Nigeria as world’s sixth most miserable?
A recent report on ranking of nations using the Misery Index on the state of living standards appears quite worrisome, particularly to the ordinary Nigerian.
According to the latest Misery Index Report released by one Steve Hanke, an economist from the John Hopkins University, Baltimore, United States of America, Nigeria was ranked as the sixth most miserable country to live in.
In that ranking, two other African countries, Egypt and South Africa were also listed among the top ten most miserable countries in the world, with Venezuela in South America ranked as the most miserable country in the world.
The report further indicated that countries such as Argentina, Iran, Brazil and Turkey make up the top five countries on this misery index classification.
Though this country classification is an effort by an economist or a non-government organisation, the outcome of this research is worth consideration by all well meaning individuals in the countries surveyed, particularly those whose rankings are considered unpalatable. The outcome of the study should be seen as a food for thought for policy makers and that is why this newspaper cannot ignore it.
Conceptually, the Misery Index which was first conceived and designed in the United States of America to give President Lyndon Johnson a snapshot indicator of the state of the economic wellbeing of the ordinary American during his tenure as President of the United States of America, has come to be relied on by many as a useful guide on the performance of economic policy across the world, particularly as it affects the poor.
The latest computation of the index considers the state of three critical economic indicators such as inflation, unemployment and bank lending rate with adjustments made for the percentage change in the growth rate of the country’s per capita income. Putting all these together to get the misery index gives an indication of the quality of life in the concerned society as well as the level of impoverishment or otherwise of the generality of the populace.
Issues of inflation, one of the criteria used in arriving at the misery index, are very critical in the design of monetary policy across the world.
In fact, the main reason why central banks exist, among others, is the maintenance of price stability in the country. Hence the core role of the monetary policy committees of central banks across the world is the maintenance of price stability.
Uncontrolled inflation makes the average worker poorer, particularly for those on fixed wages. If not well managed, inflation often creates a spiral that works against enhanced productivity in the economy with a massive erosion of monetary value in the system. Hence a key measure of the successful performance of central banks across the world is the extent to which they keep inflation at a tolerable level.
For Nigeria, the level of inflation has deteriorated from the single digit that prevailed in 2015, when this administration came into power, rising to as high as over 18 per cent in January 2017, at the height of the economic recession recently experienced in the country.
However, because of a persistent stagnation of the Monetary Policy Rate, (MPR) for about 14 consecutive sessions of the Central Bank Monetary Policy Committee, (CBMPC), the rate of inflation has taken a downward trend and currently stands in the region of 11 per cent. It was only in March 2019 that the MPR was slightly reduced by 50 basis points. The trajectory of inflation in Nigeria over the period could have had an effect on the computation of the misery index for Nigeria.
Besides, poverty in the past few years in the country has been exacerbated by the high rate of unemployment in the country, another factor considered in the computation of the misery index.
Unemployment is at present the most worrisome factor for Nigeria that reportedly weighed heavily against the country in the determination of the state of misery of its people.
Currently, only one in every five graduates of tertiary institutions in Nigeria gets employed. And the situation appears to be getting worse, according to recent reports from the National Bureau of Statistics (NBS) as well as the Minister of Employment and Labour, Chris Ngige.
The current unpalatable growth of unemployment in the country is indeed a time bomb that is already exploding with unpleasant consequences for the state of insecurity and the growth of organised economic activity in the country. We see this already in reports on banditry, kidnapping and insurgency. The consequences are staring us in the face already.
The other factor, the rate of bank lending in Nigeria is considered high by various stakeholders in the economy. This ultimately takes credit availability out of the reach of the small-scale entrepreneur.
Most of the growth in the economies of South East Asia came about with the growth of small and medium scale enterprises. The current bank-lending rate in the country is not considered low enough for the thriving of small-scale enterprises.
However, this is a consequence of trade off in economic policy since the Central Bank keeps the monetary policy rate high to fight inflation and maintain exchange rate stability but which on the other hand, makes credit costly for small businesses.
So, for Nigeria to improve its ranking on this misery index the next time around, these issues have to be addressed. The new administration to be inaugurated on May 29, 2019 should consider the state of the wellbeing of the average Nigerian as a focal point in its policy framework.
Enough of unnecessary rhetoric about “Change” and “Next Level,” which may not deliver the dividends of good governance to the people of Nigeria, across the six geopolitical zones of the country. Nigerians currently deserve better than what they are getting.
The president should hit the ground running as he starts his second term in office. He should not repeat the mistake of announcing and swearing in ministers six months into his term. There are so many issues implied in the 2030 United Nations agenda on the Sustainable Development Goals (SDGs) concerning living standards that government should focus on, to deliver value to the Nigerian people.
The time to address these issues is now. Reason? Democracy cannot deliver any dividends to the people without economic development in the country. That is the essence of the economic democracy model.