N8,000-per-family policy: Why World Bank proposal is bad for Nigeria, By Tope Fasua
As I type this, many Nigerians – especially the more comfortable, social media savvy ones – are freaking out over the plan of the Federal Government to pay N8,000 monthly to 12 million families for six months, to assuage the pains of the deregulation of the downstream petroleum sector, which had led to the tripling of fuel prices, as well as the floating of the naira, which saw the official exchange rate jump from N461/$1 to around N780/$1 today. Both serious decisions have resulted in some sort of triple whammy, ramping up inflation to perhaps a 20-year high, with promises of more to come. I believe that there is need to explain what is going on and let Nigerians know that we can still rescue the scenario. Moreso, the Tinubu government still has many opportunities to make Nigerians happy and that it shall do, after all this is the government of Renewed Hope. I personally promise to continue writing and speaking and doing everything to ensure that the government stays rooted and focused, and that it delivers on its stated goals, especially to improve the lives of Nigerians and grow the economy.
Now, personally, I don’t like the idea of handing out cash to people in the name of solving the poverty problem. The issues are well known, and they include:
Lack of reliable data around who and who is poor in Nigeria. The Chinese people have been collecting such data in their plan to eradicate poverty for over a decade now, and even they do not have perfect records. I have seen videos of President Xi Jinping visiting remote villages as part of that effort. But the Chinese government had to put in very strict punishment for government workers who falsify records and thereby cheat poor people. In Nigeria, the Buhari government informed us that there is a social register somewhere, but this register has not been made public, so that people may verify the names on it. If we go by the quality of our INEC’s voters’ register, which contains perhaps 60% fictitious names, then Nigerians are right to suspect our social register even before they see what it contains.
The cash transfer strategy is good in some cases but given Nigeria’s specific peculiarities, it is grossly inefficient, as we have seen in the cases of Marketmoni, Tradermoni and cash disbursements during the COVID-19 period, among other such failed experiments. Cash transfers have not repositioned millions of Nigerians away from poverty, or even gotten them to perform on other indices, such as school enrolment, hospital enrolment, etc.
Cash transfers at this time – which is not backed up by any form of productivity – will certainly be inflationary. Whereas one may argue that the sum of N500 billion is not significant enough to move the needle much, wisdom suggests that we should be forcing down inflation at this time, and not doing anything that may begin to ramp it up altogether.
There is also a psychology around this. Opposition parties and those opposing government, in general, will convert such an amount to dollars to try and prove that it is significant. Many will allege that government wants to simply ‘disappear the money’ as it has done to others. And for the Tinubu government, it looks like it is following Buhari’s policies, rather than further distancing itself from them. This gives more firepower to the opponents of the administration.
On Wednesday 12th of July at 7 a.m., I was promptly at Channels TV, on the invitation of Seun Okinbaloye, who had called me a couple of hours before then – as he usually does. No prior notice. The subject was about the much-awaited palliatives, which the government had just announced. The sum of N500 billion was earmarked and was to be vired from provisions made for capital items in the supplementary 2022 budget presented by former President Buhari and approved by the National Assembly. The supplementary budget was necessitated – according to the past government – by the need to restore the lives of millions of Nigerians adversely affected by last year’s floods. In my response, I commended the idea of taking from the N816 billion supplementary budget and hoped that this was the beginning of goodies to come. I also stated that I hoped the government will not be distributing the same as cash among poor people, as that was inflationary, among other issues.
The next day – 13th of July – details emerged that indeed the government would be disbursing cash to 12 million families. I equally got a lot of questions from sundry quarters, and I expressed that I thought this was grossly efficient on some of the social media platforms I belong to (especially WhatsApp). Some people argued back and some of them were the neoliberal folks who believe in mad efficiency and have never given a thought to the wellbeing of our poorest. I was surprised. How could these guys who don’t give a toss about the poor suddenly support cash transfer? Of course, they know the idea is super inefficient!
