TAXBIT: MULTIDIMENSIONAL POVERTY INDEX AND ANALYSIS: CURRENT STATUS IN NIGERIA

1.0. INTRODUCTION

Poverty is a multidimensional problem that goes beyond economics to include social and institutional issues. A concise and universally accepted definition of poverty is elusive largely because it affects many aspects of human conditions, including physical, moral, and psychological. Poverty is an economic state where people experience scarcity or the lack of certain necessities such as food, healthcare, sanitation, education, and asset. The identification of problem involves the specification of a poverty line representing the level of income necessary to maintain a subsistence standard of living and a person with income not exceeding the subsistence income level is called poor. (Ravallion, 1994). Nigeria like many other Sub-Saharan African countries is neck-deep in poverty. The country is characterized by declining per capita income, increasing hunger, rising unemployment and environmental degradation. Despite all the efforts made by various governments in Nigeria to improve the plight of the people through the various poverty alleviation programmes, the economy keeps wallowing in poverty level.

The causes of poverty in Nigeria, just like in any other nation are varied, myriad, and complex. Accordingly, Obi et al (2008:183 189), have identified that economic underdevelopment; low productivity; the existence of market imperfections; physical or environmental degradation; an unwholesome structural shift in the economy, inadequate commitment to programme implementation; political instability and social conflict; weak governance; corruption and other forms of economic mismanagement; and unemployment are major causes of poverty. The main factors that cause poverty in sub-Saharan Africa include: inadequate access to employment opportunities, inadequate physical assets such as land and capital, inadequate access to the means of supporting rural development in poor regions, poor access to markets where goods and services can be sold, the low endowment of human capital, degradation and reduced productivity, inadequate access to assistance for those living at the margin and the victims of transitory poverty, and finally failure to involve people in the design of development programmes that directly affect their living standards.

2.0. CURRENT STATUS OF NIGERIA POVERTY LEVEL

There is speculation by the World Bank that the number of poor persons in Nigeria will rise to 95.1 million in 2022. The number of poor people was 89 million in 2020 and would be 95.1 million in 2022. This means that 6.1 million more persons would have fallen beneath the poverty line between 2020 and 2022, a 6.7 percent increase. How true is this assertion in the year 2022, the Federal Government of Nigeria through the National Bureau of Statistics on 17th of November 2022 launched the results of the 2022 Multidimensional Poverty Index (MPI) survey. This survey was conducted by the National Bureau of Statistics (NBS), the National Social Safety-Nets Coordinating Office (NASSCO), the United Nations Development Programme (UNDP), the United Nations Children’s Fund (UNICEF), and the Oxford Poverty and Human Development Initiative (OPHI). The survey, which sampled over 56,000 households across the 36 states of the Federation and the FCT, was conducted between November 2021 and February 2022 and provides multidimensional poverty estimates at the senatorial district level.

3.0 HIGHLIGHTS OF THE 2022 MULTIDIMENSIONAL POVERTY INDEX SURVEY

The Multidimensional Poverty Measure (MPM) seeks to understand poverty beyond monetary deprivations (which remain the focal point of the World Bank’s monitoring of global poverty) by including access to education and basic infrastructure along with the monetary headcount ratio at the $2.15 international poverty line. The index is a key international resource that measures acute multidimensional poverty across more than 100 developing countries. The data are used to identify the poverty profiles that are more common in certain places. This is a crucial step in designing strategies that address multiple aspects of poverty at the same time. The recent highlights of the 2022 Multidimensional Poverty Index survey for Nigeria reveal that:

• 63% of persons living in Nigeria (133 million people) are multidimensionally poor.
• The National MPI is 0.257, indicating that poor people in Nigeria experience just over one-quarter of all possible deprivations.
• 65% of the poor (86 million people) live in the North, while 35% (nearly 47 million) live in the South. Poverty levels across States vary significantly, with the incidence of multidimensional poverty ranging from a low of 27% in Ondo to a high of 91% in Sokoto.
• Over half of the population of Nigeria are multidimensionally poor and cook with dung, wood, or charcoal, rather than clean energy. High deprivations also appeared nationally in sanitation, time to healthcare, food insecurity, and housing.
• In general, the incidence of monetary poverty is lower than the incidence of multidimensional poverty across most states. In Nigeria, 40.1% of people are poor according to the 2018/19 national monetary poverty line, and 63% are multidimensionally poor according to the National MPI 2022.
• Multidimensional poverty is higher in rural areas, where 72% of people are poor, compared to 42% of people in urban areas.

