President Bola Tinubu’s team of economic advisers must help him, and very quickly too. They were all here when the administration of Muhammadu Buhari rode on the back of palliatives and money handouts to nowhere. It is unlikely that one recipient of those so-called money transfers can be located today who is doing well and out of poverty.
So, why are these advisers allowing or even encouraging Tinubu to go the same path? These cash-based palliatives, as fashionable as they sound, cannot give any relief to Nigeria’s poor. Instead, they will simply add to the list of funds thrown away in the name of helping the poor. Nigerians are responding to this proposal because the aggregate amount if spent on a better thought-out programme, will yield better results.
This is what policymaking is all about. It is about choosing the policy option that will have a better result, and a greater impact on the targets without minimal negative impacts, even with the same resources deployed. But it does not appear that this question has been asked in this case, hence the posture of a forgone conclusion that is coming from the government.
Let’s do the math together. The plan is to pay N8,000 a month for six months to each of the 12 million poor households in Nigeria. With a target population of 60 million, it means the government has assumed an average household population of five. It is in fact difficult to imagine what difference the aggregate amount, N48,000 in six months, can make in the lives of the members of each of the households.
- Sokoto pays registration fees for 7,000 indigent students
- High crime rate in Kano: The need for collaborative effort
The trouble with this kind of programme is that the human factor will compromise its effectiveness. It raises fundamental questions germane to its impartial execution: who will select the 12 million households? How will they be selected, or were they selected, if the selection has already been done? At what point were they selected: before or after the removal of the subsidy? On what criteria was the N8,000 decided as a reasonable palliative for a month for five persons?
Given the rate at which the prices of basic goods are changing, it is uncertain that this amount will make a dent in the needs of any of the households being targeted.
I bought a loaf of bread yesterday in Lagos (Tuesday, July 18) at N650. As she delivered the bread to a shop in my neighbourhood, the supplier (not the baker) said that would be the last time that size of the loaf would sell for N650. By the time she comes again, the price would rise to N700, she announced, citing a decision already taken by bakers. A few months ago that size of loaf sold for less than N500.
So, how many of these loaves can any of these households buy with N8,000 in a month assuming they love to drink tea? Or perhaps, since they are poor, they should not drink tea. After all, a woman I interviewed last year for Daily Trust’s Cost of Living stories said they removed bread from the family’s menu as its price rose. Now that the price is still rising, many more families, who have since fallen into poverty, are likely to ban bread as a matter of policy.
So, let’s say that in place of bread, they want to eat yam, which is “locally” produced. But is yam a cheaper substitute for bread now? A typical tuber of yam from last year’s harvest sells for at least N1,200, and I can bet that it will not be enough for a meal for a five-member household that we are dealing with here. Or, would they be better off with rice? You check the price.
This is the same for most goods and services, even as the inflation rate inched its way up last month to 22.79 per cent, according to the National Bureau of Statistics (NBS). This 17-year high inflation rate makes the planned palliative almost dead-on-arrival as we say in Nigeria.
Obviously, some people have fallen and many more will still fall into deep poverty following the removal of the subsidy.
Therefore, the status of many has changed from where they were before May 29.
This column has maintained its stance on these palliatives that come after governments issue poverty-generating policies and turn around to announce measures supposedly designed to ameliorate the impacts of such measures. From our experience as a nation, we can conclude that they do not work. It is like beating a child to a stupor and turning around to buy sweets and biscuits to soothe his pains.
Populist actions are a major attraction for many governments, but they offer less than they pretend to do. This is especially so for a country where there are no public goods. In a country such as Nigeria where basic amenities are absent, there is hardly any amount that would be reasonable to address poor households’ problems short of getting people to work so they can earn income on a regular basis.
What, for instance, would N8,000 do for people who buy “pure water” for drinking and also well water for laundry and other uses?
Government’s statement announcing the palliatives talked about multiplier effects arising from the N8,000 monthly disbursement to about 12 million households for six months.
The government should look for another definition or concept of the multiplier effects from economic policies. The multiplier effects from 12 million families of five persons each cannot be the same as enabling all the families through market-based approaches that create jobs for Nigerians. What the families spend the money on will determine the multiplier effects of the money on the economy.
What this economy needs now is not money spent aimlessly. We need programmes and projects that generate employment and income for the poor on a sustainable basis. When individuals earn income and spend part of it on consumption, then we talk about the multiplier effects in the true sense of it. The policy action cable of doing is a cost-reduction measure that can lead to a revival of the real sector, with increased industrial and agricultural production. That will in turn lead to increased employment. This should be the way to go.
