Poverty and Income Inequality in Africa's most Populous Nation.
Nigeria is the most populous country in Africa. With a population of over 206 million people, the World Bank (2020) projected that Nigeria's population will reach 400 million with the current growth rate of 2.5 percent. The effects and consequences of rapid population growth rate are dire, given the growth rate of GDP, there are more people living in poverty in Nigeria than anywhere else in Africa.
Economic inequality and poverty in Nigeria has reached extreme levels. Despite being the largest economy in Africa. The country has an expanded economy with abundant human and economic potential to lift millions out of poverty. OXFAM International ( 2020) in its report stated that the combined wealth on Nigeria’s five richest men could end poverty at a national level yet five million face hunger. More than 112 million people in Nigeria live in extreme poverty, yet the country’s richest man would have to spend $1 million in a day for 42 years to exhaust his fortune. Poverty and inequality in Nigeria are not due to lack of resources, but to the ill-use, misallocation and misappropriation of such resources.
Despite the prevailing recession Nigeria is still seen as Africa’s largest economy and one of the fastest-growing in the world. Yet, more than half of the Nigerian population still grapples with extreme poverty, while a small group of elites enjoys ever-growing wealth. This article provides a picture of the current state of poverty and economic inequality in Nigeria, identifies the main drivers of this situation and presents some policy solutions. Over the past 40 years, the gap between the rich and the poor has been growing in developed and developing countries alike. In 2015, just 62 people had as much wealth as the poorest half of humanity, and the richest one percent owned more wealth than the rest of the world combined. At the same time, the poorest people are being denied their fair share: since the turn of the century, the poorest half of the world’s population has received just one percent of the total increase in global wealth.
In Nigeria the scale of poverty and economic inequality has reached extreme levels, and it finds expression in the daily struggles of the majority of the population in the face of accumulation of obscene amounts of wealth by a small number of individuals. Income inequality is an extreme disparity of income distributions with a high amount of wealth or income in the hands of a small percentage of the population.When there is a condition of income inequality, there is usually a very large gap between the wealth of one segment of the society in comparison with another. However, there are varying types of income disparity segregations and analysis used to understand income inequality.
The different types of income segmentations studied when analyzing income inequality may include distributions for male vs female, Ethnicity, Geographical location, Occupation and Historical income. Broadly speaking, income inequality simply put, is the fact that different people earn incomes differently with varied amounts of money. The wider those amounts are dispersed, the more the inequality occurs. Although income itself is a somewhat ambiguous idea that can be defined in different ways.
More than 70 percent of the world’s adults own under $10,000 in wealth. This 70 percent of the world holds only 3 percent of global wealth. The world’s wealthiest individuals, those owning over $100,000 in assets, total only 8.6 percent of the global population but own 85.6 percent of global wealth. Western and European countries host the lion share of the world’s millionaires. More than 70% of the world’s millionaires reside in Europe or North America, with 43% of these millionaire calling the United States home. The only non-Western nations with a significant share of millionaires are the industrial powerhouses of Japan, China and South Korea.
Since 1980, the World Inequality Report data has shown that the share of national income going to the richest 1 percent has increased rapidly in North America (defined here as the United States and Canada), China, India, and Russia and more moderately in Europe. World Inequality Lab researchers note that this period coincides with the rollback in these countries and regions of various post-World War II policies aimed at narrowing economic divides. By contrast, they point out, countries and regions that did not experience a post-war egalitarian regime, such as the Middle East, sub-Saharan Africa, and Brazil, have had relatively stable, but extremely high levels of inequality. Effects of income inequality, researchers have found, include higher rates of health and social problems, and lower rates of social goods, a lower population-wide satisfaction and happiness and even a lower level of economic growth when human capital is neglected for high-end consumption.
Poverty, Income inequality and growth interact with one another through a number of ways. In the past, soe observers have argued that economic growth is not sufficient to reduce poverty in the developing countries. In the past two decades Nigeria’s GDP has grown from $69.45 billion in 2000 to $420.00 billion in 2020. However, poverty rate has averaged 60% in twenty years. Although Nigeria is one of the most rapidly growing economies in sub-Saharan Africa, she is struggling to translate this growth into accelerated poverty and inequality reduction.
Relative to poverty reduction, in the rest of sub-Saharan Africa and other lower income countries, poverty reduction in Nigeria has been less responsive to economic growth. A lot still needs to be done if the United Nations SDG target of Zero Hunger must be achieved in Nigeria. Some of the long term strategies that can be adopted include increased yearly budget on education to provide high quality education for the citizens, and raise literacy rates, diversification of the revenue base of the economy, expanding social and economic opportunities, and increase in annual budget and investment in healthcare.
Enoma Ojo (2022)
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