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Poverty in Nigeria

Nigeria has one of the world's highest economic growth rates (averaging 7.4% over the last decade), a well-developed economy, and plenty of natural resources such as oil. However, it retains a high level of poverty, with 63% living on below $1 daily, implying a decline in equity. There have been attempts at poverty alleviation, most notably with the following programmes:

1972: National Accelerated Food Production Programme and the Nigerian Agricultural and Co-operative Bank.

1976: Operation Feed the Nation: to teach the rural farmers how to use modern farming tools.

1979: Green Revolution Programme: to reduce food importation and increase local food production.

1986: Directorate of Food, Roads and Rural Infrastructure (DFRRI)

1993: Family Support Programme and the Family Economic Advancement Programme

2001: National Poverty Eradication Programme (NAPEP): to replace the previously failed Poverty Alleviation Program.

However, these programs have largely failed to overcome the three reasons for this persistent poverty: (1) income inequality, (2) ethnic conflict, (3) political instability.

(1) Income inequality

Income inequality worsened from 0.43 to 0.49 between 2004 and 2009. This is correlated with differential access to infrastructure and amenities. In particular, there are more rural poor than urban poor. This results from the composition of Nigeria's economy, especially the energy (oil) and agriculture sectors. Oil exports contribute significantly to government revenues and about 15% of GDP, despite employing only a fraction of the population. Agriculture, however, contributes to about 45% of GDP, and employs close to 90% of the rural population.

This incongruence is compounded by the fact that oil revenue is poorly distributed among the population, with higher government spending in urban areas than rurally. High unemployment rates renders personal incomes even more divergent. Moreover, the process of oil extraction has resulted in significant pollution, which further harms the agricultural sector. While past attempts at poverty alleviation have been

(2) Ethnic conflict and civil unrest

Nigeria has historically experienced much ethnic conflict. With the return to civilian rule in 1999, militants from religious and ethnic groups have become markedly more violent. While this unrest has its roots in poverty and economic competition, its economic and human damages further escalate the problems of poverty (such as increasing the mortality rate). For instance, ethnic unrest and the displeasure of local communities with oil companies has contributed to the conflict over oil trade in the Niger delta, which threatens the productivity of oil trade. Civil unrest might also have contributed to the adoption of populist policy measures which work in the short-run, but impede long-term poverty alleviation efforts.

(3) Political instability and corruption

Nigeria's large population and historic ethnic instability has led to the adoption of a federal government. The resultant fiscal decentralisation provides Nigeria’s state and local governments considerable autonomy, including 50% control of government revenues and responsibility for providing public services. The lack of a stringent regulatory and monitoring system, however, has allowed for rampant corruption. This has hindered past poverty alleviation efforts, and will continue to do so.

Lift Above Poverty Organization (LAPO)

LAPO is a Nigerian non-governmental organisation focusing on assisting the poor, especially poor women, in Nigeria to raise their socio-economic statuses. LAPO not only acts as a microcredit institution but also assists clients to overcome problems beyond the lack of funds such as illiteracy and environmental degradation which often aggravates poverty. Moreover, LAPO aims to enhance leadership skills, literacy status and political participation among poor women. It empowers women by providing opportunities for them to learn income generating skills such as sewing, food processing and soap making.

LAPO provides the poor Nigerians with the following financial services#.

Different types of loans: Regular loan (RL) This is obtained by LAPO members through their groups as capital for entrepreneurship. Loan tenor is 32 weeks and equal amount of repayments with interest are paid weekly at group meetings.

Festival Business Loan (FBL) FBL enables the clients to fund business activities during festive periods. The average loan size of FBL is US$200 and it has benefited clients by ensuring them with high returns.

Farming Loan LAPO developed exclusive farming loan for food crop farmers in which the disbursement and repayment schedules follow the pattern of activities in farming cycle.

Credit-for-shares With this program, poor people are able to acquire and manage shares or stocks in profitable companies.

Asset loan Asset loan is designed for clients to invest in acquisition of income generating assets such as commercial transportation and household appliances.

There are also different types of savings programs for capital accumulation:

Regular savings

Clients make mandatory weekly deposits into their savings accounts at group meetings which serve as funds for investment in capital accumulation. Withdrawal is only allowed at termination of relationship with LAPO.

Voluntary savings

Similarly, voluntary savings program is introduced to aid clients in capital investment. Clients are motivated to set aside surplus funds for it and generates more funds by earning competitive interest rates on the balances.

Moreover, LAPO has set up a few subsidiaries to help tackle poverty in Nigeria. LAPO Agricultural and Rural Development Initiative (LARDI) was established to improve the lives of the rural poor in Nigeria. It helps to generate youth employment, to promote infrastructural development, to facillitate farmer’s access to capital and physical inputs such as credit, storing and processing facillities, to acquire information on relevant farming issues and to improve the farmers and rural households’ health#. Micro Investment Support Services (MISS) was set up to provide microcredit services to the poor Nigerian for income generating purposes#. Academy for Microfinance and Enterprise Development (AMED) was established to provide training and technical services to LAPO Group and other microfinance institutions#.

Positive impacts of LAPO LAPO has helped many poor Nigerians to achieve their basic needs and a high percentage 66.7% of ex-client indicated that the loan had helped them a lot.

Table 1: Positive impacts of LAPO#