Why Nations Are Poor


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October 3, 2007 - December 2, 2007



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Why Nations Are Poor




Pat Utomi




culled from VANGUARD February 03, 2006


NIGER, Nigeria’s Neighbour to the north, received much attention in the summer of 2005. Images of children so badly weakened by lack of nourishment, to even eat the food sent in by humanitarian agencies, assailed television viewers around the world. In many ways flies swarming around wounds of dying infants whose mothers were so malnourished milk ceased to flow from flabby breasts displayed to the world by television cameras reminded all who cared that poverty was, above all, an assault on human dignity.


The crushing of man’s self-worth by poverty in many instances results in the cheapening of human life. From these kinds of conditions terrorism, brutal armed robbery and civil war arise, creating a vicious circle that deepens man’s material deprivation as infrastructure that support productive life gets destroyed.

The anarchy that came to Sierra Leone as to Liberia and Somalia showed how the failed state can make material deprivation endemic and consuming of both the physical and mental well-being of the people. Why  are these  purveyors of such misery? Why are they poor even as productivity growth in countries of comparable levels of development, just one generation ago has brought higher living standards and greater social harmony to countries like Malaysia, Singapore, Thailand and South Korea.


Why nations are poor has been a central concern of my academic life for about thirty years. In travelling to many countries of Africa, Asia and Latin America, talking with the poor, policy makers and academics, observing the public choice process, I have struggled to find who to blame for the plight of the people who live on less than one dollar a day.

In many ways it has been a journey of discovery for me. Poverty, the reasons men and nations are poor, come much like perceptions of the elephant from the touch of its different parts. The poor, the policy maker, the economist, the political scientist all seem to see different causes and different remedies. Behind the power-versus-purpose challenge of the policymakers and the narrow discipline focus of most academics and consultants, the biggest challenge I find with the concern for poverty as the flavour of the season is the tendency to see the poor in statistics. But the poor are not numbers and aggregate data. The poor are people.


 The poor are the eleven-year-old boys on Lagos streets who should be in school but are putting their lives at risk running between cars on the highways hawking  wares that have a total value of less than 10 US dollars. They are teenage  boys forcibly trying to wash your windscreen as you come up to traffic lights in Johannesburg in the hope you would give them a tip. The poor also live off cotton farms in Mali that have been unable to earn their keep because of subsidies in the United States, just as they are Native Indian survivors of mudslides up in the Andes in Latin America. The poor are also child soldiers in Liberia who have lost their childhood to a flood of blood. Each has a very personal story to tell about their material condition, yet they are also affected by those choices that shape the grand economic aggregates coming out of the national planning departments.

Can poverty be eradicated? To eradicate poverty we must understand the poor and the many factors that are ostensibly responsible for the phenomenon as well as “What went right” in countries that have begun to escape poverty in recent decades.


Jeffery Sachs, the noted economist, has offered one of the boldest and most optimistic of statements about the possibilities of bringing the times of poverty to an end in his much promoted book of 2005, The End of Poverty Will His Kingdom Come? We hope to give life in the discussion that will follow by telling a few of those personal stories. Where, for example, are the personal stories in what I call the different strokes on life expectancy?

In my recent visit to the UK sometime in 2005, there was much anxiety in the public media that fast-food habits slipping into Britain from the US was increasing the tendency towards obesity, which could have the effect of causing life expectancy to drop rather than increase for the first time in a century. Later that week a British newspaper commenting on pension reforms noted that the professional woman in the next generation could expect to live to be a hundred years old. By contrast Nigerian elder statesman arid former Secretary General of the Commonwealth, Emeka Anyaoku and others at a symposium in Lagos offered the shocking news that life-expectancy in Nigeria which had slipped from 60 years to 47 (with much alarm and query about the authenticity of the statistic), had plummeted to about 42. Diseases like HIV/AIDS had continued to compound the problems of malaria and poor nourishment to blight human potential in Nigeria.


Let us take Citizen Q elsewhere on the continent and his burden a few weeks after the Nigerian symposium. One-dollar-a-day income as the barrier to crack to be seen as leaving absolute poverty behind is distant and challenging to him as the sound barrier was to aviators at the beginning of the jet age. He has lived through the change of name of his country from Congo Kinshasa to Zaire and back to the Democratic Republic of Congo (DRC), lived in refugee camps as the many wars of the Great Lakes region has caused him to abandon family, farm and friends in flight to safety He has seen Burundi tribesmen in their own flight to safety crowd him out of opportunities for subsistence survival, having on occasions to live in the bush on lizards, away from the threat of child soldiers, foreign troops who came to secure undisclosed interest and some who came to make peace. He is sometimes not sure who the enemy is anymore. So he just keeps running hoping for charity to make it to the next day. Now nature has gone and complicated his life with an earthquake to which the response is neglect.


