2 INTRODUCTION
Nigeria's regional and global
significance
6. Nigeria is the second largest economy in sub-Saharan
Africa (after South Africa) and the biggest economic power in
West Africa, generating two-thirds of the region's Gross Domestic
Product (GDP).[3] It is
Africa's most populous country. Nigeria is a leading member of
the Commonwealth, the New Partnership for Africa's Development
(NEPAD) and the Economic Community of West African States (ECOWAS).
It is also a major contributor to peace-keeping in Africa. The
World Bank describes Nigeria as "a regional giant" and
says that if it could increase its growth and prosperity and make
more progress towards the Millennium Development Goals (MDGs),
this "would translate to gains in social and economic progress
for the whole region."[4]
DFID and the World Bank assess that:
Nigeria's role in strengthening regional integration,
its efforts at financial market integration, at ports and customs
modernisation, to improve access to energy and sustainable land
and water resources, and to align trade regimes to regional agreements
are all important for the region's development.[5]
7. Nigeria is Africa's largest oil producer and the
tenth largest oil producer in the world. However, "corruption
and poor governance mean that [oil] resources are not being translated
into benefits for the poor".[6]
Moreover, a recent report from the UN Office on Drugs and Crime
found that the present instability in the oil-producing Niger
Delta was the "greatest rule of law challenge confronting
the [West Africa] region. It directly destabilises the most powerful
economy in the region, with implications far beyond the Niger
Delta".[7] We discuss
the challenges of oil wealth and the Delta in Chapter 5.
The context for poverty reduction
in Nigeria
SCALE AND DIVERSITY
8. Nigeria's population was estimated to be 148 million
in 2007 (with a growth rate of over 2.8%).[8]
One of its 36 States, Lagos, is itself larger in population terms
than 32 African countries.[9]
Although recent World Bank statistics show an improvement in per
capita GNI from $270 in 2004 to $920 in 2007, more than half the
population lives in poverty.[10]
20% of Africa's poor people live in Nigeria; India and China are
the only countries with more poor people. Without significant
progress in Nigeria, the Millennium Development Goals (MDGs),
which aim to improve people's lives through poverty reduction
and increased access to basic services, are very unlikely to be
met globally. The World Bank's assessment is that "Africa
will fail to meet the MDGs if Nigeria fails, given that one in
five Africans is a Nigerian."[11]
Nigeria is not currently on track to meet any of the MDGs.[12]
9. Nigeria is a diverse and complex country as well
as a large one and donors say that this "creates huge challenges".[13]
One of our witnesses, Dr Raufu Mustapha of the Oxford Department
for International Development, described Nigeria as "a country
characterised by intense ethnic polarisation and conflict".[14]
The north of the country is mainly Islamic and the south Christian.
The World Bank states that Nigeria has 200 ethnic groups and 500
indigenous languages.[15]
Dr Mustapha estimates the number of ethnic groups to be even higher,
at 374. These are divided into ethnic "majorities" and
"minorities". The major ethnic groups are the Hausa-Faluni
in the north; the Yoruba in the south-west; and the Igbo of the
south-east. These three groups represent over half the population.
There are also large minorities such as the Ijaw, Kanuri, Edo,
Ibibio and Nupe.[16]
10. Ethnic divisions contribute to disparities in
wealth and access to services: it has been estimated that a third
of Nigeria's poor are concentrated in the three north-west states
of Kaduna, Kano and Sokoto. Ethnic and religious differences can
also lead to conflict and violence. In July 2009, hundreds of
people died in three northern Nigerian states when followers of
a radical Islamic cleric were involved in armed clashes with security
forces.[17]
GOVERNANCE
11. DFID says that one of the major challenges to
Nigeria realising its full potential is weak governance.[18]
Nigeria was under military rule for more than 30 years between
1967 and 1999. Civilian rule was re-established in 1999 when President
Obasanjo was elected. He served for two terms, until 2007, when
President Yar'Adua took office (although this was only after the
Senate had blocked President Obasanjo's attempt to secure a third
term). This was the first peaceful transition from one democratically
elected government to another in Nigeria's history, although it
followed what were widely recognised as seriously flawed elections.[19]
12. The legacy of military rule is institutional
weakness and lack of capacity at all levels. There is a very low
base of public finance management skills and no cadre of experienced
civil servants. When civilian rule began again in 1999, some states
had no budgeting system in place because military governors had
felt no need for them. Governance structures have been corroded
and systems for basic service delivery and infrastructure are
lacking.
