities between poverty level in the Southern and Northern Nigeria, Litwack said there appeared to be higher poverty rate in the Northern part than in the Southern parts of the country.
“The number of poor Nigerians has remained 58 million, more than half of which live in the North East or North West of the country. While the South and North Central experienced declines in the poverty rate between 2010 to 2011 and 2012 to 2013, the poverty rate increased in the North East and remained almost unchanged in the North West,” he said.
Despite the upward reversal in par capita income and revised consumption figures, many Nigerians still feel the report are mere
Yomi Fawehinmi, a HR and Corporate responsibility consultant, felt the supposed effects of the report were not being felt on the streets as cost of living was on the rise, without a commensurate increase in earnings. He said “The percentage of money spent by Nigerians on food, health and education is upwards of half of their total income. Its evident none of the prices of these 3 items ever reduces in Nigeria. And that’s why in spite of the reported reduction in poverty rates in Nigeria, most people don’t feel it.”
Tunde Andrews is a Market, Analyst at TTAC Capital Principal Change Catalyst at United Konsult.
The opinions expressed in this article are solely those of the author.