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CHAPTER ONE

INTRODUCTION

1.1       Background

In Nigeria, the problem of poverty has for a long time been a cause for concern to the government. Initial attention focused on rural development and town and country planning as a practical means of dealing with the problem. Thus, the second and fourth national development plans contain both direct and indirect allusions to, as well as objectives of, policies and programmes aimed at minimizing the causes of poverty. These various causes of poverty, which include low productivity, market imperfections, structural shifts in the economy, inadequate commitment to programme implementation, political instability, etc., are complex and the consequences often reinforce the causes, further impoverishing the people. In a fairly recent survey, Nigeria’s festering poverty profile was described as “widespread and severe” CBN. (1999). The report of comparative analysis of welfare ranked Nigeria below Kenya, Ghana and Zambia and expressed concern over the dwindling purchasing power of the people and the increasing income inequality in Nigeria, which have made life unbearable for the

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citizenry despite improved inflation rates. Whether measured in absolute or relative terms, poverty is generally more prevalent in the rural communities of Nigeria. Although the population of urban dwellers in the total population has increased from 19.0% in 1963 to about 25.0% in 1990, both urban and rural areas share similar poverty characteristics even as certain peculiar features arise from either the relative intensity of socioeconomic deprivation in the rural areas or the problems of rapid urbanization Aigbokhan, B.E. (1998). The sluggish growth and the low level of income coupled with inequality in income distribution as well as lack of access to basic social amenities have accentuated poverty levels across economic groupings and geo-political divisions. When the benchmark for the

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poverty line was estimated by the World Bank on the basis of two thirds of the mean per capita household expenditure for 1985 (i.e., N395.00), about 43.0% of the entire population was considered poor. Using the same benchmark, 31.7% of urban population and 50.0% of the rural population lived below the poverty line. In most urban centre’s, poor wage incomes and high unemployment rates, in the absence of social security benefits, have reduced the capacity of most people to provide the basic needs of human existence. Similarly, the intensity of poverty among the rural dwellers is manifested not only in very low incomes (which provide barely half the nutritional requirements for healthy living), but also in poor living conditions with little or no access to potable water, electricity and modern health care facilities Obadan, M.I. (1997). Indeed, in terms of quality of life, deterioration in income, unemployment and poor social infrastructures, the poor have become poorer between 1985 and 1997. Although skill acquisition is a prerequisite for gainful employment, the high incidence of poverty among educated Nigerians reflects problems of unemployment and low wage levels. Even among people in regular or self-employment, those living below the poverty line account for about 30.0% and 25.0%, respectively. Another significant development is the redistribution of poverty among occupational categories. Even though poverty is more prevalent in the rural areas, the proportion of farmers in the population of those who live below poverty line has declined progressively from 86.6% in 1985 to 67.4% and 33.3% in 1992 and 1997, respectively. But the civil service, corporate establishment and trading (or informal) sector, which accounted for about 11.1 % and 26.3% of the poor in 1985 and 1992 respectively. This reflects the impact of falling real wages and inaccessibility of social services on the living standard of the people. With an adult literacy rate of 57% in 1997, education indexes show that about 43% of Nigerians are illiterates. The consequences are

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poor income, inadequate skilled manpower and low productivity – and hence the persisting high level of poverty in the country Ogwumike and Ekpenyong (1995).

1.1.1 Poverty profile in Nigeria

The Nigerian economy is characterized by a large rural, mostly agriculture based, traditional sector, which is home to about three-fourths of the poor, and by a smaller urban capital intensive sector, which has benefited most from the exploitation of the country’s resources and from the provision of services that successive governments have provided. This duality arose in large measures from domestic policies that steered most investment – physical, human and technological – into a few already capital intensive sectors of the economy. A fundamental problem with Nigeria’s past pattern of development has been that the incentive regimes that prevailed for most of the last two decades have tended to favour the urban modern sector to the detriment of the traditional rural sector, consistently worsening the domestic terms of trade of the latter. Nevertheless, the poor in Nigeria are not a homogeneous group. They can be found among several social/occupational groups and can be distinguished by the nature of their poverty. For example, evidence from the World Bank poverty assessment on Nigeria using 1992/93 household survey data, shows that the nature of those in poverty can be Distinguish by the following characteristics: sector, education, age, gender and employment status of the head of household FOS (1999). Other characteristics include household size and the share of food in total expenditure. Table 1 presents the percentage of persons and households below the poverty line in 1996/97 by some of these characteristics. The table shows that 67.1 million Nigerians were in poverty in 1996/97, out of which 23.3 million and 43.8 million were located in urban and rural areas, respectively FOS (1999). Thus about 65% of the poor live in the rural areas, indicating that poverty in Nigeria is largely a rural phenomenon.

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For example, in 1992, 46.4 million Nigerians were said to be living in absolute poverty, out of which 80.2% or 37.7 million are in the rural areas Ogwumike (1996). The marginalization of the rural areas through urban-biased development policies is largely responsible for the high poverty incidence in the rural areas.

Table 1: Poverty incidence by socioeconomic group, 1996/97

Socioeconomic

Extreme poor

Moderate poor

Non poor

groups

Urban

25.2

33.0

41.8

Rural

31.6


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