ON INEQUALITY IN NIGERIA

LINKING THE EVOLUTION OF INEQUALITY IN NIGERIA TO THE RESPONSE OF POVERTY TO GROWTH

Zuhumnan Dapel
Abstract

There is a widespread perception of a growing gulf in Nigeria between the poor and the nonpoor – that the rich are getting richer and the poor, poorer. And that this is standing in the way of the poor from sharing in the benefits of economic prosperity, thus, preventing many of them from escaping poverty. This paper presents a shred of counter-evidence. For instance, between 1980 and 2010 the GDP per capita of Nigeria rose by 18.92%; but at the same time the rate of absolute poverty rose by 62.76%; and the level of inequality – measured in terms of Gini Index – declined by 35.66%. The picture being painted by these stylized facts raises at least three questions: (a) over the past three decades, how has inequality in Nigeria evolved: has it be rising or falling? (b) What are the forces driving the change in the country's level of inequality? (c) If at all, does rising inequality erodes growth-driven opportunity for poverty reduction?

Using survey-based datasets that together spanned 1980-2010 and employing various measures of distribution, I show that Nigeria is less unequal in recent times than it was about three and a half decades ago. And that the decline in the level of inequality was driven by (i) series of economic contractions coinciding with the late 1970s and early the 1980s busts in world oil price in that the rich were losing more than the poor, (ii) higher redistribution of welfare among the non-poor than between the rich and the poor: the level of within-group inequality is higher than between-group inequality's. (iii) The attainment of ‘pro-poor’ growth that correspond with the country’s return to civilian rule in 1999 which was accompanied by a series of reforms in key sectors of the economy, especially, the revamping of the financial system.

[This is a summary version of a working paper. Pls stay tuned] Blog by @dapelzg