Abstract

This study examines the multidimensional nature of poverty and living conditions in Nigeria. Its aim is to fill the gap left by traditional unidimensional measures of deprivation, which rely on poverty lines estimated exclusively from monetary variables such as income or consumption expenditure. The study combines monetary and non-monetary, qualitative and quantitative indicators, including housing conditions and the possession of durable goods, with a number of composite measures of human welfare. It employs the fuzzy-set theoretic framework, using the 2003/2004 Nigeria Living Standards Survey, to identify other correlates of poverty and to establish whether poverty has regional and occupational characteristics. Three null hypotheses were formulated and tested, and all were rejected on the basis of the significance of the variable coefficients, using Z statistics at the 1 per cent and 0.1 per cent levels of significance. The estimates show that there are other major correlates of poverty in Nigeria besides income and consumption expenditure, and that poverty has both regional and occupational characteristics. On this basis, the study recommends that government should encourage education as a right and not a privilege, and should make agriculture a profitable venture by mechanizing the sector and by training and retraining its personnel. Government should also give priority to providing essential infrastructure such as electricity and a good road network. These are good paths to improving the well-being of Nigerians and to achieving the target of Millennium Development Goal One.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Poverty in Nigeria is widely recognized as a growing problem. Unlike some African countries, where high poverty can be attributed to a poor natural endowment, Nigeria's position is surprising. The country is rich in oil, and is in fact the biggest oil producer in Africa, yet it was ranked 159th out of 177 countries on the UNDP's human development index (UNDP, 2006). It was considered one of the twenty poorest countries in the world, with about 70 per cent of the population classified as poor and 35 per cent living in absolute poverty. The World Bank (1996) described the situation as poverty in the midst of plenty. Recent official estimates show that the problem is still large. The 2022 National Multidimensional Poverty Index, produced by the National Bureau of Statistics (NBS) with the UNDP, UNICEF, the National Social Safety Nets Coordinating Office and the Oxford Poverty and Human Development Initiative, found that 63 per cent of Nigerians, about 133 million people, were multidimensionally poor, whereas 40.1 per cent were poor by the 2018/19 national monetary poverty line (NBS, 2022).

In many developing countries, poverty is concentrated among people who suffer certain deprivations, including poor housing, little or no education, unstable employment or unemployment, low and unstable income, low-status jobs and the absence of savings. It is one of the most deplorable disabilities that can afflict a person or a nation. Society as a whole is alarmed by growing poverty, and there is no doubt that poverty in Nigeria is a clog in the wheels of the progress that its citizens desire. As bad as poverty is, its effects, namely violence, kidnapping, terrorism, armed robbery and similar crimes, are said to be much worse, and they hinder the nation's growth and development. The Nigerian economy faces enormous challenges and a bleak future unless fundamental steps are taken to correct the legacies of the past, among them an undiversified mono-product economic structure, lack of policy coherence, misallocation and mismanagement of resources, corruption and weak institutions. On the existing trend, poverty was projected to worsen and to engulf as much as 80 per cent of the population by 2030 (NEEDS, 2005).

Because poverty is so important, the United Nations held a special summit in Copenhagen, the World Summit for Social Development of 1995, declared 1996 the International Year for the Eradication of Poverty, and declared 1997–2006 the International Decade for the Eradication of Poverty. Notable international organizations, namely the Economic Commission for Africa (ECA), the Food and Agriculture Organization (FAO), the International Labour Organization (ILO), the United Nations Development Programme (UNDP), the United Nations Educational, Scientific and Cultural Organization (UNESCO), the United Nations Children's Fund (UNICEF), the World Food Programme (WFP), the World Health Organization (WHO) and the World Bank, have also vigorously addressed the issue. Nigeria has joined the international community in the global fight against poverty. It has launched a number of programmes, including the Directorate for Food, Roads and Rural Infrastructure (DFRRI, 1986), the National Directorate of Employment (NDE, 1986) and the Family Economic Advancement Programme (FEAP, 1997). These programmes do not appear to have had a significant impact on poverty.

