Nigeria high poverty indices like Nigeria, the consumption within

Nigeria is
experiencing the highest level of poverty it has experienced in a while. The
National Social Safety Nets Coordinating Office (NASSCO) has decried that
Nigeria is not only experiencing high level of poverty, but the income
distribution is extremely unequal. This is detrimental for any economy, and
especially for a less-developed country like Nigeria, it can pull Nigeria into
a recession that will be hard to get out of. The Nigerian government has to
decide whether to implement demand-side or supply-side policies to help improve
both the poverty indices, and the income distribution.


is defined as the state in which a person lacks the financial resources and
essentials needed to afford basic goods and services. If a country has high
poverty indices like Nigeria, the consumption within the economy drastically
decreases since consumers are unable to afford many goods and services. This
can lead to an economic recession, in which the economic activity is close to

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The National Coordinator
Mr. Papka stated that a major reason for these high levels of poverty are due
to the poor income distribution. The national income is divided very poorly
among Nigeria’s consumers, meaning that the gap between the wealthy and the
poor is extremely big. This income inequality has been stressed, and it is one
of the biggest problems that Nigeria faces. However, Mr. Papka noted that
although the poverty indices are high, and the income is distributed unequally,
Nigeria has been experiencing relative high and stable economic growth in
recent years. In recent years, the monetary value of all the finished goods and
services produced within Nigeria has increased. In other words, Nigeria’s Gross
Domestic Product (GDP) has been increasing at a stable rate. Still, to further
develop Nigeria’s economy, The highest quintile of consumers alone currently
holds an astonishing 54% of the total wealth, while the lowest quintile
accounts for only 4.4% of the total wealth in Nigeria. This can be shown in the
following diagram:











There are many
negative consequences that come with an unequal income distribution, the most
obvious one being the increase in poverty levels. Poverty itself has many
negative externalities as well. Poverty is a difficult cycle to break, and it
is often passed from one generation to the next. This means that unless the
poverty cycle is broken, there will be low consumption. This is harmful for the
economy; as low consumption stifles economic growth. Apart from economic
consequences, there are many social consequences as well. Typical consequences
of poverty include alcohol and substance abuse; less access to education; poor
housing and living conditions and increased levels of disease. In addition,
heightened levels of poverty are likely to cause increased tensions in society
as inequalities are realized. These issues often heighten crime rates in
communities affected by poverty.

the economy will not fix itself due to low consumer and producer confidence, it
is the government’s job to intervene, and implement policies that will decrease
the poverty rates, and thus improve the income distribution in Nigeria. For the
government to work towards eradicating poverty, they have to find a way for
communities to work together to implement strategies that improve living
conditions of the poor. Since poverty means that people struggle to afford
basic necessities, consideration must be given to ideas such as installing
wells that provide access to clean drinking water; educating farmers how to
produce more food; constructing shelter for the homeless; building schools to
educate and retrain the disadvantaged communities and providing enhanced access
to better health care services by building medical clinics and hospitals. All
these policies fall under either demand-side or supply-side policies. Demand
side policies are attempts made by the government in this case to increase
aggregate demand in order to increase output, employment, and inflation. Supply
side policies are aimed at increasing the aggregate supply, which can lower the
natural rate of unemployment, and enhance the productive capacities of an
economy while improving the quality and quantity of the four factors of
production. Supply-side policies are long term policies and although they
affect a country’s potential output, they take time to actually have an effect
on an economy. Demand-side policies are more short term policies that affect a
country’s actual output, but in order for an economy to really experience
sustainable economic growth, supply-side policies are needed. Demand-side
policies are needed however, since they are faster in increasing consumer
confidence in an economy and increasing the actual output. Nigeria has to find
the correct balance between supply-side and demand-side policies in order to
improve income inequality, and experience economic growth.