The Millionaire Craze In Nigeria
There’s a worrying trend in Nigeria. It’s the craze, the obsession of politicians with making millionaires. The governor of Imo state in announcing his contribution to the state prior to its 40th year anniversary boldly stated “I’ll make 40 millionaires before Imo turns 40.”
Two years to this announcement, a former head of state in citing his achievements to the nation was joyous at creating 25 billionaires within the country. These two men are not unique instances in the nation, the Federal government recently defended its tomato policy on the account of the ‘tomato millionaires’ to arrive from such a scheme. It’s a governmental ideology, the government’s way of solving poverty.
Creating millionaires, billionaire’s even feels fishy as a government plan, irrespective of how noble it seems. It perpetuates inequality — the classic rich getting richer and poor getting poorer. What else is expected of a plan that creates 25 affluent individuals, while leaving over a hundred million Nigerians destitute? Disparity reeks in a state that focuses on making 40 wealthy persons, while leaving other citizens behind.
This ideology has seen Nigeria as a nation flunk on every wealth disparity gap there is. In terms of wealth per person, G.D.P. per capita, it is 121st on the list. On the gini inequality index, it has a score of 48.6 on inequality, keeping it amongst the top 20 most inequitable nations. No Nigerian needs these statistics to know that wealth is synonymous to a V.I.P. club in the nation.
With such a bad rap, and a lot of key indicators signifying an issue with the ideology of economic plans, there’s need for a paradigmatic shift in the philosophy of poverty solution. The current value system has however been defended by the government’s belief in trickle-down economics. That wealth from one prosperous individual would trickle down to those on meagre incomes, in terms of jobs and spending on the economy.
The problem is, the economics of it all, is rarely that simple. Whenever the government interferes with the market to create wealth, there are blowback consequences. Dangote is a good case in point. His wealth has been intensified by the government’s decision to place an embargo on cement, sugar and recently tomatoes, making him the major sole supplier of vital raw materials for an entire nation. There are consequences for such an action.
At face value, the effect of such a decision seems positive when weighed with Dangote Plc employment figures. Peering into the matter closely, brings about some worrying scenes. For one, a comparison of current prices of cement and sugar with global costs show the true picture. In both commodities were the Federal Government have interrupted the markets to produce a billionaire, the charts below show that the entire nation has paid for it.
Nigerian homeowners, developers and construction companies are paying considerably more per 50kg of cement than their global counterparts. This is a direct effect of the government creating a billionaire in the cement industry. Since cement is a vital raw material for the construction sector, this policy has driven up costs massively for businesses in the real estate sectors.
The narrative also extends to sugar. The cost of sugar per metric ton in Nigeria is double the global cost. Manufacturers of beverages (both soft drinks and alcohol), pastries, restaurants, bakeries are seeing increased cost from sugar. While Dangote made a fortune from sole production of sugar, multiple businesses are losing fortunes due to outrageous costs of a global commodity perceived as cheap.
Increased costs by businesses leads to negative effects on the economy. Producers would prefer to offload the higher costs on consumers by increasing their prices in order to keep their profit margin. More often than not, this is difficult due to competition of cheap imports. This keeps businesses with two options, either to sustain a reduction in profit margin, or reduce cost of labor. Retrenchment or pay cuts has been the popular option, due to the other combined challenges of owning a business in Nigeria. The job loss and pay cuts over numerous industries caused by the interference outweighs the jobs produced by one business.
Alhaji Dangote’s case is neither unique nor peculiar. The provision of special privileges to a single individual or group with the view to create wealth, leads to deleterious consequences on a national economy. That does not mean that the poor should be left to wallow in suffering. It rather shows the need for a distributive economic policy. A distributive economic policy is one in which those counted among the poverty rate of 53%, see continuous change in their entire demographic, reducing the income inequality gap.
Economics in the 20th century brought about progressive taxes, minimum wages, social transfers and other forms of income redistribution techniques to bring about a solution for the world’s poor. Of this techniques that occur, the only technique applied in Nigeria is progressive taxation. As for minimum wages — At a low value of ₦18,000 — according to Vanguard Nigeria just two of thirty-six states in Nigeria are paying the minimum wages. The laws of the land state that firms with less than fifty employees need not pay the minimum wage.
A Lottery Is Not The Answer
The opening solution to tackling poverty starts with income redistribution techniques. A working and reasonable minimum wage, state funded programs for low income earners, investment in both health and education sectors are the opening methods to assist the poor. This plans are funded by taxes from the wealthy and elites. It’s time for Nigeria to start investing in its people, poor and rich. Global conditions have showed that this helps reduce global disparity, but not fully.
21st century economists however realize the solution to aid the less privileged also involves redistributing the sources of wealth. As Kate Raworth notes what should be shared is “the wealth that lies in controlling land and resources, in controlling money creation, and in owning enterprise, technology and knowledge.” In other words, resources for creating wealth — land, capital — needs to be shared equitably to vivacious entrepreneurs in the nation.
A good example is the ease of credit, the Bank of Industry is meant to assist Small and Medium Scale Enterprises. Its stringent conditions of a guarantor with over five million naira, and high interest rates, ensures the poor are disenfranchised in the credit scheme. A philosophy that seeks to aid everyone, would ensure the keys to resources of capital are less stringent. That way poor enterprising Nigerians have an equal share to resources for wealth creation.
Moving away from a lottery scheme to an economy that shares wealth more equitably amongst all those who help to generate it, poor and rich alike, is imperative for the Nigerian Economy.
