Why Africa still remains poor

Poverty in the midst of abundance is a popular paradox characterizing the Nigerian economy. Nigeria is a nation blessed with abundant human and natural resources. It is ranked as the sixth largest exporter of petroleum in the world. Nigeria is the largest black nation on earth thus having great potential for human resources. Foreign exchange inflow and outflow through the Central Bank of Nigeria (CBN) in July, 2006, amounted to US$3.25 billion and US$1.16 billion, respectively, resulting in a net inflow of S$2.09 billion. Cumulative inflows and outflows through Nigerian economy in the first seven months of 2006 stood at US$34.98 billion and US$12.50 billion, respectively, compared with US$26.42 billion and US$9.98 billion in the corresponding period of 2005 (CBN, Monthly Report July 2006). Despite all these Nigerian citizens suffer from wide spread poverty, the economic output is low in both the private and the public sector due to corruption, inefficiency, erratic power supply, poor infrastructure and unrealistic policies. Several attempts have been made to reverse this trend but to no avail. The austerity measures of the early 1980s, the Structural Adjustment Programme introduced in 1986 and even the current economic reforms, have yielded unsatisfactory results as per as the conditions of the common man are concerned, in fact the conditions are becoming worse every day. This paper begins with explanation of relevant macroeconomic concepts for the benefit of laymen, and then depicts the level of productivity and poverty in Nigeria in terms of the country’s poor achievement in these areas as contained in the 2005 UNDP report on human development index. Finally, the paper attempts to supply the missing links required to increase the output in the Nigerian economy and minimize poverty among Nigerians. Explanation of Key Concepts Ignorance and general misconceptions about concepts and issues related to economic development and social welfare contribute to the failure of governments and philanthropists in their bid to attack mass poverty, unemployment, crime, drug addiction, illiteracy, disease, environmental degradation and low productivity, which are manifestations of under-development. For the benefit of policy makers and executives who operate the machinery government at the local, state and federal levels but lack sufficient knowledge of economics, an explanation of key concepts related to macroeconomic policies becomes necessary. These people have the power to change things for the better but may be working on the basis of ignorance, shallow understanding of economic theories or insincere advice coming from some advisers on economic matters. Let’s begin with the concept of macroeconomics; it refers to the study of the aggregate economic behaviour of consumers and producers and of fundamental economic phenomenon such as inflation, depression and unemployment with a view to achieving certain desired economic goals. These goals include price stability, economic growth and development, obtaining a favourable balance of payment, controlling exchange rates, curtailing unemployment, etc. With the ever increasing influences of globalization on the economies of nations, macroeconomic variables such as inflation rate, interest rate, level of unemployment, growth rate, etc, in one nation can have influence or be influenced by similar variables in other nations. It is therefore naïve to formulate macroeconomic policies for a single nation without due consideration to what obtains in other nations. As globalization advances, macroeconomics is increasingly becoming irrelevant, it needs to be replaced with globoeconomics, that is “the study of macro-economic variables and policies of a nation, region or the entire globe as they influence or are influenced by macroeconomic variables and policies of other nations or regions as a result of globalization” (Sulaiman, 2005a). Output (productivity) is one of the indicators of economic growth and development; it refers to number of goods or amount of work or service produced by an individual, an organization or a nation as a whole. Productivity is considered high or low in relation to the amount of resources such money, labour and time used. The total output of an economy is termed the Gross Domestic Product (GDP). Poverty can be described as dearth of the means of meeting the basic and customary needs of people, which include good shelter, diet, clothing, security, health care, education and freedom to participate in social activities and lawful undertakings. As Zango (2002) rightly observes, there is usually a distinction between absolute and relative poverty: Absolute poverty refers to a state in which an individual or household lacks the resources necessary for subsistence. This is usually measured in terms of the earnings of individuals and the price index in the society. On the other hand, relative poverty is individual’s or group’s lack of resources in comparison to members of another society.