The federal government has reiterated its commitment to lifting 100 million Nigerians out of poverty in ten years, with a well-researched framework for implementation and funding. That framework is tagged the National Poverty Reduction with Growth Strategy (NPRGS).
President Muhammadu Buhari recently launched the steering committee of NPRGS led by Vice-President Osinbajo. The NPRGS has proposed to establish a private equity fund to ensure adequate mobilisation of funds and sustainable management of resources for the elimination of poverty.The President explained that the NPRGS would address the underlying causes of poverty in various geopolitical zones in the country. The proposed fund would pilot the mobilization of capital and its management for poverty elimination.
The President also said the whole programme is geared towards eliminating poverty in the nation. His words: “If India can lift 271 million people out of poverty between 2006 and 2016, Nigeria can surely lift 100 million out of poverty in 10 years. Fortunately, we have already started but we need to unlock the challenges of slow implementation, inappropriate targeting and absence of adequate resources”.
Private sector funding is one tested way of eliminating poverty through the principal means of job creation. It is jobs and skill development that can lift people in their numbers from the shackles of poverty.
Availability of jobs will assist in creating a better living standard while also enhancing national development through the payment of tax to the government. The growth of SMEs depends on the funding, encouragement and assistance they get. This will lead to higher revenue and provide the multiplier effect for the economy to grow. Jim Yong-Cai who is the head of the International Finance Corporation (IFC) states that,
“90 per cent of the developing world’s jobs are created in the private sector, and private equity investment is an especially effective tool in building the dynamic, job-creating companies that drive economic growth.”
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The IFC has clearly underlined the importance of private equity funding as a major instrument for economic growth. In 2005, China was a recipient of an investment of $18 million in private equity funds. By 2012, this investment, in turn, led to the creation of 116,000 jobs. The funds do not come just from aid enterprises like the World Bank, the private sector is also culpable establishing them. It can equally be achieved in a joint effort between the government and the private as planned by Nigeria.
This type of instance can be seen all over Africa. London-based Helios Partners has acquired its first fund concentrated on Africa accounting for more than one billion dollars. Located in Kenya, Catalyst Principal Partners concentrates on medium organizations in eastern Africa and has acquired a 125 million dollar fund. Unlike charity, the enticement of private equity funding is seen in the significant returns on investment.
In order for economic growth to occur, there is a vital role for private equity funding to play. These kinds of investments offer unique solutions in the war to eradicate poverty.
It should be noted that private equity investments are not the grand saviours. The returns on the profit of the private industry can lead to disparity in income. Its role in developmental works involving healthcare and education requires stability and control. It is the responsibility of “governments and international development organizations” to enforce fairness in revenue and opportunity whilst also ensuring that the nation’s interests are protected.
Side by side with private equity funds, public sector aid is also needed in eradicating mass poverty, in particular from federal governments who should assist the local governments to penetrate the stock markets.
Over the years, countries like India and China have been able to eradicate mass poverty in their respective countries. Between 1990 and 2009, the years that are indicative of the most significant decline in poverty, the world population in urban slums also reduced from 47% to 33%. This period saw three countries ascend from mass poverty to mid-income rich nations. They include India, Brazil and China. The populace in urban slums declined from 55% to 24%, 37% to 22% and 44% to 25% respectively.
The three economies also had significant growth in urban infrastructure which involved better water access and hygiene facilities, creation of long-lasting housing and adequate living areas whilst also providing stable electricity to mention but a few. In India, the World Bank states that 70% of the nation enjoyed electricity in 2007. This number became 93% in 2017. This became the principal reasons behind the cut in poverty that favoured a majority of the populace.
Having seen the reduction in poverty levels that took place in countries like India and China, what can Nigeria as a nation learn from them? Firstly, China has impressed in their efforts to eliminate poverty as they allocated a significant amount of funding to their efforts. In order to achieve success in goals set out for the 2016-2020 poverty elimination plan, the Chinese regime allocated a significant amount of 13 billion USD to tackle poverty in 2019. These funds differ from the 51 billion euros also promised by the Development Bank of China to assist the plan.
Nigeria must also strive to adopt a similar strategy. Every method of funding must be explored to raise adequate funds to tackle poverty. Programs aimed at assisting the poor can only carry on if governments possess higher access to funding.
Furthermore, the Chinese in their 30 years of economic change has made the development of infrastructure their number one objective. Between 1984 and 2008, China significantly invested 56 billion USD in transport (rail and road). This was to create a vast interconnection of roads whilst connecting rural parts to towns for stress-free movement of persons and agricultural produce.
Subsequently, Nigeria possesses significant infrastructural debt amounting to 14.2 billion USD intended to be spent annually for the following decade. The majority of the deficit is in the transport (road and rail) and energy sector. On the other hand, India is a nation that puts innovation on a pedestal.
It does not depend on one commodity like Nigeria as its major profit earner are exported commodities amounting to more than 5,000. Most of these commodities are created, packaged and exported by an average Indian within mid-sized companies. Furthermore, MSE’s in India are responsible for over 44% of the nation’s exports. Amongst emerging nations, India possesses one of the best regulations and frameworks for MSE’s.
The Indian regime takes innovation or ideas that could promote export very seriously. It makes use of encouragement, assistance and stimuli to promote export. This in turn has had a trickle-down effect as it has motivated many Indians to manufacture and export their commodities. Having seen countries like India and China reduce poverty in their respective countries, it is imperative that the Nigerian government draw lessons from them and use a number of those measures to lift its citizens out of poverty.