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How feasible is FG’s N8,000 palliative scheme to 12m poor Nigerians?

AS part of efforts to cushion the effects of the removal of the fuel subsidy on the economy, the National Assembly approved the request of the Federal government to give N8,000 each to 12 million poor households for six months. 

The President Bola Tinubu administration was, by its initial plan, intending to share N500 billion among poor households using the N8,000 format.

But intense condemnation of the idea seemingly convinced Tinubu to have a rethink of the idea. He has, therefore, ordered a review.

Critics had doubted the feasibility of the scheme, with most comments querying how the money would be well widely spread to reach the indigents who truly deserved it.

The second eyebrow raised on the idea was the sum itself. A large number of Nigerians regarded the N8,000 figure as too negligible in these days of high inflation and the consequent impact on the astronomical prices of especially food items and transport fares.

Background

On July 13, President Tinubu requested the National Assembly’s approval on a conditional cash payment that would be used to cater for vulnerable Nigerians under the National Safety Net Programme of the Federal government. 

The request was made in connection to the $800 million loan from the World Bank, which former president, Muhammadu Buhari, had requested for his social safety net programme. 

The ICIR reported that Nigeria’s inflation rate increased to 22.79 per cent in June 2023, just a month after the announcement was made. 

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Tinubu, in his letter, said, “You may also wish to know that the purpose of the facility is to expand coverage of shock-responsive safety net supports for all vulnerable Nigerians and the cost of meeting basic needs.

“Under the conditional cash transfer window of the programme, the Federal government of Nigeria will transfer the sum of N8,000 a month to 12 million poor and low-income households for a period of six months with a multiplying effect on about 60 million individuals.”

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Going by these figures, a household was expected to receive a total of N48,000 from the government after six months. 

Several controversies, a report captured, trailed the implementation of the plan, with cynics saying this would not be the first time the Federal government would be conceiving and implementing a cash-palliative scheme, with unappreciable levels of success.

Analysing with data

To analyse the effects of what the cash palliative would be on poor individuals, The ICIR gathered data from the National Bureau of Statistics (NBS) on the multidimensional poverty index, Nigerian living standards, and consumption expenditure patterns in Nigeria, comparing them to the numbers of beneficiaries and how many can afford a proper meal.

Data from the NBS last year revealed that 133 million people living in Nigeria were multidimensionally poor, which was 66.5 per cent of the estimated 200 million people living in the country. 

By this, if 60 million poor individuals were targeted by the government to receive N8,000 for six months, only 45 per cent would be the beneficiaries. Using the percentage share of multidimensional poverty, this means the northern region would have 33.3 million beneficiaries, while the southern region would have 26.7 million beneficiaries. 

Furthermore, the government was targeting 12 million households as beneficiaries, but data have shown that the average household size in Nigeria is 5.06 persons per family.

By this calculation, it is expected that 60,720,000 individuals would be the beneficiaries as against the 60 million individuals the government projected, which would not be too far off the mark.

Meanwhile, a survey conducted in 2019 on over 22,000 households’ expenditures revealed that N22.8 trillion was spent on food products. At that time, the average inflation rate was 11.4 per cent compared to 22.2 per cent in the first half of 2023. 



A report said that as of January 2023, a Nigerian family spent N48,130 monthly on food items.  Also,  SBM Intelligence, a socioeconomic research firm, said, in its Jollofrice index report, that the amount needed to make a pot of jollof rice for a family of five in Nigeria rose by 10.3 per cent to about N14,000 in March 2023, from N9,917 in September 2022. 

To this end, when all these figures are placed together, a vulnerable Nigerian household with a family of five members would have an average chance of being selected as a beneficiary, while beneficiaries themselves would be able to afford only a meal with the cash palliative.




     

     

    Revising the plan

    President Tinubu has ordered a review of the N8,000 palliative idea following the largely unfavourable reactions that trailed it. Following the announcement, the National Economic Council decided that palliatives to cushion the effects of fuel subsidy removal would be implemented using new registers created by states.

    The Founder of Policy Shapers, Ebenezar Wikina, told The ICIR that while the idea of a palliative was commendable, the lack of a data repository would limit the impact scheme. 

    Wikina said, “Because you have a hike in fuel prices which will have a ripple effect on other things, the palliative is a good idea but can barely do anything. In the same way, we had the COVID-19 palliative and all other palliatives. It would fizzle out because we do not have accurate data. Time and time again, all of these cash handout schemes from the past have shown us that they do not get to the people who need them.”

    He opined that the fund would be better utilised if invested in the energy sector, food, transportation, education or soft loans for small-scale businesses and farmers. 

    Kehinde Ogunyale tells stories by using data to hold power into account. You can send him a mail at jameskennyogunyale@gmail or Twitter: Prof_KennyJames | LinkedIn: Kehinde Ogunyale

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