Global Perspectives of Poverty The Nigerian Experi

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Published on January 14, 2008

Author: Miranda

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Global Perspectives of Poverty: The Nigerian Experience:  Global Perspectives of Poverty: The Nigerian Experience Dr. Magnus L. Kpakol National Coordinator NAPEP University of Ilorin Ilorin, Kwara State February 27, 2007 What is Development?:  What is Development? Development is about creating an enabling environment in which people can have a long, healthy and prosperous life of happiness. The UNDP HDI provides a composite measure of three dimensions of human development living a long and healthy life being educated, and having a decent standard of living Since 1990 the HDI score has increased for almost all regions of the world except for Sub-Saharan Africa which has stagnated in many areas of development. Why has Africa Stagnated? 1 What is Development?:  What is Development? Human development is related to income poverty. On average, human development rises and falls with income. However, income does not always tell the story. While per capita income in general has risen in Sub-Africa in recent times, life expectancy has declined, the only region in the world where this has happened in recent times Why has Africa Stagnated? 2 What is Development?:  What is Development? Over the past three decades developing countries have been converging on developed countries in life expectancy. On average, life expectancy at birth has increased by 9 years among developing countries, compared to 7 years for developed countries. In Sub-Saharan Africa, life expectancy is lower than it was three decades ago While per capita income in general has risen in Sub-Africa in recent times, life expectancy has declined, the only region in the world where this has happened in recent times Why has Africa Stagnated? 3 What is Development?:  What is Development? Over the past three decades developing countries have been converging on developed countries in life expectancy. Child mortality rates in developing countries are improving, but deteriorating when expressed as multiples of rates in high income countries In developing countries, almost one child in five drops out before completing primary school. Why has Africa Stagnated? 4 What is Development?:  What is Development? In high income countries, over 80% of primary school graduates continue on, and over 50% go on to tertiary institutions. In Sub-Saharan Africa, less than 50% go on to secondary school after primary school. Income poverty has dropped in all regions except in Sub-Saharan Africa The share of the world’s population on less than $1 a day has decreased from 28% in 1990 to 21%, in Sub-Saharan Africa it has increased to around 50% Why has Africa Stagnated? 5 This Stagnation in Africa…..:  This Stagnation in Africa….. When Will it End? Nigerians Speak on Poverty:  Nigerians Speak on Poverty Poverty is watching your child dying because you don’t have the money to take her to the hospital… not even a penny to buy food for yourself Poverty is when a man wakes up in the morning … and realizes that he has to start a fight for him to be able to get out of the house Slide9:  Poverty is spending the daytime hawking on the street and missing school in the process “You want me to define poverty… Look at me, enter my house, look at the house, look at the children, whatever you see… write down, that is poverty” Poverty: Where Shall We Start? :  Poverty: Where Shall We Start? “For the Poor shall never cease out of the land” Therefore I command thee, saying, Thou shalt open thine hand wide unto thy brother, to thy poor, and to thy needy, in thy land” Deut. 15:11 “Save when there shall be no poor among you……only if thou hearken unto the voice of the Lord thy God, to observe to do all these commandments which I command thee this day” Deut. 15:4-5 Effective Reforms across Africa will produce the commandments and ordinances for fighting poverty Reforms that include mass participation in the economic development process will defeat poverty In Africa, mass participation, not “trickle down” is the anti-dote for poverty In Nigeria, this Specific effort is led by the Presidency through the National Poverty Eradication Program (NAPEP) Globalization Exposes Countries:  Globalization Exposes Countries Why is it that some countries are more successful than others? It is about the quantity and quality of empowered competitive capacity that they have. And this competitive capacity includes tangible and intangible assets that are acquired and developed. Globalization is not a new phenomenon. The exponential growth in the exchange of goods, ideas, institutions and people that we see today is part of a long-term historical trend. The Three Waves of Modern Globalization:  The Three