His profile is the classic Tawney’s metaphor of the peasant so deep in water that even a ripple could drown him. Yet the paradox of plenty here is manifested in the fact that his country is one of the most endowed with natural resources in the world. But DRC is one of the poorest countries on earth, whether it be based on the UNDP’s human development index measures or nominal GDP per capita. He has counterparts in Nigeria.


He may be a victim of war but has never seen war. Nigeria has not witnessed war since January 1970. Even that war was waged in the South- East, a considerable physical and mental distance from the South- West where he lives. Jide Oresanya represents one face of the urban poor in the sprawling metropolis of Lagos to the South -West of Nigeria, on the Atlantic coastline, bordering the Gulf of Guinea. The Atlantic Basin just off the coast is currently witnessing some of the most active investments in oil and gas in the world. Given the anxieties in the Middle East, as Samuel P. Huntington’s vision of a clash of civilizations plays out, with Islam and the West violently engaged in strategic reviews of economic interdependence, new partnerships seem imperative. Jide’s backyard may just be in the neighbourhood of the most interest to those who want to preserve the strategic energy interests of the United States. Yet, Oresanya’s life is untouched by the economic consequences of the energy-addicted superpower that borders the Atlantic  to the West. No one he knows has ever been in the employ of an oil company  or even remotely impacted by activity in the oil-and-gas value chain.


That Nigeria’s oil-and-gas sector is an enclave  economy is an esoteric  concept to Mr. Oresanya, because all he knows about oil is that it causes him immense grief each time fuel prices go up. This is because he is a carpenter and needs fuel for the small generator he uses to power his tools, and because the cost of transportation to get his final product to his customers is a major part of his cost structure.


Jide Oresanya can easily become a simple statistic, one of 250 million poor people living in sub-Saharan Africa, some 45 per cent of the region’s population, according to the World Bank in its Global Economic Prospects and Developing Countries in 1987. He may be living in “oil-rich” but “development-poor” Nigeria, which is one of the 32 countries of Africa and among the world’s 48 least-developed countries, but he is a 41-year-old man with eight children all of whom, along with his wife, are crammed into a 10-by-10 feet bedroom and a living room of similar size. They have to share a kitchen half the size of that in most American suburban homes  with 11 other families of similar size in a dormitory type of housing Nigerians call “face-me-I-face-you.” The location of their residence is Agbado-Ijaiye area, a high-density urban area in the outskirts of Lagos whose rapidly swelling population (perhaps the fastest growing city in the world) has been estimated at between 12 and 16 million people.


Jide had about 4 years of primary education before becoming an apprentice carpenter in his place of birth in Ondo State, few hundred kilometers North -East of Lagos in the South -Western part of Nigeria.
His father was a farmer as was his grandfather. Rural Ondo dominated by peasant agriculture at the onset of British colonial hegemony over Nigeria at the beginning of the twentieth century witnessed the introduction of cash crops by the colonials for the purpose of raw materials exports to feed Britain’s industrial revolution that had been in high gear since James Watts redesigned the steam engine. Cocoa had found a home in the Undo area. Produce-buying agents for European companies were soon familiar figures around the region.


When German U-boats began to torpedo merchant marine vessels in the North Atlantic, the cost, to the produce-buying companies, produced a reluctance to ship produce by the European firms. But British war effort required the raw materials. The colonial authorities chose therefore to reduce the risk for the trading companies by purchasing the produce in the West African port city of Lagos. This would mushroom into the marketing boards that defined and dominated cash crop exports from the West African region. In the journey from subsistence family to growing cash crops, a quantum leap in the income profiles of the Undo farmer had taken place. Jide’s grandfather came to know prosperity.

Paradoxically, in these same marketing boards would be sown the seeds of its later travails. As the farmers of Undo could not go to Europe to sell their farm output, the government-established marketing boards did it for them and determined how much it paid the farmer and how much it kept back to invest in capacity and institutional arrangements that would help him serve the farmer better. The boards did provide some price support systems and some agricultural extension services but in the end they kept back much of the surplus and invested them in urban areas in such real estate as the Cocoa House in Ibadan which was for a long time the tallest building in West Africa.


