‘Those of us who run intellectual business and academic schedule; the road ahead will be tortuous and challenging diplomatic situation as a result of the stigma of a convicted President and the damage to our national image. Please take his money if you are bribed but vote wisely and do the right things’
A look at Nigeria as we approach the 2011 Elections.
Sunday, 26 December 2010
How to win a Nigerian Election by GEJ & Co
Saturday, 4 December 2010
What's the big deal about zoning?
Saturday, 16 October 2010
Inequality in Nigeria
Inequality in Nigeria is a thoroughly contentious problem. The difference between the ‘haves’ and the ‘have-nots’ can be seen all too clearly, with the lavish lifestyles of a few juxtaposed amongst the squalor of the many. Inequality is closely related to the issue of poverty but the two issues should be looked at separately because ultimately the issue of inequality is not limited by poverty, inequality still exists in countries with low levels of absolute poverty. In fact the world economy as a whole shows high level of inequalities: low income countries account for 62% of the world’s population but only 6% of the world’s income. Inequality in Nigeria has three inter-related but distinct aspects, inequality of wealth, inequality of income and inequality of opportunity. It also takes at least three distinct dimensions: inequalities between urban and rural populations, between rich and poor, and between the genders. The gender issue is a serious and complex problem in itself and is part of a social phenomenon. Because it deserves a discussion in its own right so it will not be discussed here
Scope of Income Inequalities
Inequality is a very difficult concept to measure as it exists in many forms. The inequalities between the groups are further complicated by the inequalities within the groups and trying to treat the groups as homogenous masks the scale.
Data on wealth distribution in Nigeria is difficult to come by. This is partly because wealth and the sources of wealth raise deep political (and perhaps legal) questions. However, the fact that the self-professed richest black person on the planet is from the same nation where 54% of the population are living below the national poverty line, would suggest that there is a severely unequal distribution of wealth.
The Gini coefficient is a statistical measure of inequality which has been applied to national income distributions to measure income inequality in countries. It gives a 0 to a perfectly equal distribution and 1 to a perfectly unequal distribution. According to the CIA, Nigeria gets 43.7 (0.437) in 2003 on this scale, making it more unequal than Ghana, Senegal, Tanzania and Egypt to name but a few. This statistic while offering a snapshot of the situation in regards to income, doesn’t tell the whole story. There is also inequality of opportunity; while this is difficult to measure it exists in all facets of life. There is unequal access to education, to healthcare, to justice, to security, to capital and even to political representation. Some are able to live as full citizens while the majority are offered little by the state and are left to fend for themselves.
The causes of inequality
Inequality in Nigeria has multiple causes, it is undoubtedly possible to trace inequalities to pre-colonial societies: in the forms of social divisions, cast systems and domestic slavery, but the modern phenomenon has its roots in the colonial era. The urban –rural divide really became accentuated in this period as the extractive model of the colonial forces didn’t require them to thoroughly penetrate the hinterland. Commerce was centred round commercial and coastal areas and only the bare minimum of investment was made outside these areas. The system of indirect rule and the utilisation of local middlemen concentrated wealth (and ultimately power) in the hands of a few and thus entrenched the inequalities between rich and poor. The extractive economic model continued into the post-colonial era and was accelerated with the discovery of oil and the propagation of the oil sector. The concentration of amenities in urban areas continues. The structure of the economy is now such that most people (about 70%) are employed in the relatively unproductive agricultural sector, which accounts for only a third of national income.
There has also been a failure thus far on the part of government to institute redistributive policies. Part of the role of government is to ensure a level of equality in society. The most widely used systems of wealth redistribution are taxation, welfare and nationalization. The saga of state owned enterprises in Nigeria is a sad one; corruption and mismanagement have meant that nationalised industries instead of being redistributive have furthered society’s inequalities. The problem in Nigeria’s case has not been nationalization itself, but the way in which it has been done. When it comes to welfare in Nigeria there has been a mish-mash of government initiatives coupled with the work of religious, community and non-government organisations, however there remains no comprehensive welfare policy.
The Nigerian polity has consistently failed to develop a sustainable tax base within the nation. The government is over-reliant on oil revenue, with oil exports accounting for over 80% of Government revenue. Though there is an increasing awareness amongst State Governors of the importance of internally generated revenue (IGR), the failure to tax the average citizen and everyday businesses has countless ramifications both historically and for the future, but it is importance in the context of inequality. Revenue raised from taxation should be spent on providing the public goods and services such as education, healthcare etc that reduce the inequalities of opportunity that plague Nigeria. In addition to this a progressive tax system that tax higher earners more could also aid to balance inequality in all its forms. It is not enough to tax the population; the funds must then be used to improve the lot of the disadvantaged.
