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Chapter 1 : Poverty and Inequality in Nigeria

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Chapter 1 : Poverty and Inequality in Nigeria Public Disclosure Authorized Federal Republic of Nigeria Poverty Work Program Poverty Reduction in Nigeria in the Last Decade October 13th 2016 GPV01 Public Disclosure Authorized AFRICA Public Disclosure Authorized The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/ The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected]. Public Disclosure Authorized Report No. -NGA Poverty Reduction in Nigeria in the Last Decade October 13, 2016 Poverty Global Practice Africa Region Document of the World Bank CURRENCY EQUIVALENTS (Exchange Rate Effective January 1, 2016) Currency Unit = Nigerian Naira (₦) US$1 = ₦200 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS DHS Demographic and Health Surveys GDP gross domestic product GEP growth elasticity of poverty GHS General Household Survey HOI human opportunity index HNLSS Harmonized Nigeria Living Standards Survey LGA local government administration MPI multidimensional poverty index NFE nonfarm enterprise NLSS Nigeria Living Standards Survey PPP purchasing power parity RIF recentered influence function TFP total factor productivity WDI World Development Indicators Vice President: Makhtar Diop Country Director: Rachid Benmessaoud Sector Director: Ana Revenga Task Team Leader: Vasco Molini ACKNOWLEDGMENTS This poverty assessment was prepared by a core team consisting of Eleonora Bertoni, Fabio Clementi, Vasco Molini, Francesco Schettino, and Hitomi Teraoka. The report was prepared under the guidance of Pablo Fajnzylber and Pierella Paci. Luis Alberto Andres, Andrew Dabalen, Foluso Okunmadewa, and Kinnon Scott provided useful feedback on some of the modeling in an earlier version of the report. We would also like to thank the Nigeria National Bureau of Statistics for their collaboration and willingness to share their data and the Central Bank of Nigeria and the Nigerian Economic Society for their useful feedbacks. Final editing was done by Robert Zimmermann iv Table of Contents Executive Summary ........................................................................................................................................... x Introduction ........................................................................................................................................................ 1 Data.................................................................................................................................................................. 2 Definitions and technical notes ................................................................................................................... 4 Chapter 1 : Poverty and Inequality in Nigeria ............................................................................................... 6 Poverty rates declined, but the number of the poor remained unvaried ............................................... 6 Rapid population increase and persistent high inflation contributed to the limited poverty impact of GDP growth .............................................................................................................................................. 9 GDP per capita did not entirely trickle down to household consumption and job creation ........... 14 Widening inequality cut the gains from consumption growth in half ................................................. 16 Lower poverty rates and a growing middle class, but also more vulnerable households.................. 18 A profile of the poor, the vulnerable, and middle-class households .................................................... 21 In poverty reduction, progress in nonmonetary indicators is slower in Nigeria than in other Sub- Saharan African countries ........................................................................................................................... 24 Chapter 2 : Mind the Gap ............................................................................................................................... 28 Poverty rates in the north are higher and decreasing much more slowly ............................................ 28 Poverty is more chronic in the north ........................................................................................................ 30 Poverty trends at the national level average two (or more) heterogeneous dynamics ....................... 32 The variations in performance contributed to widening inequality and polarization ........................ 34 Several nonmonetary outcomes confirm the breadth of the north-south divide............................... 38 Poverty maps show the big divide, but also suggest high heterogeneity within zones ..................... 41 Chapter 3 : The North-South Divide: An Econometric Analysis ............................................................ 47 Decomposing the north-south poverty differential ................................................................................ 47 The chronic and transient poor: an econometric analysis ..................................................................... 51 Chapter 4 : The Drivers of the Divide .......................................................................................................... 56 The south is ready to benefit from the demographic dividend; the north is not ............................... 56 Access to electricity, water and sanitation, and roads is better in the south ....................................... 58 The index of the concentration of productive assets is higher in the south ....................................... 63 Southern zones developed economies of agglomeration owing to more rapid urbanization .......... 65 The Southern zones show higher levels of human capital .................................................................... 70 Agriculture is still the prevailing activity in the north ............................................................................ 73 Other constraints to poverty reduction are generally more binding in the north .............................. 78 After many episodes of conflict in the last decade, conflict is now focused in the upper north ..... 82 Conclusions ....................................................................................................................................................... 85 v Findings ......................................................................................................................................................... 85 A preliminary policy roadmap.................................................................................................................... 87 Appendix A Technical Notes .................................................................................................................... 92 The anomalies in the HNLSS 2009–10 .................................................................................................... 92 Comparing NLSS 2003–04 and GHS 2010–11 and 2012–13: the survey-to-survey method .......... 97 Appendix B Zone and State Summary ................................................................................................. 101 North Central ............................................................................................................................................ 101 North East ................................................................................................................................................. 103 North West ................................................................................................................................................ 105 South East .................................................................................................................................................. 107 South South ............................................................................................................................................... 109 South West ................................................................................................................................................. 111 Appendix C Econometric Results ..................................................................................................... 113 Appendix D Agriculture and Conflicts addendum .............................................................................. 116 The market dynamics of Nigeria’s major crops ................................................................................... 116 Deaths caused by farmer-pastoralist violence in the Middle Belt ...................................................... 118 Map C.2. Deaths Caused by Farmer-Pastoralist Violence, Middle Belt States, Five-Year Increments ...... 118 References .....................................................................................................................................................
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