Waves of Modern Globalization Over the course of human history, the desire for something better and greater, has motivated people to move themselves, their goods, and their ideas around the world. The first wave of modern globalization took place from 1870 to 1914, spurred by advances in transportation and negotiated reduction of barriers. Although global per capita income rose at an unprecedented rate, it was not fast enough to prevent the number of poor people from rising. Waves of Modern Globalization, contd.:  Waves of Modern Globalization, contd. The 1950 to 1980 period saw the second wave of modern globalization. This wave was more focused on integration among rich countries. But during this time many developing countries remained stuck in primary commodity exporting and were largely excluded from capital flows. This was due in part to these developing countries in-ward oriented policies. The most recent wave of globalization started around 1980 and is continuing today. It his being spurred by technological advance in transport and communications technologies and by the choice of large developing countries to improve their investment climate and open up to foreign trade and investment. Can Africa Compete?:  Can Africa Compete? Africa faces a host of challenges which are militating against our being active players in the global arena. These include: a high incidence of extreme poverty. limited human capital and productive capacity; geographic handicaps including poor soils, low level agricultural production and food insecurity, vulnerability to natural disasters and communicable diseases, weak institutions and poorly diversified industries and underdeveloped markets for many goods and services, limited access to information and communication technologies instability in government. Africa therefore needs to design and adopt policies that will maximize the potential benefits from globalization. Promote Globafrication Africa-Centered Globalization:  Promote Globafrication Africa-Centered Globalization Africa Centered Globalization Empowering Africans and Developing African Capital Promoting African Merchandise Africating the global market place Generating Partnerships across Africa Promoting Partnerships across the World The GBU: A Required Alliance:  The GBU: A Required Alliance The partnership of tomorrow is between Government, Business and the University. (GBU) Governments must be ready to create an enabling environment for profitable business competition. The challenge of the future is to choose a course that satisfies the market requirements for growth and development. economic development is multidimensional, including the ability to sustain improvements in health, education, the environment, food security, shelter, sanitation and other things that improve life expectancy and overall happiness The University therefore has a major role What Do Consumption Patterns Suggest?:  What Do Consumption Patterns Suggest? The money spent on household consumption worldwide has increased over 70% between 1980 and 2004, as the consumer in many parts of the world is able to buy many new consumer goods. Today we have many new products that did not exist several years ago that we buy to make life easier for us. The microwave oven, the VCR, the fax machine, Cable TV (e.g. CNN), the Internet, Cellular telephone, and the lap top. Food consumption as a share of household income has declined sharply to around 30% to 40% around the world. However in Africa, food purchases still account for as much as 70% of family income. What About Energy?:  What About Energy? World energy production rose around 45% between 1980 and 2004 and will continue to grow. Energy production has a strong correlation with industrial development and economic growth. Today about 60 million urban citizens a year are being added to the world’s population, and mostly in Africa, where population growth is around 3.0%, compared to well under 1% in many advanced economies. You add this amount of people to your cities, when energy production does not rise; and you have what is called Low Energy Related Poverty Syndrome (LERPS). Not leprosy, but something nearly as bad, because people refuse to deal with you when you are too poor. You don’t see too many people fighting to make friends with poor people. Age, Population and Democracy?:  Age, Population and Democracy? The aging population and low birth rates in Europe will seriously impact healthcare costs, creating the need for more healthcare workers. Countries like Japan, Germany and Italy may soon be in need of foreign born younger workers if there are no innovations to maintain prevailing productivity levels. Indeed European and Japanese populations will require more than 110 million new workers by 2015 to maintain current dependency ratios between the working population and retirees. Where