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The data behind Nigerian poverty
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For each of the past nine weeks, this newsletter has focused on the coronavirus.
We can be forgiven for this; the demand for information on the pandemic has—like many things these days—been unprecedented. Last month, the Guardian US reported that its coronavirus explainer is now the publisher’s most read article ever.
So, this week we are doing something different. We’re breaking our nine-week COVID-19 streak for a good cause: poverty.
Earlier this week, the National Bureau of Statistics (NBS) released the 2019 Nigerian Living Standards Survey (NLSS).
The survey, which provides data on poverty in Nigeria, hasn’t been released for a decade, and so deserves our attention. Below, we paint a picture of Nigeria’s current poverty situation.
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87 million or 92 million in poverty?
The headline number is that 40% of the population or 83 million Nigerians currently live in poverty.
Many people will remember back in 2018 when Nigeria overtook India and became the poverty capital of the world, with 87 million individuals below the poverty line.
So have 5 million people escaped poverty in the last two years? Not necessarily.
The 87 million number, which was on just about every news headline at the time, was provided by the World Poverty Clock, an NGO that calculates global poverty rates using data from multinational agencies.
Going by their numbers, Nigeria’s poor population had risen to 92 million people by 2019, nine million higher than the NBS suggests.
So, what is the real number: 92 million or 87 million?
Nobody knows for sure.
To find out, we would need to count every single poor Nigerian, and that is no easy feat. We haven’t even counted our population since 2006; there were plans to do so in 2018, but it never happened. Perhaps because the census was supposed to cost around ₦272 billion.
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For the last 14 years then, we have been using population estimates, and that is what the two numbers (92 million and 87 million) are: estimates.
To arrive at its numbers, the NBS conducted a survey of 22,110 representative households who were asked questions about their expenditure. The results from this sample were then extrapolated to the wider Nigerian entire population.
The World Poverty Clock uses similar data for its estimates.
For those wondering, there’s nothing strange with using a survey of a few thousand people to get a result for a 200 million population. It’s how statisticians in all countries calculate a lot of the numbers we see in the news like inflation or unemployment.
These methods are the best estimates of the true number, but it’s important to remind ourselves how they are calculated; especially when it seems like 87 million people have been identified.
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A moving poverty line
Now that it’s clear the NBS didn’t miss nine million people in its count, let us highlight one of the main reasons why the estimates are different: the poverty line.
The World Poverty Clock uses the global poverty benchmark of less than $1.90`as the definition of extreme poverty. However, $1.90 isn’t the same in every country. Furthermore, with ever-changing exchange rates, the local value is continually fluctuating.
The NBS, in collaboration with the World Bank, decided on a poverty line more specific to Nigeria.
They started with the daily recommended calories for an average Nigerian, which is 2,251 calories.
Next, the NBS asked its 22,000 households for their average food expenditure. Excluding the poorest group, they then calculated how much it costs to consume 2,251 calories in a day.
The figure came to ₦224 a day (₦81,767 annually). The assumption here is anyone who does not have this amount is unable to meet their basic food needs, making this the food poverty line.
Finally, they looked at the households just above the food poverty line and tracked their expenditure on non-food items like clothing, housing, education and health care. With this, they were able to calculate a non-food poverty line, add it to ₦224 and came to a total of ₦376 a day or ₦137,430 annually as Nigeria’s official poverty line for 2019. In dollars, it comes to around 90 cents at today’s exchange rate—$1 less than the $1.90 used by the World Poverty Clock.
These are the types of calculations that create differences between reports. In this case, the reason the NBS number is lower than current World Poverty Clock estimates is that the NBS uses a stricter definition of poverty (i.e. a lower poverty line), meaning fewer Nigerians are considered poor.
In fact, the NBS says this 2019 survey can’t be compared with its 2009 result which concluded that 102 million Nigerians lived in poverty. Back then, it was defined as having less than ₦151 daily (roughly $1 a day at the time).
The main reason they can’t be compared is that the method for conducting the survey has been improved. The NBS says this survey will be the new base study.
