March 31, 2023

Celebrating Excellence & Integrity


Structured poverty?

The findings were sensational enough to grab the headlines: Nigerians spend larger chunks of their earnings on utility bills than any other people in the world, bar Pakistan. Daily Trust, quoting the result of a study by Utility Bidder, a British firm that offers professional advice on utility rates, reported that Nigerian households spend 67.7 per cent of their income on utilities — almost N7 out of every N10 earned.

In a study that examined utility spends in 51 countries, Nigeria only played second fiddle to Pakistan, which households reportedly spend 82.9 per cent of their income on utilities. The Philippines followed Nigeria with 61.5 per cent to form the top three.

Utilities are common, inescapable daily spends for modern, comfortable living: electricity, fuel, water, rent, telephone (voice calls) and its Siamese twin: data — which power the whole gamut of value-added services: WhatsApp, Facebook, Twitter, Instagram, etc, collectively grouped as “social media

Utility Bidder, from its study, found that Nigerians pay one of the highest monthly bills for Internet broadband: on the average, more than half their monthly income for Internet broadband, which powers the social media.

That could well be true for some, given the explosion in the use of cellphones and sundry tablets; powering apps like Instagram (celebrities’ bastion), websites for online news media, Twitter, Tik-Tok and Facebook, the biggest global interactive app for now.

For many users of these channels, it is just business and livelihood — even with Instagram, on which celebrities project their trivia to further secure their popularity or notoriety, to raise their perceived ratings and further guarantee their livelihood.

But pushing that as a general rule would appear a bridge too far, as some local experts have noted, while questioning that leg of the study findings. The utilities gulping household money appear more real than virtual: electricity bills, galloping rents, fuelling cost, especially with the current soar in diesel and aviation fuel pump prices. How soaring fuelling costs impact mass transport and trigger cost-push inflation is very clear.

So, the spend-tale of Aliyu Shuaibu, an Abuja worker who reportedly earns around N350, 000 a month, as quoted by Daily Trust, probably gives a more realistic picture. Hear Shuaibu: “Every month I pay N30, 000 for electricity; N20, 000 for cooking gas, N18, 000 for data and more than N20, 000 for calls. I give N100, 000 to my wife for upkeep and to buy perishables. On the other hand, I buy the grains we use. I fuel my car and the family utility car. So, the truth is that the whole salary is not even enough for utilities.”

Even if you give room for understandable hyperboles in matters like these, it is clear most of Shuaibu’s salary is spent on food and utilities. He is by no means a low-income earner. Yet, outside the raw basics (food and rent) and basic comfort (utilities) little or nothing is left of the salary.

If this is the reality of a mid-income salary earner, what then is the fate of the so-called low-income earner; and the large army of Nigerian youths underemployed and grossly underpaid for the skills their certificates and proficiency claim? Is the Nigerian — salary owners and self-employed — now structured to poverty, in view of high utility bills?

That is the sobering point policy makers must take away. A saying quips that “the mass of men live the life of quiet desperation.” Is that the reality of contemporary Nigeria? If it is, what can we do to ease the situation; and break the cycle of structured poverty (no matter how high you earn) for a path to development and prosperity?

Breton Woods orthodoxy seems to have given subsidy a bad name. But if utility bills are this high — particularly of electricity, gas and other household cooking fuels — now is the time to consider subsidies for utilities. That would make immediate impacts, other things being equal: it would ram down inflation. Lower inflation should push the capacity of every kobo to buy more goods and services. That should bolster economic growth.

Still, how do you subsidise electricity when you can hardly trust the electricity distribution companies (DisCos) to play by the books? With that, how do you wean these DisCos from ogling fraudulent estimated billing to embracing pre-paid meters that guarantee their earnings and business survival in the long term?

If we can get rid of structured corruption (as DisCos’, by estimated billing, would appear a prime example), then subsidy on electricity is not a bad idea. That should tie over citizens until the economy improves, salaries and earnings are enhanced, and everyone can pay their way.

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