political systems are brittle, the combination of population growth and urbanization will foster instability. Today there are about 120 truly democratic countries, compared to only 22 in 1950. So democracy is the way of the future. What About ICT?:  What About ICT? Today, around a billion people use the Internet, compared with less than 20 million 10 years ago. Most experts agree that the IT revolution represents the most significant global transformation since the Industrial Revolution beginning in the mid-eighteenth century. The 20th century was the age of accelerating Innovation and Technology. Never before in the history of the human race has change and progress happened at such an unrelenting pace. The awesome economic transformations, which have defined this era is primarily due to Innovation and technology. it took Britain 60 years to double its GDP, Sit took South Korea only 11years. And Education?:  And Education? Education will continue to be the primary determinant of success in our country and in the world through the years to come. The globalizing economy and technological change will inevitably place an increasing premium on a more highly skilled labor force. Adult literacy and school enrollments will increase in almost all countries, and lead to a narrowing in the educational gender gap across the world. Countries that are left behind will continue to be poor Economic Reforms are Working to Spur Strong Economic Growth & Poverty Reduction:  Economic Reforms are Working to Spur Strong Economic Growth & Poverty Reduction Sound Monetary and Fiscal Policies now assuring: moderate inflation moderate budget deficits moderate size of government good and stable financial system beneficial international trade Stronger Institutions and Good Governance promoting: adequate rule of law transparency, due process and accountability, and minimizing uncertainty and volatility in delivery of public goods and services Empowerment through efficient safety nets and service delivery assuring: Mass participation in economic development process Confidence and hope for investors and the masses Nigeria: Economic Growth Has Turned Stronger:  Nigeria: Economic Growth Has Turned Stronger Source: National Bureau of Statistics 1980 - 1984 - 6.4% 1985 – 1989 5.0% 1990 – 1994 3.9% 1995 - 1999 2.8% 2000 – 2005 6.0% Real GDP Growth (Yr-to-Yr % change) POVERTY Responding to Reforms:  POVERTY Responding to Reforms Source: National Bureau of Statistics Reforms Helping Poverty Reduction:  Reforms Helping Poverty Reduction Source: National Bureau of Statistics * Extrapolated Main Engine of rapid poverty reduction is reform that creates opportunities for people Increasingly, Opportunities for Mass Participation are Growing:  Increasingly, Opportunities for Mass Participation are Growing Palliatives, Safety Nets & other Support Facilities Catalytic mobilization of resources by NAPEP Debt relief funds for achieving MDGs Entrepreneurial development by SMEDAN and skills development by NDE Fuel price adjustment support for the poor Catalytic Investments in Agriculture & Agro-Processing N50 billion support for all categories of agricultural activity Various Presidential Initiatives with broad based participation Micro-Finance Policy Making loanable funds available to relatively poorer Nigerians Creating a more predictable environment for lending to the poor Strengthening inter-agency partnerships for collaboration to fund economic activities for the poor Empowerment is Anti-dote to Poverty :  Empowerment is Anti-dote to Poverty “Poverty is always and everywhere the result of the inability of man to control the elements of nature” People are poor because they lack tools and capacity. They lack empowerment in: tools and new techniques, innovations, management skills and new ideas, a voice and increased economic participation To defeat poverty we must subdue the earth with skills and tools. Some Causes of Poverty:  Some Causes of Poverty Acute Causes of poverty Natural Disasters ( drought, flooding, earthquakes, etc) Warfare Agricultural circles Entrenched Causes Corruption Lack of education and necessary skills Lack of productions and lack of markets Social inequality Environmental degradation What is Poverty? :  What is Poverty? Poverty is severe deprivation that constrains the ability to have access to basic: food Clothing shelter and educational & healthcare facilities Poverty is a situation of Extreme Scarcity and Extremely limited choices in productive capacity and therefore consumption Principal Challenges Confronting the Poor :  Principal Challenges Confronting the Poor Lack of Access to Capital limited access to capital limited collateral limited standardization & legal title Lack of Access to Information prohibitive cost of information infrequent supply of information Lack of Access to Stable Markets fragility