5 Key Issues Concerning Nigerian Welfare Benefit System

5 Key Issues Concerning Nigerian Welfare Benefit System

Editor's note: Iniobong Obong, Legit.ng guest author, talks about the absence of welfare benefit system in Nigeria, and the issues the federal government should consider before introducing it.

If the poor cannot sleep because they are hungry, the rich will not sleep because the poor are awake. Nigerian proverb

It is no secret that Nigeria relies on the fittest mindset with absolutely no welfare package for the poor and those with disabilities. In theory, the Nigerian political system is modelled after the blueprint of the American democracy. Paradoxically, welfare benefit system which is a key component of the American system is conspicuously missing in the Nigerian model. Given the ostentatious lifestyle of the ruling political class, in a sense, it appears as if Nigerians take care of the government whereas in the West governments take care of the people. The fallout of this crude form of capitalism not only keeps the country from attaining greater heights, but also gives birth to many social vices and miscreants. The recent declaration by the vice president concerning unemployment benefits resonated with the citizenry because of this ugly background. While the declaration is highly commendable there are short- and long-term challenges on the way to its successful implementation. Below are 5 salient points.

1. Social security and crime level reduction

“Poverty is the parent of revolution and crime,” claimed Aristotle, the Greek philosopher. Although Aristotle made this observation over 2000 years ago, current empirical data across the globe agrees with that school of thought. For instance, in Nigeria large percentage of those involved in armed robbery, prostitution, terrorism come from the very poor class. However, it by no means implies that every poor person is a potential criminal. The argument rather suggests that welfare benefits may reduce crime rate among poor masses. From an economic perspective, when a person is about to die of hunger, the opportunity cost of going into armed robbery or petty stealing is far lower than the cost of dying, and crime as such becomes very attractive to them. On the other hand, when a person is sure of always having food in their stomach, the opportunity cost of committing a crime becomes much higher. Welfare system on its own cannot bring crime to an end, after all, rich men commit crimes as well, but it can reduce crime incidence. Welfare system cannot turn a bad person into a good one, but it can give a poor person something to hope for.

2. Structural challenges

Without accurate population figures and a real-time database containing information about all Nigerians, it is almost impossible for a groundbreaking project of such magnitude to succeed. Many often look at the challenges with the Nigerian population census from the political lens without considering the economic implication. Welfare system success is intimately tied to the national electronic ID card project, and a dynamic and comprehensive database. If the present government truly wants this project to succeed, they have to realize that the Nigerian Identity Management Commission (NIMC) holds the key. The NIMC enrolment centres in the 36 states should be strengthened. Any other strategy will amount to putting the cart before the horse. The national ID card will be a prerequisite for voting in the 2019 election. In the same vein, it should also be a condition for those who seek to benefit from the welfare package.

3. Cost implication

It is in the habit of wise people to do the cost analysis before embarking on a project. Sixty six percent of Nigerians (112m) are classified as extremely poor based on the World Bank report. Using N 5000 benchmark, the federal government will be paying N560b per month or N6.72t per year. Taking into account dwindling oil prices and the challenges government is currently facing with respect to the payment of salaries, it will take time before the project is implemented. However, the current financial burden should not in any way kill the noble vision; rather, the waiting period should be used to crystallize the vision. A vision is like a seed: often those who give birth to it may not live long enough to see it bearing the fruit.

4. Take-off point

President Buhari will have credibility problems if he cannot deliver his campaign promises. For this reason certain aspects of the project should be kickstarted as soon as possible. Broadly speaking, those who qualify for the benefit system include people with disabilities (especially physical) and their carers, widows without any support for raising children, the sick, the elderly, the unemployed and those looking for job. I would like to propose that those with physical disabilities of such an extent that makes them ineligible for work should be given priority. However, it still depends on accurate data from the NIMC and the government’s commitment to checkmate those who may wish to divert the monies for their personal use.

5. Unemployment trap

Unemployment trap is a situation in which able-bodied people deliberately refuse to work, even if job is available, because of the benefits they are getting from the government. That’s why the government should not pay large benefits lest to discourage people from going to work. For instance, a gardener who earns N4000 a month will prefer to be unemployed because he will be better off financially with the proposed N5000. But the mere fact that benefits may lead to unemployment trap is a weak argument to completely do away with the benefit system. It is like saying we should close down all universities in order to prevent some university students from joining secret cults. Those pushing this line of reasoning may not be aware that “improving employment incentive” when work becomes available is one of the three points on the iron triangle of welfare. Unemployment benefits are to help those in need, the challenges associated with it have been well-documented, and there are tested and proven economic models to mitigate the impact of the negative fallout.

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