There are also more debateable things that may be at the root of the disparity in Nigeria. There is an argument to be made about the link between levels of democracy and levels of inequality, this makes intuitive sense and fits in with the facts as according to Freedom House’s ‘Freedom in the World Report 2010’, Nigeria is rated as ‘Partly Free’. There is also an increasingly popular argument that ethnic heterogeneity is causally related to inequality, again while the argument is contentious it does fit the facts of Nigeria which has over 250 distinct ethnic groups.
Finally, Inequalities of wealth and income perpetuate themselves and deepen inequalities of opportunity. The better off have better access to healthcare and education (both at home and abroad), they enjoy better job opportunities, easier access to financial markets, higher levels of justice and security, and more political access and participation. Through the process of wealth condensation, newly created wealth tends to concentrate in the possession of those who have the means to invest (the already wealthy). So without outside intervention, the market in an unequal society tends to worsen the problem of inequality.
The implications of Inequality
Firstly, inequality is undesirable in itself. Attached to the concept of true democracy is an egalitarian ideal and one of the duties of a democracy is to work towards this ideal. However, there are implications of high levels of inequality that pertain to the economic, political and social aspects of society.
The economic consequences are not entirely clear. There is a body of work that suggests that societal inequalities inspire greater innovation and ingenuity in the economy. On the other hand, the World institute for Development Economic Research argue that highly unequal societies (a Gini coefficient of 0.40 or greater) for a range of reasons s detrimental to economic growth. In a global context inequality amongst nations causes growth in better off countries at the expense of poorer countries.
From a political standpoint, the inequality of access to power is an important one. Politics in Nigeria is a rich man’s game, the system excludes representation of the less advantaged in the institutions of state. Less advantaged people also contribute less to political discourse and have little influence on political policy at all levels of government and even parties. The actual workings of power are the domain of an elite few who have the means to participate, this is at the root of bad governance and the demise of true democracy. The disparity of wealth means that the political class is able to manipulate the political process through legal and illegal means.
The greatest impact of inequality is on the social level. Inequality has its major effect on social cohesion. In unequal societies people are less likely to trust each other. This is a serious problem in a relative young country which has lived through a civil war, it means that economic problems are easily framed as regional, religious or ethnic problems. The term social capital is one often brandished around but is somewhat difficult to define; broadly speaking it is the value of the social networks of society. This value is evident in participation in public and communal organizations, engagement with public officials, adherence to legal and social duties and other forms of social participation. Inequality reduces social capital and as such has negative effects on everything from the effectiveness of education to the development of civil societies.
Inequality is also a cause of crime and this is of particular importance in Nigeria, with the problems of theft, armed robbery, internet scams and the plague of ‘area boys’ amongst others a constant concern amongst the citizenry. Inequality also opens the door for white collar crime. Those with the means are able to take advantage of those without as is evident in the continuing banking sector scandals. The low pay of many relative to a few fuels low level corruption, this manifests itself in a corrupt and inept civil service and security force which in turn results in poor delivery of public services. Such levels of corruption, for which Nigeria is famous worldwide, affect the country the economic performance of the country and the credibility of the political structure.
Inequality is a difficult topic to discuss, let alone to solve. The people in a position to talk about it and act on it are predominantly those that benefit most from the status quo. There therefore has to be a general national consensus that attacking the problem of inequality is fundamental to improving the current condition and the future prospects of Nigeria as a whole.
Wednesday, 6 October 2010
Unemployment
UNEMPLOYMENT
Like many of the problems we face in
The scope of unemployment in Nigeria
Simply speaking the rate of unemployment is the percentage of the work force that is without a job. The official statistics for unemployment measure the percentage of the population of working age (16-64) that are not in work but are looking. Surprisingly, in 2007 this rate was 4.9% which automatically seems inconsistent with the actual work situation in the nation. The low rate exposes a problem with this measurement which ignores forms of hidden unemployment and underemployment. It tends to ignore full time housewives who would be economically active; it ignores people outside the official working age (especially those under the age of 15); it ignores the unpaid family and domestic workers; it ignores the underemployment in the agricultural sector and in the taxi/ ‘okada’ industry. The list goes on and in Nigeria, where woman and young people are at a disadvantage when it comes to finding formal employment, the future appears perilous because as the young population increases and the difference between levels of male and female employment reduces, the number of unemployed will swell.
