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Why is Nigeria poor despite its wealth?

Answer

In Nigeria, widespread and severe poverty is a reality. It is a reality that depicts a lack of food, clothes, education and other basic amenities. Severely poor people lack the most basic necessities of life to a degree that it can be wondered how they manage to survive.

Despite the fact that Nigeria is a very rich country. Nigeria has the largest oil reserves in Africa. It is the 26th largest economy in the world. Its GDP is greater than many of its more developed African peers like the Republic of South Africa. Nigeria is very poor in terms of human development.

The wealth in Nigeria is concentrated in very few hands. Poverty and inequality in Nigeria are not due to a lack of resources, but to the ill-use, misallocation and misappropriation of such resources. At the root is a culture of corruption combined with a political elite out of touch with the daily struggles of average Nigerians.

Nigeria exported food to West Africa, but now, it is now a net importer. In 1960, Nigeria had a significant manufacturing sector, especially in textiles, furniture, and other goods. With the coming of oil, which began in earnest in the 1970s, fiscal and economic policy were distorted, and oil sucked-up domestic and foreign investment at the expense of other sectors of the economy.

Government borrowing when oil prices were low led to debt. Military governments punctuated by coups resulted in policy instability and uncertainty and facilitated wholesale looting of the state.

 

Why is Nigeria so poor?

Nigeria also has some of the most crushing poverty rates in the world. 120 million out of their 200 million population live under $1 per day. In the interior regions of Nigeria, subsistence is a major problem. 75% of the youth population (below the age of 25) is unemployed.

The Nigerian economy ranks 121st in the world in terms of per capita income despite being the 26th largest economy. 20% of the children in Nigeria do not live till their fifth birthday due to the lack of basic facilities. Most Nigerian citizens have no access to water, electricity or any other basic infrastructure.

Population: The number of people in Nigeria is very high. This population is also growing at a very alarming rate. Hence, even though the country generates a lot of oil revenue, very little actually reaches the masses. Nigeria has a population of 200 million, and it produces around 800 million barrels of oil per year.

Hence, on a per capita basis, they produce only 4 barrels of oil which translates to a revenue of less than $200. On the other hand, countries like Saudi Arabia produce over 130 barrels of oil per person creating a revenue stream of over $6000 per person. Nigeria can neither increase its oil production nor reduce the population. Hence, it is completely dependent upon the price of oil.

Poor Policies: The Nigerian government has taken very few steps to encourage economic activity in the country. As mentioned above, the infrastructure is already in tatters. However, the government isn’t making any efforts to develop its human resource either. India was also suffering from a population explosion.

However, it educated its people and turned a problem into an opportunity. The Nigerian government doesn’t seem to be interested in replicating India’s model. This is the reason why it spends a dismal 5% and 3% on education and healthcare respectively.

Negligence: The government of Nigeria has also been negligent when it comes to other industries. Nigeria had a booming agricultural and manufacturing sector before the 1960s. In fact, Nigeria was a net exporter of food products to the rest of Africa.

The situation is very different now. Nigeria doesn’t produce enough to even be self-sufficient. It has to pay a huge import bill every year. The government can be held responsible for this since they did not pay attention to any industry except for the oil industry. The manufacturing sector was also destroyed since the sources of funding for these sectors were diverted toward the oil sector.

Corruption: Apart from the handful of rich businessmen, the politicians in Nigeria are also very wealthy. This comes as a surprise since most of them don’t own any legitimate businesses. Corruption in Nigeria is known to be rampant. Public property is sold into private hands for pennies on the dollar in return for kickbacks.

Nigeria is one of the few countries in the world which has a regressive tax system. The government levies indirect taxes on a lot of goods that are used by the poor. On the other hand, the Nigerian government is also known for giving huge tax breaks to the rich. The taxation policy of the Nigerian government is a giant wealth transfer scheme that aims to make the “haves” even richer at the expense of the “have-nots.”

Poor Access to Education: Economic infrastructure is not the only infrastructure that is lacking in Nigeria. Currently, a lack of a robust educational system underserves many of the poorest Nigerians. 10.5 million Nigerian children do not attend school at all, and 60% of those children are girls.

These problems are especially profound in the northern, more rural parts of Nigeria. Terrorist groups such as Boko Haram that vilify Western education further exasperate the situation. Education gives many the skills they need to enter the workforce and escape impoverishment, and the lack of educational opportunity is one of the truly devastating causes of poverty in Nigeria.

Sources cited:

https://www.managementstudyguide.com/nigeria-a-strange-mix-of-poverty-and-oil-wealth.html, https://borgenproject.org/causes-of-poverty-in-nigeria/

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