APPRAISAL OF THE ROLE OF GOVERNMENT IN POVERTY alleviation
APPRAISAL OF THE ROLE OF GOVERNMENT IN POVERTY ALLEVIATION
1.1 BACKGROUND OF THE study
Prior to the commercial extraction of fossil oil, Nigeria's economy was primarily dependent on agricultural products for domestic food supply and foreign exchange profits. This situation altered when the oil boom caused the agriculture sector to be neglected.
Furthermore, throughout the oil boom time, the nation's economic policies gave little or no attention to the non-oil export industry. Nigeria went from being a significant agricultural exporter and mostly self-sufficient in food in the 1960s to a net food importer in the 1970s as a result of this negligence (Atolaye, 1997).
The World Bank report on poverty and welfare in Nigeria (World Bank, n.d.), which outlined the negative consequences of developing one sector on the activities of the other sector(s) of the economy, gave a good illustration of the Nigerian crisis.
According to the report, despite Nigeria's enormous land, oil, and natural resources, many of its population are impoverished. The Central Bank observed that the country's oil earnings of approximately $200 billion from 1970 to 1990 had had little impact on the welfare of the people, particularly the poor,
because the oil revenue had not been wisely invested in productive ventures to provide a sustainable stream of benefits to the poor. The country's poverty and unemployment condition worsens despite policies and strategies to mitigate the effects.
The economic depression became obvious as growth rates in the nation's gross domestic product (GDP), which averaged 10% between 1970 and 1973, and 8% between 1974 and 1980, not only declined but turned negative beginning in 1980,
with an average of 6% between 1980 and 1984 (Osagie, 1992). According to the Central Bank of Nigeria and the World Bank (1999), the country has been dealing with poor trade terms, excessive imports, and debt overhang since the late 1970s, amidst a harsh economic climate induced by oil shocks and global economic slump.
In order to combat the downturn, the Nigerian government implemented the Structural Adjustment Programme (SAP) in 1986. The primary goals of SAP included diversifying the economy's productive base in order to reduce reliance on the oil sector and imports in the medium term,
establishing a solid foundation for non-inflationary growth, and reducing the importance of non-productive investments in public sector efficiency. During the execution of the Structural Adjustment Programme, it was discovered that the program's unanticipated negative impacts, such as accentuation of life, became more noticeable in Nigeria,
with the poor being the most affected group (National Planning Commission, 1995). Demery and Addison (1988) pointed this out. Policy changes could have a negative impact on the poor in two ways. First, in the short run, adjustment measures may diminish impoverished people's actual income and consumption.
Second, certain impoverished groups may not profit in the long run from the procedures set in place by the adjustment effort. According to Demery and Addison (1988), adjustment strategies impact development and influence income distribution for years to come, with varying effects on the poor.
This viewpoint is supported by Atoloye (1997), who argues that the marginalisation of the middle class in Nigeria's economic growth process, particularly since the implementation of SAP,
has disrupted the traditional economic link between the middle and low-income groups (those most affected by poverty), by which the former complemented the latter.
As a result, the problem associated with the Structural Adjustment Programme has gone beyond crossing the desert, as the marginalisation of the middle class has resulted in the emergence of the new poor, in addition to disrupting the economic link between this class and the low income group (the poor).
The realisation of SAP's negative impacts on the poor encouraged the implementation of policies and programmes to relieve poverty and offer economic safety nets for the poor (National Planning Commission, 1995).
Nigeria is one of the few Sub-Saharan African countries where the government has identified poverty reduction as a major economic policy priority. The formation of a democratically elected administration in Nigeria promised to lay the nation's poor masses' yearnings to rest through poverty alleviation. Despite available resources, the Nigerian people continue to struggle with poverty and other socioeconomic challenges.
According to the United Nations Development Programme (2001), the high incidence of accessible resources has become a concern for policymakers and indeed all well-meaning Nigerians. It has not only climbed from 27.2% in 1980 to 8% in 1978,
but it is expected to be increasing by 10% every three years. Furthermore, despite numerous attempts by the government, non-governmental organisations, and international donors, the nation's poor status has worsened, according to various indices.
Ali-Apajak and Pyke (2003:6) summarised the nation's dismal poverty position in the face of abundant natural resources, as well as measures to relieve it. All documentation, official or otherwise, reveals that poverty in Nigeria is expanding at an alarming rate.
Despite having the most natural resources, Nigeria's socioeconomic statistics place it among the lowest in South Saharan Africa…. Given that Nigeria is the world's seventh largest oil exporter, these facts are concerning.
Nigeria's poverty profile does indeed present a very sombre picture of a rich nation in decline/the nation's poverty situation becomes more disturbing when compared with nations that are similarly or even less endowed with resources, as it has been described by Kwanashie (2000) as one of the poorest nations in the world despite its abundant resources.
Nigeria is the world's seventh largest oil exporter, the sixth largest producer in OPEC, Africa's largest oil exporter, and the fifth major source of oil imports to the United States.
This enormous wealth has the potential for effective poverty alleviation or reduction, if not eradication (National Planning Commission, 2004, oil statistics, n.d., Thomas and Canagarajah, 2002),
yet Nigeria is not only one of the poorest countries in the world, but also in Africa, and particularly in South Saharan Africa. As long as the majority of Nigerians remain impoverished, with inadequate social development, the country's vast natural richness will make meeting the Millennium Development Goals (MDGs) impossible.