Consistent with this, the Federal Government in 2009 admitted that the true unemployment rate was as much as 28% with as many as 40 million people unemployed in Nigeria. This is not to suggest that the government is deliberately misinforming people, but it is evident that the current system of measuring unemployment is not fit for purpose in the Nigerian context. Nigerians would certainly find it hard to believe that only 1 in 20 people is unemployed.
The causes of unemployment in Nigeria
Unemployment may seem an emotive and complex subject, but in basic terms, the number of unemployed is simply the difference between the number of people willing to work and the number of jobs available. In supply and demand terms, this translates to the difference between the SUPPLY OF LABOUR and DEMAND FOR LABOUR. The underlying problem of unemployment is that the supply of labour is greater than the demand for labour. The question to be addressed therefore is simply why is the supply for labour so high and the demand for labour so low?
The high supply for labour
There are two factors which are positively correlated to the supply of labour:
I. The size of the working age population.
The present population of
II. The willingness of the working age population to participate in the labour market.
Poverty greatly affects willingness to work. The absence of a welfare system or social safety net and low levels of development mean that many people work on a subsistence level. At the extremes of poverty, no choice exists regarding whether to work or not; it is a necessity for survival. At such poverty levels, the options are either work, beg or die.
Also increasing the willingness to work is the increase in the number of formally educated individuals. Education itself and its cost means that educated are likely to demonstrate a willingness to work. Despite failings in the education sector, the enrolment and graduation rates in
The relative improvements of transport, information and communication systems have improved the flexibility of the labour force which in turn increases the supply of labour.
The low demand for labour
It does seem like an absurd criticism to make, that the supply of labour is too great. One would expect that in such a vibrant economy, growth of the labour force would be welcomed and put to strategic use as we have seen with relative success in India and China. The problem cannot be viewed as the abundance of labour; rather, the problem is the low demand for labour. This seems intuitive as public consensus is that there are too few jobs available. So why after a decade of reasonably high economic growth has there been no real improvement in employment. This question of low job creation in
One possible reason is that GDP growth in the last decade wasn’t strong enough. The average growth fell below the 7% threshold which the UN argues is necessary to reduce poverty and improve living conditions. However, this is simply a guideline and
Perhaps more important is the nature of the growth that
On a different note, perhaps the labour being supplied is inadequate in kind or quality for employers. Many employers do not trust local education institutions for various reasons and presently school leavers may not be gaining the qualifications required by the economy. The labour market isn’t absorbing university graduates as evidenced by poor the placement and retention record of the NYSC programme. This issue constitutes a bigger problem with education in
The trend in international politics is in favour of austerity, there is a movement towards a smaller state, both in size (the amount the government is doing/spending) and in scope (the range of activities that government takes on). In this respect, Nigeria has not been an exception. This directly results in fewer public sector jobs, with little or no plans having been made for those who were ‘retrenched’. The reduction of government spending also reduces demand in the economy which in turn has a negative effect on employment.
The manufacturing sector in the developing world is an under-utilized avenue of job creation. Through labour-intensive processes, local operators can satisfy much local demand for value products and demand for labour. Low investment and a poor business environment however, hinder the development of this sector. Erratic electricity supply represents a major cost to a manufacturer and could be the difference between profit and loss or the difference between taking on an employee or not. However, this is not the only problem, access to finance, the technology gap, poor research and development, scarcity of reliable data, poor transport systems, competition from cheap imports also hinder this sector. These are all issues in their own right but their current state compounds the problem of employment. The agricultural sector is also in need of reform as it currently employs 70% of the population but only yields 33% of GDP. But like manufacturing it is a complex topic that requires its own analysis.
The Implications of unemployment
The most direct result of unemployment is on the economy as a whole. People out of work do not contribute much to the economy, and as such, the economy performs below its optimal level. The result is slowed rates of economic growth and ultimately less development.
Unemployment also reduces the tax base of the society. This is often an underestimated problem but it manifests in two ways. Firstly, the reduced tax base means that government has fewer funds available for state projects. This results in fewer public services and lower public investment. The second problem is more subtle but no less serious: taxation is an important element of state building; people need to take a vested interest in the state so they have legitimacy and the incentive to hold their leaders to account. This is of particular pertinence to
There are also wide social implications of unemployment. Some are more obvious problems and warrant their own discussion, such as crime, militancy, the black market and human capital flight (the brain drain). The effects of these problems are known by Nigerians and are felt in very real ways in day to day life. There are also social implications that we cannot yet know the full extent of. As