The weak response of the poverty trend to policy may be ascribed to the fact that earlier research on poverty relied only on income or consumption expenditure as the proxy for poverty, and so suffered from a unidimensional limitation. Such research has also shared the traditional need to divide the population into the poor and the non-poor by means of a poverty line. Unidimensional poverty measures give only a partial understanding of poverty and therefore lead to ineffective poverty reduction programmes. They fail to capture many aspects of deprivation, including lack of access to services essential for health and literacy, and lack of political voice and legal protection. The policy recommendations that come from such traditional analysis consequently concentrate on policies that reduce poverty in the short run, and leave untouched the structure of socio-economic policies that could break the intergenerational reproduction of poverty in the long run. The Nigerian official data show how much the choice of measure matters: the multidimensional headcount of 63 per cent is far above the monetary headcount of 40.1 per cent (NBS, 2022). Adepoju (2019), comparing the two approaches for rural households in South-West Nigeria, also finds that they share many similarities but do not lead to the same results.

The conventional measures, namely the Foster-Greer-Thorbecke (FGT) class, the head count (HC) and Sen's composite index, classify the population into two groups, the poor and the non-poor, defined in relation to a chosen poverty line based on household expenditure or income per capita. Most analysts in developing countries follow this conventional view, which focuses on insufficient income for securing basic goods and services. The theoretical debate on the measurement of poverty has, however, made impressive progress by moving gradually from the traditional unidimensional approach to a multidimensional one. Poverty is now regarded as a multidimensional phenomenon of which income is only one aspect. The study of income should be complemented by non-monetary indices, built from appropriately weighted indicators of deprivation, which help us to understand the different sources of the economic problems that households experience daily. Fuzzy set methods are one way of doing this. Popogbe, Akinleye and Oke (2021), for example, use a fuzzy set multidimensional poverty index to measure deprivation in Lagos slums, and find an average index of 0.49 and the greatest deprivation in education, followed by living standards and then health. With multidimensional measurement of poverty, policy makers can understand the main causes of poverty and identify the socio-economic policies that will reduce its spread. The purpose of this study is therefore to determine the multidimensionality of poverty in Nigeria.

1.2 Statement of the Problem

Poverty reduction has been a cardinal policy thrust in Nigeria since independence in 1960. This is a major problem for the country, because despite its abundant resources, which are enough to tackle the problem, a positive and significant response to the anti-poverty programmes has remained elusive. The current administration of President Yar'Adua and Goodluck Jonathan has a seven-point agenda (food security and agriculture, mass transportation, land reforms, security, power and energy, good education, and job creation and employment), all aimed primarily at reducing poverty. It has not yet been fully implemented or assessed, but on past record Nigeria is still rated at a 70 per cent poverty level by the UNDP (2006) and hosts the third largest number of poor people after China and India.

Earlier Nigerian studies of poverty were unidimensional and used income or consumption expenditure as the only proxy for poverty. Each of them took either the level of income or the level of expenditure as its sole measure of well-being, so the policies drawn from them had limited impact, and the poverty level has continued to rise. These policies may have had little effect because income and expenditure can hardly be considered the only causes of poverty.

The earlier studies reported varying results, which may depend on the period studied. Several are consistent, however, in finding that poverty is highly concentrated in the Northern region and in rural areas. Alemu (2019), using a multidimensional approach with fuzzy sets, finds that poverty in Nigeria is high, averaging 52 per cent whether it is defined by income or by a combination of income and non-income factors, and that three northern zones, the North East, North West and North Central, account for most of it. The 2022 national estimates show the same pattern, with 65 per cent of the multidimensionally poor living in the North, and with a rural incidence of 72 per cent against 42 per cent in urban areas (NBS, 2022). One wonders whether this is related to the kind of work people do in their respective regions, which makes the link between poverty and occupation a major issue. A multidimensional approach has also been used in some recent work, though at the level of a state or locality, as in the Lagos slums study (Popogbe et al., 2021). It is not yet clear which approach should be adopted for plausible, result-oriented policy making in Nigeria.