The National MPI is reported with a linked Child MPI, which provides additional information on Multidimensional Child Poverty in Nigeria. According to the report:

• Two-thirds (67.5%) of children (0–17) are multidimensionally poor according to the National MPI, and a half (51%) of all poor people are children.
• The highest deprivations are in the indicator of child engagements – where over half of the poor children lack the intellectual stimulation that is pivotal to early childhood development.
• Child poverty is prevalent in rural areas, with almost 90% of rural children experiencing poverty.
• Across the geo-political zones, the child MPI shows higher poverty in the North-East and North-West (where 90% of children are poor) and lower poverty in the South-East and South-West (74% and 65.1% respectively). The incidence of Child MPI is above 50% in all States and greater than 95% in Bayelsa, Sokoto, Gombe, and Kebbi.
• Four million Nigerians – 2.1% of the population – live with a child aged 15–17 who is the first generation in that household to have completed primary school.

4.0. TAXATION AS SPRINGBOARD FOR ELIMINATING MULTIDIMENSIONAL POVERTY

Economic and political elites in Nigeria need to show more commitment to accepting and promoting policies of greater social inclusion. Even if there is movement against tax havens at the international level and multinational companies refrain from transfer pricing abuse, these actions will be insufficient without a profound revision of domestic tax policies in a pro-poor direction. No resources should be spared in order to significantly improve the country’s public administration capacity so that they can meet their obligations to the most disadvantaged in the society. Internal policy changes should focus on taxation to exploit the full potential that a good domestic fiscal system could provide in the fight against poverty and inequality. Also, they should be able to build solid and efficient states that can generate and administer both their resources and those derived from international cooperation. It is during this critical period in our economy and history that policymakers need to be often prompted to recognize that taxation is a reliable source of funding. But a fair tax system warrants further assessment for more fundamental reasons. As well as generating new revenue, a comprehensive tax policy can provide the structural basis for the building and consolidation of genuinely democratic state. Fiscal systems should be based on a regularly-renewed agreement or contract between governments and citizens. Such a contract – in the form of democratic elections – should result in increased government responsibility for the judicious use of tax revenues.

5.0. CONCLUSION

From the taxation perspective, there is need to genuinely conduct comprehensive research to identify those working class with tax exemption on minimum wages/salary below N30,000.00 monthly according to the Finance Act, 2021 which amended the Personal Income Tax Act on Pay as you earn (PAYE). The outcome of this research will assist government in analysing disguised unemployment whose unemployment status have no relevance to aggregate economic output. Disguised unemployment occurs when any part of the population is not employed at full capacity, therefore, government will be able to strategically move citizens in this category out of the multidimensional poverty level to the poverty level or completely out of poverty.

From the multidimensional poverty perspective, a report from MPI showed that 63% of persons living in Nigeria which constitutes about 133 million people are multidimensionally poor. It was also noted that 40.1% of people in the urban areas of Nigeria are poor. However, poverty is higher in rural areas, where 72% of people are poor, compared to 42% of people in urban areas. The United Nation (UN) sustainable development goals agenda 2030 provided 17 agenda which was signed by 195 nations in 2015 and for Nigeria’s economy to achieve the set agenda which will eliminate multidimensional poverty, there must be concerted effort to set up medium terms framework to firstly address the first 8 agenda of the SDG which are:

• Eliminate Poverty
• Erase Hunger
• Establish good health and well-being
• Provide quality education
• Enforce Gender Equality
• Improve clean water and sanitation
• Grow affordable and clean energy
• Create decent work and Economic growth

It was a deliberate focus of the UN to have placed the elimination of poverty topmost on the achievable SDG agenda in 2030. We have 8 years to 2030, and moving into a new Federal Government administration in 2023, the time is now for political gladiators who may emerge as President/State governments of the Republic of Nigeria and other leaders at the state and federal level to set in motion the strategy to fully achieve this agenda on or before 2030.

Recommendations

1. The new administration should also review the National Development Plan and other related policies with a holistic view to eliminating multidimensional poverty in Nigeria by 2030.
2. Internal policy changes should focus on taxation to exploit the full potential that a good domestic fiscal system could provide in the fight against poverty and inequality.

References

https://www.undp.org/turkiye/publications/2022-multidimensional-poverty-index-mpi

https://www.vanguardngr.com/2022/11/133m-nigerians-multidimensionally-poor nbs/#:~:text=Highlights of the 2022 Multidimensional Poverty Index survey,Ondo to a high of 91% in Sokoto.