21/01/2022
Nigerians have been justifiably confused by conflicting poverty data presented by the Muhammadu Buhari administration and the World Bank. According to Buhari, his administration has lifted 10.5 million Nigerians out of poverty within the past two years. But no sooner had he made the statement than the World Bank asserted that inflation has plunged seven million Nigerians into poverty.
These statements might seem to be contradictory to non-economists. But closer analysis suggests that Buhari and the World Bank are right - depending on how poverty is measured.
The first is income or monetary measure of poverty, what economists refer to as the 'headcount index'. It measures the proportion of the population that is poor based on a minimum personal income - for example $1.90 per day. This minimum amount is deemed adequate to maintain an acceptable living standard, given the cost of living in a given country.
Based on this measure, Buhari is right to claim that - by transferring cash to 12 million households during the past five years - a majority of these Nigerians have exceeded the income threshold. Therefore, they have escaped poverty.
The other measure is known as the multidimensional poverty measure. It measures poverty by income, and by the access people have to health, education and living standard indicators. These include sanitation, drinking water, electricity, and housing. It is therefore possible for someone to be regarded as non-poor under Buhari's calculations, but poor when this measure is used.
This is the measure the World Bank appears to be applying. By this measure 47.3% Nigerians, or 98 million people, live in multidimensional poverty. Most of them are located in northern Nigeria. This poverty rate does not include Borno State, where insurgency has prevented data collection.
Aware of this, the Buhari administration has set the very ambitious goal of lifting 100 million Nigerians out of poverty by 2030. This is a tall order, considering that another five million more Nigerians are expected to become poor as a result of COVID-19 in 2020.
The administration's cash transfer programme is commendable. But Buhari should turn his focus more on promoting structural transformation. This would move millions of poor Nigerians from low-productivity agricultural and informal-sector activities to high-productivity sectors such as manufacturing, agro-processing, as well as information and communication technologies.