I should say that one of the comments I dropped in my social media discussions was how somebody who should know, called me after an outing at Africa Independent Television (AIT) with the information that the World Bank was insisting that Nigeria should disburse the $800 million loan it was giving us towards the palliatives, as cash to poor people. This person said that though he has been involved in most of the meetings, Nigerians do not want to take the loan but the bank is insisting. This drops the ball squarely at the feet of the World Bank. Recall also my article of a few weeks back where I wrote about issues of moral hazards and conflicts of interest.
FIRS
So, why did the Tinubu government go ahead with the loan, which is specifically to be disbursed as cash? It could be because the processing was too far gone for it to stop. It could also be because the World Bank is extremely powerful and without sorting out an ongoing transaction, Nigeria cannot move on to the next. Another possibility – which is even more credible – is that, just as the Tesco advert says, ‘every little helps’. I believe that the Tinubu administration is a very intellectual government and having gotten rid of two elephants in the room, it will roll out ideas upon ideas to make the lives of people much easier. This N500 billion is certainly not enough but is just the beginning. It is certainly inflationary, but it is better than nothing. And we cannot keep discussing the matter of palliatives without doing anything at all about it. Since there was a low-hanging fruit that is already approved for disbursement, why not go for it? I am only trying to read the mind of the Tinubu government, as I am not involved in the decision-making process. But in spite of these challenging times, I still have hope that the Tinubu government will do things differently and achieve results. However, when we need to correct the government or give feedback from the streets, we should not hesitate in doing so. I will not.
My Suggestion to World Bank and Nigeria
If we must borrow the said amount from World Bank, and if we must use the funds for emergency poverty relief for those who have been very adversely impacted by recent reforms, I would have suggested that rather than distribute cash, the government should mount a programme of purchasing food from our farmers to distribute to people, around the country, who actually sleep and wake up in hunger. Whereas this idea could be inefficient too – as government operatives and politicians have been known to hoard food meant for poor folks and the process of purchases could not be devoid of padding and other shenanigans – the idea is a far sight better than just distributing cash (even if the said cash is disbursed electronically through the e-Naira for instance.
The following can be achieved with a government-led food purchase and distribution project, as is done in the United States, India and other countries:
This is direct cash assistance to our farmers.
Farmers are encouraged to produce more – with the guarantee of bulk purchases.
Though there will be disruption to activities of middlemen in the agriculture space, this will be temporary.
Food poverty will be positively impacted. There is no assurance that N8,000 cash will be used for food. Many poor men will use the money for sundry purposes, including alcohol, betting, cigarettes etc, and no problem will have been solved.
The food programme could also target nutrition through a bouquet of carbohydrates, proteins, and fruits distributed to people over time.
Many food crops value chain in Nigeria and farmers producing them will be positively impacted.
This will open up the rural areas and shift attention to the local governments as required. The next phase of growth for our economy will necessarily have to start from the local governments.
This will dovetail with the government’s stated resolve to ensure food security.
This is the best way to reduce post-harvest losses in many crops. For example, billions of dollars’ worth of crops, including fruits and vegetables, are abandoned to rot yearly all over the country, while millions of Nigerians are unable to find food.
A food programme will also have reduced effect on inflation, compared with just pumping out more cash – that will probably have to be supported by more naira printing. With inflation already at 22.41%, with prospects of reaching 40% as a result of the same policies, perhaps we should avoid giving people cash.
The suggested food programme will also directly target the biting effect of food inflation, which stands at 24.82%, as at last count. Whereas government purchases from farmers could lead to price increases, the most vulnerable Nigerians are spared of that impact. We could also study how the US and other countries avoid these spikes with their food programmes.
A food programme could also provide the government with precious data around food production, population, poverty and so on around the country. It could even really assist accuracy in our upcoming population census. We need ideas like this that has many ramifications and gets everybody busy.
This food programme will also provide a lot of jobs in logistics, agriculture, accounting, social services, information technology, statistics and so on, if done right. Even if we achieve a 60% success rate, that would be impactful.
