President Ahmed Bola Tinubu transmitted a letter to the National Assembly requesting for approval for an $800million World Bank Loan which is over N600billion (N621,632,000,000). According to the President; N500 billion ($645million) of that money would be distributed in six months at N8,000 to N12,000 every month to poor Nigerian households to cushion the effects of the removal of subsidy on petrol which has made life more difficult for millions of people across the country as prices of good and services skyrocket. The approval for the World Bank loan has already been granted by the National Assembly (both lower and upper chambers).
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| Mr. I.D. OKETA |
Organized labour groups: Nigeria Labour Congress and (NLC) and Trade Union Congress (TUC) have protested the President's mode of palliative; demanding instead a 300% pay rise for workers. They maintained that N500 billion is not enough for 125 million poor Nigerians affected by deregulation and subsidy removal and hence the best thing is salary increment against the current minimum wage.
Many Nigerians and professionals have rejected the mode of the palliative proposed by Mr. President. Writers, callers on radio or Television shows lamented that the proposed palliative measure is not a good economic policy; some of them citing the recent attempt by the out-gone Buhari administration against the Coronavirus (covid19); which they insist was looted and few individuals were enriched. Others argue that N8,000 to N12,000 a month (amounting to less than N250 to N387 or (0.32 to 0.50 cent per day) cannot change anything for good for an average Nigerian household and hence the impact will be insignificant. Some of them suggested palliative investments in transport and healthcare etc for more people to benefit on a wider scale.
What is palliative? As a direct meaning; a palliative is a medicine or form of medical care that relieves symptoms without dealing with the cause of the condition; it does not cure the disease itself. Hence economic palliative are soothing handouts especially monetary (but not limited to money handouts) for people to endure the suffering caused by a policy or natural disaster or pandemic like the Coronavirus (covid19).
Now it is interesting to note that as an economic policy; a loan should normally not be used for palliatives; however, except as the case clearly permits in good faith. However, if a loan should be used for palliative as the case suggests this time; it should be substantial or economically viable enough to really solve problems rather than just calming people down in their suffering or worsening their situation . In this regard; N12,000 a month is less than 0.50cent a day and is nothing to write home about against poverty or extreme poverty.
According to the World Bank, extreme poverty is an economic situation where people live on $2 or less than $2 a day. And as defined by the United Nations (UN); “extreme poverty is the most severe type of poverty; a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information.”
If you examine the above carefully; apart from the high tendency of the funds being looted and ending up in the pockets of a few people or a group of corrupt people; it does not make good or viable economic sense to hand N8,000 to N12,000 per month (thus N48,000 to N72,000 in six months) to household as palliatives. Rather it will amount to pure wastage and leave the people poorer.
So what is the right solution or most economic viable use for this palliative loan? As an economist and business development advisor cum social entrepreneur and policy analyst with over 10years in active service; I will offer some perspective on the best use of this palliative loan to uplift the people from extreme poverty which in the first place is a crime against ourselves and humanity. Let us start with the summary of some of the demands and suggestions for the ‘palliative’ loan:
1. N8000 to N12,000 per month should be distributed to a poor household of over 125,000 people. This will be insignificant and less impactful). According to the FG 2022 Poverty Index by the National Bureau of Statistics, at least 130m Nigerians are living in poverty while 88.4 million of them live in extreme poverty. Hence sharing some N8000 or N12,000 only to some households for six months amounting to N48,000 to N72, 000 in six months and even N96,000 to N144,000 in twelve months is a very poor economic decision.
2. Increase salary and wages by 300% as requested by NLC and TUC etc: if this becomes the case, will yet lead to more hyper inflation and more economic catastrophe. So it is not a good economic policy.
3. Investment in infrastructure; health care and transportation etc: many of which are long term beneficial and they may end up in few private hands some as businesses; contractors and government officials etc.
The number four which is my proposition is selective youth investment. Youths are the power plug of any economy. An impact investment in youth development will trigger down to their family by helping them to solve some immediate problems and build viable businesses or enterprises that can solve problems and create income in the next 10 to 20 years or more because it will have many backward and forward linkages. And this is how to go about this:
1. A trust fund (Special Youth Investment Trust Fund (SYITF) will be created immediately with the proposed N500billion with a web portal for application and verification with the National ID.
2. 10 graduates of between 30-40years of age who must have completed their NYSC shall be selected from each of the 8,809 Electoral Wards amounting to 88,090 graduates. Each of them will get an investment fund of N5million or $6500 to start a business and to collaborate with each other. They shall apply through the web portal. If you make it 20 graduates from each ward; they can get or N2.5million or $3,000 each. This is clearly better than giving N12,000 per month or 72,000 in six months to ‘supposed’ household without proper verifiable address or economic advantage.
3. Applicants who meet the criteria must be living in Nigeria and they must have their enterprise run in Nigeria primarily; and very importantly; the investment palliative is not for payment of school fees but for business and entrepreneurship only.
4. This group of people shall be monitored closely for the next 3-4years. Those of them who are able to create a variable enterprise shall be given more support.
In line with the above; only verifiable youths and those who meet the criteria shall apply and be subjected to verification and selection through the online portal and it should not be politicized in any way. And this group could still be monitored or remodeled for further interventions or once they are above 40years and maintain a good standing record; they may be qualified for more interventions.
With this, we would have better streamlined the palliative intervention and then it could be better implemented, monitored and evaluated. Also it can easily trickle down more investments. Very importantly, those who receive this intervention can be made to partner or collaborate with each in the same locality or around nigeria.
This will surely have better economic ‘growth’ advantages and viability on millions of households; most of which are directly dependent on these youths to make ends meet.
It is also very important to note that the economic woes of the world are projected to get more disparaging for at least the next 7 to 10years (until 2030). Hence it is only impact investing in comparative economic advantage sectors for sustainable solutions that can liberate the people of Nigeria from poverty and extreme poverty.
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