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Nigeria Income Distribution
The reliability of Nigeria's national income statistics
was
limited by meager industry-wide information (especially
for
domestically consumed commodities), the questionable
validity of
data, and quantification based on subjective judgments by
state
officials. Despite deficiencies in aggregate economic
statistics,
a few general tendencies concerning growth, income
distribution,
prices, wages, and the employment rate could be discerned.
The
Office of Statistics indicated that GDP grew 6.0 percent
annually
(adjusted for inflation) between FY
(fiscal year--see Glossary)
1959 and FY 1967. GDP shrank at an inflation-adjusted
annual rate
of 1.1 percent between FY 1967 (which ended two months
before the
secession of the Eastern Region) and FY 1970 (which ended
three
months after the war). However, because capital
destruction such
as occurs during wartime is not reflected in annual
measures of
GDP, the decline in net domestic production was probably
severely
understated.
Annual population growth estimates very considerably,
but it
is generally held that growth was roughly 2 percent in the
late
1950s and early 1960s, 2.5 to 3.0 percent from the
mid-1960s to
the late 1970s, and 3.0 to 3.5 percent in the 1980s
(see Population
, ch. 2). Accordingly, annual GDP growth per
person can
be estimated at 4.0 percent in the late 1950s and early
1960s,
3.0 to 3.5 percent in the mid 1960s, -3.5 to -4.0 percent
during
the civil war, roughly 7 percent in the early to late
1970s, -6.0
percent from the late 1970s to the early 1980s, and -2.5
percent
for the balance of the 1980s.
Nigeria's decline in real GNP per capita by 1988, to
US$290,
relegated the nation to low-income status below India,
Pakistan,
and Ghana. Other indicators of development--life
expectancy, for
which Nigeria ranked 155th out of the world's 177
countries, and
infant mortality, for which Nigeria ranked 148th among 173
countries--were consistent with Nigeria's low ranking in
income
per capita.
The authors of the first plan had argued that a "very
good
case can be made that premature preoccupation with equity
problems will backfire and prevent any development from
taking
place." Thus, Nigeria's first plan stressed production and
profitability, not distribution. Yet people who already
own
property, hold influential positions, and have good
educations
are best situated to profit once growth begins. Thus, a
society
with initial income inequality that begins to expand
economically
is likely to remain unequal, or even become more so.
Although wealth appeared to be highly concentrated in
Nigeria, the government had no comprehensive
income-distribution
estimates. From 1960 to 1978, the number of rural poor
remained
constant, but the rural poverty rate declined. During the
same
period, the urban poor roughly doubled in number, although
the
rate of urban poverty also probably declined. Federal
civil
service studies indicating a substantial increase in
income
concentration from 1969 to 1976 may have reflected a trend
toward
overall income inequality, exacerbated perhaps by the
large
raises given to high-ranking administrators by the Udoji
Commission on wages and salaries in 1975. But this
inequality
probably eased from 1976 to the end of the decade, thanks
to
increased salaries for low-income workers, the abolition
of
subsidized automobile allowances for the wealthy, and a
decline
in economic activity, especially in the oil sector.
During the 1960s and 1970s, Nigeria's degree of income
concentration was average for sub-Saharan Africa, which,
after
Latin America, had the highest income inequality of any
region in
the world. Income concentration in Nigeria was probably
higher
than in Niger or Ivory Coast, about the same as in
Tanzania, and
lower than in Kenya and Cameroon.
Because the rural masses were politically weak,
official
income distribution policies focused on interurban
redistribution. More than 80 percent of Nigeria's second
plan
(1970-74) investment was in urban areas. The third plan
(1975-80)
emphasized more even distribution, but did not mention
urbanrural imbalances
(see
Federalism and Introgovernmental Relations).
The ratio of industrial to agricultural labor
productivity,
2.5:1 in 1966, increased to 2.7:1 in 1970 and 7.2:1 in
1975.
(Urban-rural per capita income ratios showed greater
differentials for succeeding years, largely because
incomes from
capital, property, and entrepreneurial activity were far
larger
for city dwellers than for rural residents.) The sharp
rise in
industrial productivity between 1970 and 1975 was due
largely to
phenomenal increases in oil output, prices, and tax
revenues
rather than to technical changes or improved skills.
Without oil,
1975's labor productivity ratio would have been 3.0:1, as
the
terms of trade shifted away from agriculture. Moreover,
emigration drained the rural areas of the most able young
people,
attracted by the Udoji commission's doubling of government
minimum wages. The loss of the superior education and
skills of
these rural-to-urban migrants resulted in a decline in
inflationadjusted agricultural productivity between 1970 and 1975.
Average
rural income was so low by 1975 that the richest rural
quartile
was poor by urban standards.
Rising debt and falling average income in the 1980s had
a
particularly severe effect on the poor. Consumption per
capita
fell 7 percent annually during that decade, material
standards of
living were lower in the mid-1980s than in the 1950s, and
calorie
and protein intake per capita were no greater in 1985 than
in
1952. In effect, the economic crisis of the 1980s canceled
out
the progress of the previous two decades.
Urban real wages fell rapidly between 1982 and 1989 as
a
result of a minimum wage freeze in the formal sector.
Rural real
wages also fell, but more slowly because few employers had
previously paid as much as the minimum wage on the farm.
Beginning in 1986, the liberalizing effect of the SAP on
agricultural prices and the exchange rate also
redistributed
income from urban to rural areas, especially in the
agricultural
export sector. In the 1980s, the urban self-employed, a
group
which included many in the low-income informal sector
(e.g.,
cottage industries, crafts, petty trade, and repair work),
had
lower incomes than urban wage earners. Even the rural
selfemployed (smallholder farmers, sharecroppers, and tenants,
as
well as a few commercial farmers) had lower incomes than
rural
wage earners, who ranged from unskilled, landless workers
to
plantation workers.
During the 1980s, the urban-rural gap narrowed--a
result of
rising urban poverty rather than of growing rural
affluence. A
World Bank/International Finance Corporation study
estimated that
64 percent of urban households and 61 percent of rural
households
were in poverty in FY 1984. Because 70 percent of
Nigeria's
population was rural, most of the poor were to be found in
rural
areas. By the late 1980s, with structural adjustment and
agricultural price decontrol, the average income of all
rural
households exceeded the average for urban households.
Ironically,
rural household income levels in the late 1980s only
improved
relative to levels for city households, as real income in
both
urban and rural areas had fallen throughout the 1980s. The
result
was that, for the first time since independence, more
Nigerians
migrated to the country than to urban areas.
Rapid inflation, 20 percent yearly between 1973 and
1980 and
more than 20 percent per year between 1980 and 1984 (as
measured
by the consumer price index), dropped to 5.5 percent in
1985, 5.4
percent in 1986 (years of good harvests), and 10.2 percent
in
1987, before rising to 38.3 percent in 1988 and 47.5
percent in
1989. Under a World Bank SAP, 1986 and 1987 were years of
tightmoney financial policy. But a poor harvest in 1987 put
pressure
on 1988 food prices, and authorities lifted the wage
freeze and
eased fiscal policies in 1988 in the face of rising
political
opposition to austerity. Inflation abated somewhat in late
1989,
as food supplies grew and the Central Bank of Nigeria
tightened
monetary policy.
Real wages fell significantly in the l980s following a
statutory wage freeze (1982-88), salary cuts in the public
sector
in 1985, and a constant nominal minimum wage that started
in
1981. From 1986 to 1989, real wages fell almost 60
percent.
Data as of June 1991
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