Besides the increased attraction it gave to the emerging urban areas, thus pulling people away from the productive land of rural areas, the investment strategies negatively impacted on infrastructure to facilitate improved cash crop production. The odyssey of the Oresanyas from the subsistence moral economy of rural Undo to prosperity and ultimately to the urban slum of Agbado-Ijaiye, where life was truly brutish, was sealed by the discovery of crude oil in commercial quantities in Oloibiri in the southern tip of the Niger Delta in 1956. As crude oil prices rose in the 1970s Nigeria’s exchange rate appreciated. The local currency value of international prices, less the extraction of the marketing board, kept getting so more and more ridiculous that the rational Undo farmer felt better off as a messenger in Lagos. So Jide’s father was far less prosperous than his own father and Jide had to seek fortunes better than what seemed like the dead end of his rural community.


In the “Eldorado” called Lagos, he had not visited a hospital in more than 22 years since he arrived. This is not because disease had stayed out of where he lived. The neighbourhood is a sprawling market of exposed meat, vegetables and other food items. Eating had to be a health hazard if you shopped around there. There is so much stagnant water and open sewers that mosquitoes had to be on permanent patrol. Malaria was therefore bound to occur frequently. Such frequent attacks of malaria, Jeffery Sachs, author of the End of Poverty, would argue was reason productivity was low. This is because people were weakened by malaria and spent much time nursing the disease, making for slow economic growth. Jide simply had never been to a hospital because he could not afford it. In his words “If you go to hospital in Alagbado they will be looking for ways to collect huge amount of money, so I don’t ever go to hospital. Instead of the doctor, he practices• self-medication, going to unregulated patent medicine stores, administering whatever he thought would bring relief. Remarkably, medical educator of renown and latter-day hospital entrepreneur, Professor Elebute suggests that studies show such people may actually spend more on self-medication, which could further endanger their health than they would in proper hospitals. Perception of high cost of medical care lead them to substitutes.,

Jide estimates his income, which he says is significantly affected by power supply at about N15,000 a month (about $100). On that income, he asked, in response to our question about retirement planning, how could he put something away for his retirement? Well retirement was not a consideration of now. If the children are “trained” until they can fend for themselves and perhaps help the old man, all should be well. He had heard of retired civil servants and soldiers whose pensions had not been paid for years dying on the queue at identity verification exercises.


This view of life after one’s most useful years seemed so sharply contrasting with an experience in Malaysia years ago. In 1997 I was on a working visit to Kuala Lumpur and had as host a research fellow at the Institute of Strategic and International Studies (ISIS). He suggested one afternoon that we drive out of town to visit with his parents. It was a remarkable experience.

They were both over 75 years old and quite happy living independently in a home many middle class Nigerians in their prime would envy. They had their old car in the garage and still drove occasionally. Their pensions were secure.

Visiting Malaysia in 2005, I asked after the parents. They were still well and quite happy. It became obvious that the fear of old age was a characteristic of poverty. Anxiety over social security programme funding may be scary and big election issues in the United States, but poor countries live the fear of old age, especially as extended family support systems begin to break down.


If Jide Oresanya represented the urban poor’s fear of income flow after retirement, the case of Titilayo Aderibigbe gives a rural impression. In Ifo, not so far from Lagos, she ekes out a living farming and being a petty trader. She does not know how old she is but 60 is a fair estimate. She has never been in a school. Retirement is not something she can contemplate. She will go on until she cannot. Her circumstance was much like that of Mama Iyabo in Itamopo village where time seems to stand still, except that Mama Iyabo is hopeful that her children in England and Lagos would send her the occasional allowance. But her environment looked so dreary it looked sure to accelerate slow death by boredom. Her children in Lagos do not visit often, neither had they erected mansions in their ancestral homes like their friends from the Eastern part of Nigeria.


Historical experience like returning to the East when the national crisis of 1966 broke out, with no homes to shelter returnees, had led many to make building a house in the traditional homestead, and visiting often, top priority. Many that had run back “home” from regions of domicile outside Eastern Nigeria found nowhere to lay their heads as the Civil War loomed, making the priority of a home back East a test of manhood. In the years since the Civil War many people from the, East would first build a house in their villages before getting appropriate accommodation where they spend most of their time.

This phenomenon has had some consequences for spatial distribution of Housing Stock and for both rural and urban quality of life. For the rural East, the construction of those mansions in the village by people who live like the Oresanyas in Lagos have been a source of income for rural dwellers. It has also made rural South-East generally more appealing than rural areas in many other parts of Nigeria. The holiday visits by these homeowners,  especially at Christmas and Easter, often translates into a flow of te millions of dollars into what would diversely be a desolate economy.

