beyondbrics

While Nigeria’s government powers ahead on its path to reform, large swathes of the population are getting left behind.

On Sunday, the FT reported that electricity tariffs in Nigeria were set to increase by up to 88 per cent, with most customers seeing a 50 per cent hike in their bills. A survey released on Monday, meanwhile, finds that the proportion of Nigerians living in absolute poverty rose to 60.9 per cent in 2010 – in spite of strong growth in Africa’s most populous country.

Nigeria currently sells power at one of the cheapest rates in Africa. Yet in spite of its large reserves of natural gas, the country’s electricity supply is among the world’s worst. Half of the 160m population lack have no access to electricity and its per capita consumption is just 3 per cent of that of South Africa, the continent’s only larger economy.

It is hoped the tariff hike will rejuvenate the country’s ailing power sector and entice foreign investors. But it comes only shortly after President Goodluck Jonathan’s decision to remove fuel subsidies – causing petrol prices to more than double – which sparked nationwide protests in January, and ultimately a part-reversal.

Jonathan will be hoping that this move will prove less controversial, by insulating Nigeria’s poorest from the brunt of the increases. The FT reported that Bart Nnaji, the minister of power, said in an interview in Abuja: “We are making sure that the urban poor and rural dwellers be provided a subsidy so that they don’t see a significant increase in tariff… The rest should be able to pay for it.”

The government’s confidence could be undermined, however, after a report from Nigeria’s national bureau of statistics revealed that the proportion of Nigerians living in absolute poverty – that is, those who can afford only food, shelter and clothing – jumped to 60.9 per cent in 2010 from 54.7 per cent in 2004. Of a population of 167m, 100m live on less than a dollar a day.

This belies the country’s strong GDP growth over recent years. In that same period, GDP grew more than120 per cent, from $87.8bn to $193.7bn, according to the World Bank. That well outstrips population growth of 16 per cent.

Which suggests income distribution has become sharply more uneven over the six years measured – a problem the report suggests is likely to get worse still:

The results of the HNLSS 2010 as contained in the Nigeria Poverty Profile 2010 Report indicate that poverty and income inequality in Nigeria have increased since 2003/2004. In addition, NBS estimates that this trend may have increased further in 2011 if the potential positive impacts of several anti-poverty  and employment generation intervention programmes are not taken into account, but this can only be ascertained at the conclusion of the 2011 survey later this year.

The newly released data pave the way for “candid and constructive public discourse”, the report says. Most immediately, the report will raise questions about how the Nigerian government plans to raise tariffs for most customer classes while insulating the growing number living in poverty.

Yet there is no doubt that Nigeria urgently needs to modernise its power infrastructure. Especially if it aims - as some analysts reckon it should – to have Africa’s largest economy by as early as 2014.

Related reading:
Nigeria power rates to rise up to 88%, FT
Nigeria: No. 1 in Africa by 2014? beyondbrics
Nigeria: A reformed investment, beyondbrics
Nigeria: Power outage, FT
Nigeria’s hydra-headed monster threatens unity, FT