What’s the Sharing Formula?
The idea of the federal government to share the $322m loot recovered from Gen. Sani Abacha. In this report, Shola Oyeyipo examines the issue of questionable database on the likely sharing formula
The journey to economic prosperity in Brazil was not without some hard choices. One of such, however, was the conditional grant to some indigent citizens of the country, which helped families to lift above their unfortunate status of dwelling below poverty line. The conditions were clearly spelt out to each family, depending on what the challenge in that family was at the time.
Today, Brazil fares better even though several other development initiatives had been taken to complement this unconventional approach to economic prosperity. Thus, whenever the story of Brazil’s economic prosperity is told, that singular initiative always takes the front row. However, it turned out a huge success because it was devoid of any iota of political influence or manipulations.
In Nigeria too, today, different shades of opinions had attended the debates that followed the decision by the federal government to share the $322 recovered loot from the late General Sani Abacha, and most of them have raised genuine questions on the rationale behind the idea.
The government had said through the Special Adviser to President Muhammadu Buhari on Justice Sector Reforms, Mrs. Juliet Ibekaku-Nwagwu, that it would invest the money on social development programmes, which would entail giving money to 300,000 poor families through Conditional Cash Transfers (CCT).
The Minister of Finance, Kemi Adeosun, expatiated further that the objective of the National Social Safety Nets Project is to provide access to targeted transfers to poor and vulnerable households under an expanded national social safety nets system.
A representative of the National Cash Transfer Office (NCTO), Tukur Rumar, also hinted that the federal government would begin the disbursement of the loot to over 300,000 poor households in 19 states of Niger, Kogi, Ekiti, Osun, Oyo, Kwara, Cross River, Bauchi, Gombe, Jigawa, Benue, Taraba, Adamawa, Kano, Katsina, Kaduna, Plateau, Nasarrawa, Anambra and internally displaced camps (IDPs) in Borno this month.
While only a few people have supported the idea, a majority of commentators consider the policy as a way to further mismanage the recovered money, because government cannot boast of reliable database to determine who are the extremely poor in Nigeria and where they are.
This further accentuated the fears that no matter how carefully the beneficiaries are selected, so many vulnerable Nigerians would still not be captured in the programme, either because of their locations or because they are not captured on any known data.
One question that has therefore not really been answered is: what is the sharing formula? It is good to ask that and there should be an empirically proven answer. The reason is simply because there would be need to query the criteria that are used to arrive at the so-called vulnerable Nigerians.
Aside the argument on whether it was wise to use the money the way government intends or not, there must established calculations to arrive at any conclusion on who is poor and vulnerable.
Problem is that the poverty cycle in Nigeria is dynamic. It is a consistently rising scourge and it is estimated that about 100 million people live on less than a $1 (£0.63) a day. Even where there is visible economic growth, the details by the National Bureau of Statistics (NBC) show that poverty has continued to rise in Nigeria, despite improvement in the economy.
In a report by the NBC in 2010, 93.9 per cent of the respondents personally consider themselves poor compared to the 75.5 per cent figure that came by six years earlier. This buttresses the argument that it may not be ideal for government to correctly determine peoples’ poverty level. It means given an option to classify themselves as poor and entitled to the ‘loot,’ more families than 300,000 will apply to be part of the sharing formula.
Another option is that since the looted fund belongs to every Nigerian, the argument therefore suffices that it should go round every citizen. But that argument will fall flat on its face, when subjected mathematical scrutiny. A simple arithmetic to drive home this point applies. The latest recovered Abacha loot is about N116bn. When this is divided by about 180 million Nigerians, it will give each person a paltry N644.4. So, that cannot even be an option.
The unreliability of the first option of sharing it with 300,000 indigent families and even the second option of spreading it among everybody is why Nigerians have been asking what is informing the idea of sharing the money at this time and age.
This is the more reason the federal government has been criticised and advised to rather invest the money in tangible and productive investments or critical infrastructure capable of alleviating poverty on a long term basis.
The Deputy Director, Socio-Economic Rights and Accountability Project (SERAP), Timothy Adewale, who reacted to the proposal, disagreed with the federal government on plans to share the Abacha loot among estimated 300,000 households, describing it as “mis-targeted” and that it would not bring any tangible benefits to the beneficiaries.
While a majority of those, who have contributed to the discussion held the views that the idea of sharing the loot was covertly targeted at impressing the electorate ahead of the 2019 presidential election, members the House of Representatives, took a more decisive step when they moved to stop the policy.
During Tuesday plenary, the lower chamber of the National Assembly started processing a bill, which sought to use the $322 million (or N101.26 billion) Abacha loot to fund the Ajaokuta Steel company and railway line.
Some few days before, the lawmakers passed a resolution urging President Muhammadu Buhari not to go ahead with the plan to share the $322 million to 302, 000 poor households in 19 states without database.
The bill to instead use the fund to activate the abandoned Ajaokuta Steel Company and railway projects in Nigeria is more in line with the thinking of most Nigerians, who feel the recovered money is better spent on developmental projects.
Presidency’s explanation that the decision to share the recovered $322million Abacha’s loot to the poorest of the poor Nigerians was due to the Memorandum of Understanding (MoU) signed with the Swiss government and the network of Civil Societies (CSOs), has made no difference to most Nigerians.
Going by latest findings by the Washington-based Brookings Institution that Nigeria has gone past India with a larger number of extremely poor people, leaders must not feign ignorance that only investment in human capital development and infrastructure development is the best way to go.
It’s a known fact that infrastructure will always have higher rates of economic growth and productivity returns and it is capable of retaining multiple values of the funds in the system over a longer time, than sharing the money.
The government can take a cue from the position of the Director, African Department of the International Monetary Fund (IMF), Abebe Aemro Selassie, who has always advised the federal government to give priority to investment in infrastructure in order to address the high level of poverty in Nigeria.
“For the government’s objective of addressing poverty, you need infrastructure investment to be able to do that, you need to build more schools and you need to invest more in health and education. All of these require resources,” he opined.
The World Bank believes that there is the need for accelerated investment in human capital in Nigeria in order to secure future economic growth. Therefore, the idea of sharing money, conditional grants regardless sounds primitive and because of the tendency to be hugely influenced politically, it is better not to travel that route than fail abysmally.