of local community markets poor local infrastructure limited development of local & distant markets Sell & Buy Triangle (SBT) for Wealth Creation:  Mass Participation for Economic Development Capital Infrastructure Excluded People Triangle to Become Larger with Partnership Sell & Buy Triangle (SBT) for Wealth Creation Jointly Driven Basic primary education Adult education Value reorientation Awareness &sensitization Skills acquisition Public Sector Driven Education Health Care Power Facilities Water ICT Transportation infrastructure Private Sector Driven Financial resources for investment Innovation New techniques Health Care Delivery Information Model for Community Based Mass Participation in Economic Growth and Development:  Model for Community Based Mass Participation in Economic Growth and Development Infrastructure Economic Activity Higher Income Well-being Human Capital Development & Sustainable Environment Partnerships Poor People Poor Communities Loan repayments, Contributions Information Micro Credit Source: EGDC Who Will Finance the Poverty Gap?:  Who Will Finance the Poverty Gap? Over 7,000 microfinance (MF) institutions in the world 2.8 billion people - live on less than US$2 a day, 1.2 billion, a fifth of world population, live on less than US$1 a day. In Africa, just 8.5 percent of the potential market is currently being served Over 60% of Africans have limited access to credit Where is the beef for the Poor? Why Do Banks Avoid Micro-Credit?:  Why Do Banks Avoid Micro-Credit? Limited Information (Do not Understand it) Never taught in college Not Attractive (Not glamorous) Obfuscated clientele (poor record keeping) Low Comparative Profitability Too risky Too costly to run Unreliable Market fragility of collateral assets poor local infrastructure Likely market failure (constrained arms length transactions) DO BANKS GIVE LOANS TO THE POOR? Micro-Credit: Goals, Conflicts & Intermediation:  Micro-Credit: Goals, Conflicts & Intermediation Banks Focus on Profitability Higher profits Increased market share & glamorous visibility Governments Focus on Development Provision of public goods (infrastructure) Mass participation in economic development Political gain NAPEP created for Intervention, Coordination, Monitoring and Catalytic Intervention Coordinate and monitor all poverty eradication activities Lead the active poor to banks Catalytically stimulate and mobilize resources from various tiers of government, NGOs, FBOs, Donors and the Private sector Nigeria’s Agency For Poverty Alleviation :  Nigeria’s Agency For Poverty Alleviation The National Poverty Eradication Programme (NAPEP) was set up by Mr. President to help ensure mass participation in the economic development process NAPEP is the symbol of the Federal Government’s commitment to poverty eradication The primary aim of NAPEP is to catalytically empower the poor to have a voice, and therefore a way of expressing their ideas The program seeks to involve communities, cooperatives and individuals, by enhancing their capacity to become more productive. To be the leading government program in building a sustainable relationship between the poor, the banking community the private sector and development partners. NAPEP: What We Do:  NAPEP: What We Do Help generate mass participation in the economic reform process, through catalytic partnerships and intervention Help state and local governments develop direct anti-poverty programs that include Micro-Credit and Micro-Finance Build strategic public and private sector partnerships that provide Information to the disadvantaged. Cause political action against poverty to center on providing confidence and Stable Markets for the goods & services of poor people Slide38:  THE HUMAN CAPACITY DEVELOPMENT INDEX (HCDI) HCDI uses girl child primary school enrolment and adult female literacy in English to build an index that measures the degree of human deprivation in Nigeria across States In Care of the People (COPE):  In Care of the People (COPE) COPE = BIG + PRAI BIG (Basic Guaranteed Income) PRAI (Poverty Reduction Accelerator Income) South – South :  South – South South East:  South East South West:  South West North Central:  North Central North East:  North East North West:  North West The Private Sector In a Key Role:  The Private Sector In a Key Role Banks must reach out to the poor The 0.7% of income rule should extend to poor country big business to generate the funds needed for affordable micro-credit The bottom is where most of the potential customers are Good income for the poor is good business for all. Must win locally to compete globally Poverty & Size of Household:  Poverty & Size of Household Source: National Bureau of Statistics POVERTY RATES – By Region:  POVERTY RATES – By Region Source: National Bureau of Statistics

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