N8,000 palliative: Must we take the World Bank advice?

As I type this, many Nigerians – especially the more comfortable, social media savvy ones – are freaking out over the plans of the federal government to pay N8,000 monthly to 12 million families for six months, to assuage the pains of the deregulation of the downstream petroleum sector which has led to the tripling of fuel prices, as well as the floating of the naira, which saw official exchange rate jump from N461 to around N780 today.

Both serious decisions have resulted in some sort of triple whammy, ramping up inflation to perhaps 20-year highs, with promises of more to come. I believe there is a need to explain what is going on and let Nigerians know that we can still rescue the scenario. Moreso, the Tinubu government still has many opportunities to make Nigerians happy and that it shall do, after all this is the government of Renewed Hope.

I personally promised to continue writing and speaking and doing everything to ensure that the government stays rooted and focused and that it delivers on its stated goals especially to improve the lives of Nigerians and grow the economy.

Now, personally, I don’t like the idea of handing out cash to people in the name of solving the poverty problem. The issues are well known, and they include:

Lack of reliable data around who and who is poor in Nigeria. The Chinese people have been collecting such data in their plan to eradicate poverty for over a decade now, and even they do not have perfect records. I have seen videos of President Xi Jinping visiting remote villages as part of that effort. But the Chinese government had to put in very strict punishment around government workers falsifying records and cheating the poor people.

In Nigeria, the Buhari government informed us that there is a social register somewhere, but this register has not been made public so that people may verify the names on it. If we go by the quality of our INEC’s voters’ register which contains fictitious names, then Nigerians are right to suspect our social register even before they see what it contains.

The cash transfer strategy is good in some cases but given Nigeria’s specific peculiarities, it is grossly inefficient as we have seen in the cases of Marketmoni, Tradermoni and cash disbursements during theCOVID-19 period, among other such failed experiments. Cash transfers have not repositioned millions of Nigerians away from poverty, or even got them to perform on other indices such as school enrolment, hospital enrolment etc.
Cash transfers at this time – that is not backed up by any form of productivity – is certainly inflationary. Whereas one may argue that the sum of N500 billion is not significant such as to move the needle much, wisdom suggests that we should be forcing down inflation at this time, and not doing anything that may begin to ramp it up altogether.
There is also a psychology around this. Opposition parties and those opposing government in general will convert such an amount to dollars to try and prove it is significant. Many will allege that government wants to simply ‘disappear the money as it has done to others’. And for the Tinubu government, it looks like it is following Buhari’s policies rather than further distancing itself from them. This gives more firepower to the opponents of the administration.

On Wednesday July 12, I was at Channels TV, on the invitation of Seun Okinbaloye. The subject was about the much-awaited palliatives which the government had announced that afternoon. The sum of N500 billion was earmarked and was to be vired from provisions made for capital items in the supplementary 2022 budget presented by former President Buhari and approved by the National Assembly.

The supplementary budget was necessitated, according to the past government, by the need to restore the lives of millions of Nigerians adversely affected by last year’s floods. In my response I commended the idea of taking from the N816 billion supplementary budget and hoped that this was the beginning of goodies to come. I also stated that I hoped the government will not be distributing same as cash among poor people as that was inflationary, among other issues.

The next day – July 13 – details emerged that indeed the government would be disbursing cash to 12 million families. I equally got a lot of questions from sundry quarters, and I expressed that I thought it was grossly efficient on some of the social media platforms I belong to (especially WhatsApp).

Some people argued back and some of them were the neoliberal people who believe in mad efficiency and have never given a thought to the wellbeing of our poorest. I was surprised. How could these guys who don’t give a toss about the poor suddenly support cash transfer? Of course, they know the idea is super inefficient!

I should say, that one of the comments I dropped in my social media discussions was how somebody who should know called me after an outing at AIT and informed me that the World Bank was insisting on Nigeria disbursing the $800 million loan it was giving us towards the palliatives, as cash to poor people. This person said that though he has been involved in most of the meetings, the Nigerians do not want to take the loan but the bank insisted. This drops the ball squarely at the feet of the World Bank.

Recall also my article of a few weeks back where I wrote about issues of moral hazards and conflicts of interest.

So, why did the Tinubu government go ahead with the loan, which is specifically to be disbursed as cash? It could be because the processing was too far gone for it to stop. It could also be because the World Bank is extremely powerful and without sorting out an ongoing transaction Nigeria cannot move on to the next.

Another possibility – which is even more credible – is that, just as the Tesco advert says ‘every little helps’. I believe that the Tinubu government is a very intellectual government and having got rid of two elephants in the room, it will roll out ideas upon ideas to make the lives of people much easier.

This N500 billion is certainly not enough but is just the beginning. It is certainly inflationary, but it is better than nothing. And we cannot keep discussing the matter of palliatives without doing anything at all about it. Since there was a low-hanging fruit that is already approved for disbursement, why not go for it? I am only thinking that this is the Tinubu government’s thinking.

I am not involved in the decision-making process. But in spite of these challenging times, I still have hope that the Tituba government will do things differently and achieve results. However, where we need to correct the government or give feedback from the streets, we should not hesitate. I will not.