13. Nigeria has a federal structure which DFID says
"has contributed to the survival of Nigeria as a cohesive
nation".[20] The
country is divided into six regional zones and 36 States.[21]
The State governments spend 50% of public funds and have a high
degree of autonomy. They take lead responsibility for delivery
of basic services, together with the 774 local government areas
(LGAs) within states. This is, however, hampered by a lack of
coordination and cooperation between the three tiers of government.
States are not required under the constitution to account to the
Federal Government for the use of the funds allocated to them.
The quality of State and local governments varies but is assessed
as being "characterised by particularly weak institutional
capacities". The Country Partnership Strategy identifies
the main deficiencies in government as:
- limited transparency and accountability
in public resource management at all levels of government, exacerbated
by weak sanctions;
- low capacity of the civil service to implement
programmes;
- an ineffective judicial system;
- limited effectiveness of State assemblies;
- an absence of social accountability mechanisms
to give voice to citizens' views on government services.[22]
Infrastructure and basic services
14. The inadequacy of infrastructure to support provision
of basic services is a major obstacle to growth in Nigeria. The
power sector is a particular problem. For its 150 million people,
Nigeria manages to generate around 1,800-2,000 megawatts (Mw)
of electricity, the equivalent of the power consumption of the
city of Bradford in England which has a population of 300,000.
By comparison, South Africa has a generation capacity of 45,000
Mw for its population of 48 million.[23]
Lagos is a vibrant and dynamic city which contributes 12% of Nigeria's
GDP. It is also chaotic: its infrastructure was designed for 1
million people but supports a population of 15 million which is
expected to reach 20 million by 2010, when it will overtake Cairo
as Africa's biggest city and become one of the ten most populated
cities in the world. [24]
15. 55% of Nigeria's population live on less than
$1 a day; 29% of children are under-weight; less than half the
rural population has access to a safe water supply.[25]
The World Health Organisation (WHO) has ranked the Nigerian health
system 187th out of 191 member states. Nigeria is off-track on
all the health-related MDGs. Child and maternal mortality rates
are extremely high, especially in the north of the country. One
in every five children dies before the age of 5. Only 20% of children
are fully immunised. Nigeria is also only one of only four countries
globally where the polio virus is still circulating. Both DFID
and Save the Children characterise Nigeria's primary health care
services as being in a state of collapse.[26]
Nigeria remains off-track on both education MDGs (achieving universal
basic education and eliminating gender disparity in primary and
secondary education). Nigeria has the most primary age children
"out of school" of any country in the world, currently
estimated at 8 million. The primary education net enrolment rate
is around 63% and has improved only a little in the last decade.[27]
Oil
16. DFID describes Nigeria as "a classic example
of a resource-dependent developing country." It says that
"the discovery of oil in the 1960s, and the subsequent mismanagement
of the revenues have had a profound impact on economic growth,
the political economy and on the relationship between citizen
and state."[28]
The negative impact of resource wealth (often known as "Dutch
disease") arises from large inflows of foreign capital and
resulting high currency exchange rates, which makes manufacturing
non-competitive and encourages de-industrialisation. In resource-rich
states, politics and public services also frequently become entangled
with business interests, which feeds corruption and mismanagement.[29]
DFID points to Nigeria's "oil curse" as the cause of
its many years of political and economic instability including
30 years of military rule.[30]
17. Oil provides 85% of government revenue and over
95% of export earnings and is therefore the dominant factor in
both the economics and the politics of the country.[31]
The World Bank points to systematic and prolonged mismanagement
of oil revenues, which has "fuelled corruption, undermined
trust and ultimately held development back".[32]
The oil sector provides few jobs for Nigerians: it accounts for
around 40% of GDP, but employs less than 1% of the workforce.[33]
We were told during our visit that there is a pervasive view that
the country has been blessed with oil and that there is therefore
no need to do anything else to generate economic activity. The
value of oil wealth also has to be put in perspective. Revenue
even from 2.5 million barrels a day (a target which is not being
reached at present) is about $150 million a day (with the oil
price at $60 per barrel). With a population of 150 million, this
is barely $1 per person per day. In 2006, estimated GDP was over
$100 billion but this equates to less than $800 per capita.[34]
18. Nigeria has also been hard hit by the global
economic downturn and the resulting reduction in world oil prices,
