Why N5,000 Conditional Cash Transfer Is Urgently Necessary In Nigeria By Kikiowo Ileowo
“It
is quite true that man lives by bread alone — when there is no bread.
But what happens to man’s desires when there is plenty of bread and when
his belly is chronically filled?” (Maslow, 1943, p. 375).
So
many pundits have advocated reasons why cash transfer to Nigeria’s
desperately poor is unnecessary and counter-productive, however, they
often fail to discuss the inherent benefits of this widely accepted
social scheme. Many who are against this scheme are themselves rich,
“well to do”, and can to a large extent, provide their psychological and
safety needs for survival according to Maxlow’s law on hierarchy of
needs five-stage model. What the pundits claim is that any type of
conditional cash transfer will ultimately make the people lazy to work
and subsequently poorer. They forget that the amount involved is too
insignificant for anyone to PERMANENTLY rely on for survival.
I won’t bore you with regurgitated statistics, as we have all heard, as many as 112.47 million Nigerians live below the poverty line according to 2010 figures of the Nigerian Bureau of Statistics, 38.7 million of them are DESPERATELY poor.
Depending
on whose statistics you believe, the World Bank claims 53.2 million
Nigerians live in extreme poverty. In fact, of the one billion poor people that live in poverty around the world, 7% of them reside in Nigeria.
Nigeria
is one of the top five countries with the largest number of poor,
ranking third, with China and India, ranking second and first
respectively.
Majority
of Nigeria’s desperately poor never had the opportunity to attend a
school, nor receive some form of education, whether formal or informal.
We must understand that without education/skills to secure some form of
income, it is nearly impossible for anyone to achieve the first stage of
Physiological needs on Maxlow’s hierarchy of needs. While building
desperately needed infrastructure is sacrosanct, we must not forget to
take care of the suffering poor, who mostly dwell in rural areas and are
UNBANKED.
According
to one of John Maynard Kaynes theory, government spending can be used
to increase aggregate demand, thus increasing economic activity,
reducing unemployment and ultimately reducing poverty to the barest
minimum. Conditional cash transfer is not new to the field of economics.
In Nigeria, our psyche has been so bastardized, we feel we don’t
deserve anything from the government, compared to a country like Finland that is proposing paying each citizens whether rich or poor, at least 800 Euros tax free every month.
Polls conducted indicate a simple majority of citizens in Finland
support the move, even though the country is heavily indebted.
Still
on the necessity of the conditional cash transfer programme, a popular
anonymous phrase on placards during the Occupy Nigeria protests in 2012,
states “One day, the poor will have nothing left to eat but the rich.”
If you think, conditional cash transfers are unnecessary then think
again. There is a surging army of unemployed who are bursting at the
very fabric of our societal seams.
The
Buhari/Osinbajo administration rode to power on several promises. Chief
amongst them being the conditional cash transfer of N5,000 monthly to
25 million desperately poor Nigerians, majority of whom cannot afford to
live on a dollar a day. These are individuals who live on two dollar a
week. i.e. About N1,000 ($8) monthly.
Hello,
step back your thought process a bit, you are already thinking, 'it’s
impossible'; 'people don’t live like that', ‘blah blah blah’. But you
will be surprised at the level of poverty in this land when you hear and
witness the suffering in the lives of some, especially in rural areas.
During
one of my numerous travels, I met an elderly woman who visited the
local market, bought palm oil worth N20, Vegetable N50, One Maggi
seasoning cube for N5 and some other ingredient I can’t recall, but the
total amount of money she spent was N120 ie less than a dollar. Now,
imagine what N5,000 would do in the life of such an individual. Most of
those the conditional cash transfer policy will positively affect are
those who find themselves in such circumstance. They did not purpose to
live a life of penury, but opportunities for income are just not
available in a country where graduate unemployment is 60% and around 70%
in the wider population.
The Cost Of Nigeria’s Conditional Cash Transfer
I will focus here on only the financial cost
A simple mathematical analysis shows Nigeria can afford this project.
N5,000 multiplied by 25,000,000 is N125,000,000,000 monthly.
N125,000,000,000 X 12 months is N1,500,000,000,000 annually.
In
simple terms, it will cost Nigeria 125billion ($500million) naira
monthly and 1.5trillion ($6billion) naira annually to finance the
conditional cash transfer of N5,000 ($20) monthly to 25million
desperately poor citizens.
Source Of Financing
There are several ways Nigeria can source for these funds, but I will mention a few.
Keep
in mind; Nigeria will reach at least, 700,000 people in each of the 36
states and federal capital territory in the country. Imagine almost half
(41%) of Bayelsa State population receiving bailout from FG. This alone
will set the Buhari/Oshinbajo administration on another pedestal.
In
the 1930s, great economist, John Maynard Keynes, suggested one of the
most practical ways of getting the economy such as ours out of downturn.
He encouraged increase in government spending to improve demand and the
gross domestic product. The 25 million Nigerians that will eventually
get this cash transfer won’t SAVE it in the bank (most are unbanked
anyway). They will SPEND it, thereby creating a new circle of economic
empowerment and opportunities.
There are several ways of financing this type of social project, and for once, let us take our mind off the World Bank.
Financing
a sustainable cash transfer policy can be achieved by tweaking the
system, redistributing wealth from the rich and giving to the poor. The
present administration can borrow a leaf from the UK, a country that has
learnt to tax its citizens for the provisions of essential services.
The country practice what economists called a progressives tax system.
In other words, the higher your income, the higher your taxes. From
taxing car users, alone, the United Kingdom generates 7% of its total
revenue, using same to maintain critical infrastructure and provide
other essential services.
The
Buhari/Osinbajo government can also creatively look for a way to shove
up our revenue base without straining our present source of revenue
generation.
Also,
the government can withdraw its subsidies on petrol (after proper
consultations and ability to meet local demand of daily Premium Motor
Spirit, PMS, need). Nigeria’s subsidy scheme on petroleum product is
gulping almost the same projected amount needed for this conditional
cash transfer programme. When Nigeria starts refining its crude, the
amount per litre of PMS will not be up to this present subsidized N87
per litre.
Nigeria Not Alone
Countries
like India, Brazil and Pakistan have some form of conditional cash
transfer programme that is helping their poor citizens out of poverty.
Injecting N125bn monthly into the hands of a spending population will in
turn encourage economic growth. Small businesses like recharge card
sales, barbing & hair dressing salon etc will be invested in by the
beneficiaries to help generate sustainable income. This will in the long
run REDUCE POVERTY.
I
understand the pundit’s dislike for this idea, but they must realize it
is not a perpetual solution. Having a Ten Years Programme of N15trn in
conditional cash transfers will change our poverty dynamics and
statistics by 2026. By 2027, Nigeria will be migrating from cash
transfers to other forms of social security.
As
the Buhari administration presents the 2016 budget, it is sacrosanct
that a 10 year spending expenditure/income framework should be
developed, with N125bn set aside for the conditional cash transfer on
annual basis till 2026.
Kikiowo Ileowo is the Editor of The Paradigm, Chief Strategist at Revamp Media and tweets atwww.twitter.com/About The Nigerian Blogger
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