On the other hand, the feel that many of those homes are not in use  for most of the year, while their owners squat in slums, is a scandalous  waste of savings, especially as most of those homes, in the classic raised by Hernarido de Soto, do not translate from assets to capital because  of underdeveloped representational systems. The Peruvian economist’s  views in the much-celebrated book, The Mystery of Capital, about a without representational systems, as dead capital, comes alive in the housing  commitments of people from the East. They suffer a double jeopard that they cannot use the houses to raise capital as there is a grave lack of  representational systems that give them title to the land, and they do not have the possibility of using those houses to reduce their personal housing problems as the houses they have built are located hundreds of miles a’ sitting idle.

The point of these profiles in poverty is that the poor have varied  characteristics. They are not only lumpen-proletariat. It is also about fact that invariably most of us are made poor because there are far many poor people among us. A collective will to drastically reduce poverty  is therefore in the collective best interest.


Let us meet Beatrice Ofulue. She is poor. She earns less than a dollar a day and has six children to raise. How did she get here? Beatrice raised in a village not far from Agbor in the Aniocha local government of Delta State where she was born only 32 years before. Her life story m~ her sound like she were nearly 70 years of age but the occasional spar in her eye suggest she was and could still be a very attractive woman. young village girl she could not wait to escape the drudgery and boredom  of the trap of the countryside.


 Her father had chosen not to follow his father  into farming, the peasant agriculture that was the way of sustenance most of the local people. He became a bicycle repairman, servicing those the community who had moved up from walking several miles every morning to their farms as early as five o’clock before dawn came and to set out after dusk, and a long day of tilling the soil, which was broken by  roasting the yam from the barn and eating that with palm oil season with salt. Those who managed the savings to reduce the exhaustion that the long walk back inflicted on them and what was left of family life on their return, bought bicycles. Sometimes the savings they managed from consuming only food and barely ever changing clothes, and a thatched roof on a mud hut, was supplemented by remittances from relatives in the city. This enabled them to buy bicycles. Beatrice’s father had competition in the bicycle-repair business and seemed to earn so little he was technically in disguised unemployment. He spent what he had drinking palmwine and beer whenever there was a burial ceremony at which the relatively well-off in the city lavished in entertainment of all corners. Beatrice’s mother, on the other hand, farmed and was engaged in petty trading. They wanted their children to have a better future so they sent them to the local school. Beatrice had six years of primary school education before the need to spend what little her parents had on her four younger brothers crowded out Beatrice and another sister.


She did not have too long to wait. Before her eighteenth birthday one of the boys from the village who had left several years earlier in search of green pastures, had become a commercial microbus driver in Lagos. He returned to ask her hand in marriage. This provided her an escape alley from the village and she welcomed it. They set up home in a ghetto called Lawanson, near the middle-class neighbourhood of Surulere in Lagos. Ten years and six children later they were still keeping up the struggle to move up. Her life centred around the local Catholic church of SS Mulumba and David and her petty-trading. That was until the horrible news came. Her husband had been killed in an accident. Before his death the income of about $100 a month that her husband brought in went mainly to paying the rent, utilities and keeping the children in the local public school. Feeding m the family depended much on the $25 to $30 she earned a month from her trading. Now it seemed the family of seven would step down from the height of $130 a month income to $30, with one mouth less to feed. But she had surprises waiting for her.


Burial rites for her husband meant she had to spend one year in the village mourning his passing. That would be one year without income at all. Those who enforced the practices gave no care to how she and six children already drowning in deprivation would survive on no income. If she was lucky she would find enough charitable people to give her handouts to keep them from starving to death.


The ladies of the husband’s clan, as was the norm, managed to accuse her of not taking good enough care of the husband while he lived, and of failing to alert the elders quickly enough on his death. Though she found the accusations outrageous, she lacked the power to do anything about it. She was having her initiation into the inner-sanctum of absolute poverty, the realm of powerlessness. She was fined a total of nearly two hundred dollars, nearly seven months’ wages she would not get a chance to earn in the following year. She would technically be unable to get off mourning until she had paid the fines.

To save her children she sent the boys off to live with good family friends for the year of mourning and the girls as domestic workers in homes of middle-class people. She had the good fortune, on return from her year of mourning to join a Widow Support Centre, a social initiative to help very poor widows. There a micro-credit scheme offered her a loan of about $300 to aid the textile trade she wanted to enter. She used more than half the loan to pay the fines. She considered herself particularly lucky. Many in her position may not have access to such micro-credit and would get into a vicious cycle of the poverty trap that Sachs analyzes so eloquently in The End of Poverty.



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