The policy will also lead to economic growth as a result of waste-reduction, new jobs and services provided, and new activity in rural areas – including urban poor areas. This will occur if data of government activity is well-captured.
The ruling government will score very good points among the masses of Nigeria if this is done. Political operatives could be given some of the assignment to collaborate with public sector workers for the food distribution. Government must think of clever ways of ensuring that these distributors do not hoard the food products or repackage them for campaigns. The Tinubu administration should always remember that it promised RENEWED HOPE to the people.
This idea will be different from Buhari-administration’s failed ideas like Tradermoni, Marketmoni and the COVID-19 cash distribution. People want a new lease of hope, not old, inefficient ideas.
The government has stated, as part of its launch of a campaign on food security, that it has declared “a state of emergency on food security”, and “that all matters pertaining to food and water availability and affordability, as essential livelihood items are henceforth included within the purview of the National Security Council”. There is no better way to anchor this laudable declaration than the idea I have suggested.
I like this idea because of its transformative potential, even if it is hardly perfect. Every year and all over the country, we waste food. In Benue, massive amounts of oranges and other citrus fruits waste, yearly. In the Jos area, strawberries, apples and other fruits get abandoned. In Kaduna, mangos are left to rot on trees. In Osun and all over the South-West, fruits are abandoned in millions by the roadside yearly. And before someone says this is a socialist idea, it is worth knowing that the most-capitalist country in the world has a permanent programme targeted at food purchase and distribution to the most vulnerable people. This is through a programme of the US government called, The Emergency Food Assistance Program (TEFAP):
I quote from one of the articles:
The USDA Agricultural Marketing Service (AMS) conducted the Food Purchase and Distribution Program (FPDP) during Fiscal Year 2019 (Oct. 2018 – Sept. 2019) and Fiscal Year 2020 (Oct. 2019 – Sept. 2020). The program was one of three USDA trade mitigation programs aimed at assisting farmers suffering from damage due to unjustified trade retaliation by foreign nations… Under FPDP, over the course of these two years, USDA purchased about $2.3 billion of a variety of U.S. produced agricultural products impacted by trade tariffs normally going to export markets. USDA purchased food products produced on American farms by American farmers through approved vendors who had proven they were able to supply U.S.-produced products. The commodities purchased and the amounts of each were based on an economic analysis of the damage caused by the tariffs. Most of the food purchased was provided to states for distribution to the network of food banks and food pantries that participate in The Emergency Food Assistance Program (TEFAP). In the first round of trade mitigation, during fiscal year 2019, USDA was authorized to purchase up to $1.2 billion of food products. This round ended in September 2019 with about $1.1 billion spent on foods for distribution. In the second round, during fiscal year 2020, the program was authorized to use CCC Charter Act authority to purchase up to $1.4 billion of surplus commodities affected by the tariffs. This round ended in September 2020 with about $1.2 billion spent on foods for distribution.
Having established that a food programme is infinitely better than cash distribution (and one is left bewildered by why the World Bank is not helping to push such an idea as they have in their country of abode), I want to conclude by begging President Tinubu not to take his fingers off the pulse of the country. He should please rein in excesses in government, show example by sacrificing some of his own benefits, rein in the National Assembly, declare at least one year of ascetism in political quarters, and proclaim a moratorium on all luxury goods purchases in government (especially exotic cars). Also, he needs to declare a programme to curb unruliness, indiscipline, destruction of public properties (in the name of anger against government), destruction of Nigeria’s image home and abroad through drug dealing, cultism, and online fraud, corruption, bribery, and extortion everywhere (especially at our airports and sea ports), and other such behaviours with which we have continually ruined our chances and cast ourselves as swine before the rest of the world. Without dealing with these issues, we labour over the economy in vain. Yet, we can work and chew gum. A massive reorientation programem involving the youths and creating thousands, if not millions, of jobs should be launched. This government must not fail. It shall not fail!
‘Tope Fasua, an economist, author, blogger, entrepreneur, and recent presidential candidate of the Abundant Nigeria Renewal Party (ANRP), can be reached through [email protected].