which fell from a peak of $147 a barrel in July 2008 to a low
of $40 in early 2009.[35]
This has been compounded by a fall in output arising from increased
instability in the oil-producing Delta region. Monthly oil revenue
fell to $1 billion in January 2009 from an average of $2.2 billion
in 2008.[36] DFID asserts
that the global economic crisis has heightened the challenges
to growth, development and poverty reduction which Nigeria already
faced and which it believes "still emanate from within Nigeria."[37]
These challenges are demonstrated at their most extreme in the
Niger Delta where criminality, political power struggles and genuine
grievances of local people about lack of basic services all interact,
fuelling violence and insecurity.[38]
After a brief lull following the 2007 elections, conflict in the
Delta has re-emerged as a major security threat, with kidnappings
of both Nigerians and foreign nationals and attacks on local communities
and oil installations.[39]
Debt relief
19. In September 2005, Nigeria received the biggest
ever debt relief package from the so-called "Paris Club"an
informal group of the world's richest countries, including the
UK. The debt relief deal was worth $18 billion and represented
a reduction of about 60% of Nigeria's overall debt to the Paris
Club of about $30 billion.[40]
The UK's share of the debt relief was £2.85 billion.[41]
Nigeria's external debt now stands at less than 4% of GDP.[42]
20. The Paris Club debt deal generated annual savings
of US$1 billion. US$750 million of this goes to the Federal Government
budget and US$250 million to the States. The federal share is
used to boost efforts to meet the MDGs and is ring-fenced in a
"virtual poverty fund" which allocates resources to
specific projects and programmes including in health, education,
water and social safety net programmes. The Federal Government
also uses Debt Relief Gains to improve service delivery and strengthen
inter-governmental co-operation through the Conditional Grants
Scheme for States.[43]
In Abuja, we met the Senior Special Assistant to the President
on the MDGs whose office oversees expenditure from the debt relief
gains. She gave us some examples of how the money had been spent
including: training and recruitment of 40,000 new teachers; and
the construction of 57 new primary healthcare centres.
DFID's Programme
21. DFID's budget in Nigeria for 2009-10 is £120
million having risen from £32 million in 2003-04.[44]
Since 2005, DFID has operated a joint Country Partnership Strategy
(CPS) with the World Bank.[45]
A new CPS, which will cover the period to 2013, and in which the
African Development Bank (AfDB) and the United States Agency for
International Development (USAID) will also participate, was approved
by the World Bank board on 28 July 2009, following earlier approval
by DFID and the other partners.[46]
The 2005-09 CPS supported Nigeria's own priorities for development
and focused on economic growth and poverty reduction; improving
governance and accountability; and improving human development,
particularly in health, education and HIV/AIDS.[47]
The new CPS has a similar focus "to transform and diversify
Nigeria's economy" by improving governance; maintaining non-oil
growth; and promoting human development.[48]
22. 75% of DFID's expenditure in Nigeria is on technical
assistance; 20% is spent on MDG-related projects; and 5% goes
to civil society organisations. 60% of expenditure is at State
level, where the main responsibility for delivery of services
lies.[49] DFID established
an office in Abuja in 2001 and now also has regional offices in
Enugu, Lagos and Kano States.[50]
Kano and Lagos are the two largest States in Nigeria which between
them contain 15% of the national population.[51]
23. Few other bilateral donor agencies operate in
Nigeria. The biggest donors are the World Bank, USAID, the AfDB
and the European Commission.[52]
Nigeria is not an aid-dependent country: indeed aid represents
less than 1% of GDP. This compares to a sub-Saharan African average
of 10%. DFID says that this influences the way it operates in
the country: it seeks to leverage better use of Nigeria's own
resources rather than focusing on transfer of resources.
[53]
24. DFID has programmes in a limited number of Statescurrently
four"which have demonstrated commitment to reform
and to poverty reduction".[54]
Gareth Thomas MP, the Minister of State for International Development,
told us that DFID certainly did not choose to work only in the
States with the fewest problems or the best governance: the States
in which it worked had "significant challenges". However,
it was necessary for DFID to avoid the risk of spreading its impact
too thinly and to operate where its resources would have the most
impact.[55]
25. The Minister's view was that DFID's strategy
of picking a few states in which to work at a "deep level"
was the correct one and should continue:
Our judgment has been that it is clearly more
sensible to work in those states and with those institutions that
are most keen to have access to expertise and advice and who are
most committed to trying to tackle poverty in their areas. That
has certainly informed the choice of states where we have worked.