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It always comes down to education
Now, let’s switch from statistical discussions to insights from the report.
We already mentioned that 40% of Nigerians were below the poverty line, but what factors made people poor?
Unsurprisingly, education was one.
According to the survey, respondents with higher education levels had a lower poverty headcount. Specifically, over half of the population with only primary school education lived in poverty, compared with just 12% of those with post-secondary school certificates.
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Where you live also matters. The percentage of the population below the poverty line is 52% in rural towns, compared to 18% in urban areas.
Interestingly, the report suggests that being a female with tertiary education living in an urban area was one of the best combinations. The poverty headcount for that group was only 3%.
Education has always been known to be a major driver of eradicating poverty. It’s not a coincidence that Nigeria both has the highest number of poor individuals and the most children out of school.
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Agriculture & big households
What you do for work is another significant factor. Half of the Nigerians with agriculture as their primary source of income live below the ₦376 a day line.
This is just more evidence to show how one of Nigeria’s largest sectors is impoverished.
In contrast, only 15% of Nigerians doing “wage work” were below the poverty line, suggesting that more should be done to move the population into the formal sector.
Asides from the state you live in (more on this below), the main determinant for living in poverty was the household size. Almost 80% of individuals living with 20 or more people were poor. In contrast, those living on their own had a poverty rate of 3%.
At this point, it’s important to note that the result does not tell us the direction of causation. For example, it is just as likely that these people live in groups of more than 20 because they are poor.
Moreover, the sample size for the 20 or more category was small and has a greater error margin. But the significant household size result still held for the other categories.
A house with 2 to 4 inhabitants had a poverty rate of 17%, whereas households with 10 to 19 and 5 to 9 people had rates of 70% and 41% respectively.
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₦3.4 trillion
While the number of people below the poverty line is a useful statistic, it doesn’t give us an idea of how poor the individuals are.
How close are they to the poverty line?
To get an idea, we can use the poverty gap index, which, according to the NBS, is 13%. What this means is that the average poor person has 13% less naira than the required ₦376 per day.
What’s more, with this statistic, we can also get an estimate of how much money Nigeria would need to move the entire poor population (83 million) to the poverty line.
According to this, Nigeria needs ₦3.4 trillion per year to eliminate extreme poverty - around a third of last year’s government budget expenditure.
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Northern Nigeria
We always knew there was a gap between the North and South, but this NBS survey highlights it even further.
In Sokoto, Taraba, and Jigawa, almost 90% of the population lives on less than ₦376 a day. In Lagos, it’s only 4.5%.
It’s a pattern throughout the North and South: Oyo, Ogun, Osun, and Delta also had poverty rates in the single digits. Meanwhile, no state in the North West or North East had a rate lower than the national average of 40%.
The story is just as bad when you look at the poverty gap index.
Sokoto, Taraba, and Jigawa have an index of around 40%, meaning that the average person in poverty lives on ₦225 a day (about 50 cents). In comparison, the average poor person living in Osun, Delta, and Lagos lives on ₦372 daily, just 1% or ₦4 off the poverty line.
As we discussed earlier, education and household size were significantly correlated with poverty rates. And that’s precisely where the gap between both regions lie.
The average household size in the North East is eight compared with three people in the South West.
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As for school, as we have argued in the past, Nigeria doesn’t have an education system; it has two.
Almost all children between the ages of 5-14 in the South attend school, while the attendance rate in the North is 55%. The kids also go to different types of schools.
60% of students in the South West go to private schools, while in the North West it’s only 14%.
At this point, it’s fair to say that policymakers have the data to know what is driving poverty.
Speaking of data, one state is missing from the NBS report: Borno.
Late last year when the survey was conducted, NBS officials were unable to get a representative sample from the state because many areas were not safe enough to visit. Just like that, Borno was excluded from a national survey.
Sometimes, in Nigeria, you are too poor to count.
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Welcome to our weekly insight on the Nigerian economy. Take a moment to subscribe if this email was forwarded to you, or forward it to a friend! To get our daily news on WhatsApp, click here and send "Subscribe".
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