In view of these problems, the following questions arise:

1. What are the major correlates of poverty in Nigeria?

2. Does poverty have a regional characteristic?

3. Does the nature of one's job increase the risk of poverty?

1.3 Objectives of the Study

The broad objective of the research is to study the multidimensionality of poverty in Nigeria using the 2003/2004 Nigeria Living Standards Survey (NLSS), which was the latest comprehensive survey at the time of the study. The specific objectives are:

i. To determine the major correlates of poverty in Nigeria.

ii. To determine whether poverty in Nigeria is regionally concentrated.

iii. To determine whether poverty has an occupational characteristic.

1.4 Statement of Working Hypotheses

The hypotheses of the research are stated as follows:

i. Poverty has no major correlate in Nigeria.

ii. Poverty in Nigeria has no regional characteristic.

iii. Poverty has no occupational characteristic in Nigeria.

1.5 Justification of the Study

Perspectives on poverty have evolved significantly, with wide acceptance of the multidimensional nature of poverty and of the importance of considering its depth and severity. Poverty is a complex social phenomenon, and incorporating more information is necessary to draw an accurate picture of it. Doing so also adds value to policy targeting, because it identifies the degree of poverty that is actually experienced. Alemu (2019) reports, for instance, that households attach more weight to education, energy and employment, which suggests that interventions in these areas could significantly reduce poverty in Nigeria.

If the Millennium Development Goals (MDGs) are to be achieved in Nigeria, progress is essential in all the major areas that bear on the well-being of the people, including poverty reduction and improvements in education, health, gender equality and the environment, with the eradication of extreme poverty and hunger at the forefront. A sound and effective policy is feasible when the degree of poverty is known and compared across the relevant dimensions of poverty, instead of treating consumption expenditure or income as the only proxy. This provides a genuine path towards the Millennium Development Goals. Besides this relevance, the study will help students by providing a framework on which further research can be built, and by introducing various indicators of deprivation (poverty) other than the traditional and conventional approach.

1.6 Scope and Limitations of the Study

The study of the multidimensionality of poverty in Nigeria is limited to the existing cross-sectional data of the 2003/2004 Nigeria Living Standards Survey (NLSS). The 2003/2004 NLSS was chosen because it is comprehensive and the data are available. Secondly, according to a senior official of the National Bureau of Statistics, the 2008/2009 Harmonised Nigeria Living Standards Survey (HNLSS), being conducted by the World Bank, the European Union (EU) and other stakeholders to provide the data needed to analyse poverty in the country, was still under way at the time of the study, and 2010 data were not yet available. Later surveys, such as the 2018/19 NLSS and the 2022 national multidimensional poverty survey, now exist (NBS, 2022). Besides the NLSS, the 2006 Core Welfare Indicator Questionnaire exists, but it lacks clarity and certain salient variables needed for this analysis. In addition, finance was a serious constraint on the study and limited its efficiency.

References

Adepoju, A. A. (2019). Comparative analysis of determinants of household poverty among rural farming households in Southwest Nigeria. Asian Journal of Agricultural Extension, Economics & Sociology, 29(4).

Alemu, Z. G. (2019). Poverty in Nigeria: A multidimensional approach (Working Paper No. 327). African Development Bank.

National Bureau of Statistics. (2022). Nigeria multidimensional poverty index (MPI) survey report 2022. https://www.nigerianstat.gov.ng

Popogbe, O. O., Akinleye, S. O., & Oke, M. D. (2021). Fuzzy set approach to measuring urban poverty: A case of Lagos State slums. International Journal of Development Issues, 20(2), 191–209. https://doi.org/10.1108/IJDI-06-2020-0139