I do not think you can say that Kano state or Jigawa state are
amongst the most well off states.[56]
However, the new Country Partnership Strategy points
out that the lead state approach raised issues in relation to
the "geopolitical balance" among Nigeria's six regions
and that, for this reason, the partners will move away from a
single set of lead states. Instead, "state selections will
be based on states' needs, agreement with Government, state level
governance capacity and commitment, geopolitical balance"
and existing programmes.[57]
Mr Thomas highlighted that DFID was working at some level in 21
out of the 36 States. We saw the example of a community policing
project during our visit which is being implemented to some extent
in 18 States.[58] The
Minster asserted that DFID had shown a willingness to respond
positively to specific requests from the Government to extend
programmes to States beyond the focus ones.[59]
He believed that DFID's success in its focus States could have
a wider effect in terms of sharing experience and learning lessons,
both through DFID's relationship with the Federal Government and
from States learning from each other.[60]
26. In such a vast and diverse country, we believe
that DFID is right to focus on a limited number of States where
the standards of governance are sufficient to permit an aid programme
to operate at a meaningful level and have a significant impact.
These focus States need to be chosen carefully and to reflect
DFID's overriding priority of poverty reduction. The Federal Government
and the focus States should be encouraged and supported to share
information about successful programmes so that other States can
replicate them using their own resources.
3 Q 174 Back
4
Country Partnership Strategy 2005-09, para 1 Back
5
Country Partnership Strategy 2009-13, para 25 Back
6
Ev 85 Back
7
Transnational Trafficking and the Rule of Law in West Africa:
a threat assessment, UN Office on Drugs and Crime, July 2009,
Executive Summary, p 8 Back
8
World Bank country statistics on Nigeria, available at www.worldbank.org Back
9
Country Partnership Strategy 2005-09, Executive Summary Back
10
World Bank country statistics on Nigeria, available at www.worldbank.org Back
11
Country Partnership Strategy 2005-09, para 25 Back
12
Ev 52 Back
13
Country Partnership Strategy 2009-13, para 39 Back
14
Ethnic Structure, Inequality and Governance of the Public Sector
in Nigeria, Dr Raufu Mustapha, November 2006 Back
15
Country Partnership Strategy 2009-13, para 39 Back
16
Ethnic Structure, Inequality and Governance of the Public Sector
in Nigeria, Dr Raufu Mustapha, November 2006 Back
17
"Islamist sect leader shot dead after 600 killed in Nigeria
siege" The Times, 31 July 2009 Back
18
Ev 52 Back
19
Ev 51 and 54; see also Country Partnership Strategy 2009-2013,
para 1 Back
20
Country Partnership Strategy 2005-09, para 31 Back
21
See map at Ev 51 Back
22
Country Partnership Strategy 2009-13, para 40 Back
23
"A long embrace with the dark", Financial Times,
21 July 2009 and World Bank country statistics Back
24
Ev 93, 95; Country Partnership Strategy 2009-13, para 32. See
also "Everyone's sleeping with one eye open; what's it like
to live in the middle of a population explosion?", The
Guardian, 9 May 2009 Back
25
Country Partnership Strategy, 2005-09, para 34, Table 1 Back
26
Ev 61 and Ev 80 Back
27
Ev 85 Back
28
Ev 86 Back
29
Country Partnership Strategy 2005-09, Box 1 Back
30
Country Partnership Strategy 2005-09, para 26 Back
31
Country Partnership Strategy 2009-2013, Executive Summary, para
1 Back
32
Country Partnership Strategy 2005-09, para 27 Back
33
Ev 54 and 91 Back
34
FCO Nigeria Country Profile Back
35
Country Partnership Strategy 2009-13, para 10 Back
36
Ev 90 Back
37
Ev 90 Back
38
Transnational Trafficking and the Rule of Law in West Africa:
a threat assessment, UN Office on Drugs and Crime, July 2009,
Executive Summary, p 8 and p 72 Back
39
Ev 70 Back
40
"Paris Club agrees on a comprehensive treatment of Nigeria's
debt", Paris Club press release, 20 October 2005 Back
41
DFID, Statistics on International Development 2007 and 2008. The
UK cancelled £1,649 million in 2006/07 and £1,135 million
in 2005/06. See also DFID Millennium Development Goal Factsheet
on Debt, November 2008 Back
42
Ev 65 Back
43
Ev 65 Back
44
Ev 53; Country Partnership Strategy 2005-09, para 15 Back
45
World Bank Group and Department
for International Development (UK) Country Partnership Strategy
for the Federal Republic of Nigeria (2005-2009), 2 June 2005 Back
46
Ev 86 Back
47
Ev 54 Back
48
Country Partnership Strategy 2009-13, Executive Summary, para
6 Back
49
Ev 86 Back
50
Ev 54 Back
51
Ev 87 Back
52
Ev 54 Back
53
Ev 56 Back
54
Ev 56; Q 106 Back
55
Q 107 Back
56
Q 145 Back
57
Country Partnership Strategy 2009-13, Executive Summary, para
12 Back
58
Ev 106 Back
59
Q 106 Back
60
Qq 107-108 Back
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