The Chinese Model Of Palliatives: A Lesson For Nigeria.

By Ray Morphy.

The news has been awash with the N500billion for palliatives. It is one topic of discussion that has dominated both formal news and informal discussions across the length and breadth of Nigeria since the initiative was unveiled!

However, not many Nigerians believe that the handout route is the way to go! Palliatives are often seen as charity and it does not spur the effect required.  In most cases it leaves the poor poorer than they were before receiving the handouts.

In successful poverty alleviation schemes, the world’s number one gold medalist is China!

This column therefore recommends the Chinese example of poverty alleviation experience as the best model for tackling poverty head-on in this country.

To achieve the success it recorded, China chose the human capacity development route rather than the handout model.

China’s blisteringly rapid pace of development, which has lifted it from the ranks of the world’s poor countries and turned it into a global economic powerhouse, started with economic reforms which the country’s leaders begun in the late 1970’s.

At that time more than 80% of China’s population were rural and 85% of the Chinese population were living in abject poverty. One of the key reforms that was used to improve the lives of rural people was the household responsibility system. Under this system land was allocated to households and farmers were allowed to keep income earned from any sales over and above required sales to the state.

The key to this reform was that farmers were able to keep the rewards earned from using their own hard work and initiative. This incentive spurred farmers, and in the six years between 1978 and 1984 rural incomes grew by some 14% per annum.

Grappling with the problems of rural incomes, food safety, food security and stubbornly persistent high levels of rural poverty, farmer cooperatives were identified as a possible way forward. It has been recognized internationally that cooperatives are the one verifiable way that has made huge contribution to improving the lives of farmers and the rural poor.

After careful study of Chinese and international experience, in 2006 the Law on Specialized Farmer Cooperatives was passed by the National People’s Congress, coming into effect on July 1 2007. This was the first time since the establishment of the People’s Republic of China in 1949 that cooperatives were given a legal identity.

Over the past 40 years, the number of people in China with incomes below $1.90 per day – the International Poverty Line as defined by the World Bank– has fallen by close to 800 million. In other words, by using the cooperative model, China lifted 800 million people out of poverty. That is a world record. With this, China has contributed close to three-quarters of the global reduction in the number of people living in extreme poverty.

To take stock of this achievement, a joint study – “Four Decades of Poverty Reduction in China: Drivers, Insights for the World, and the Way Ahead” – was undertaken by China’s Ministry of Finance, the Development Research Center (DRC) of the State Council, and the World Bank, with the China Center for International Knowledge on Development (CIKD) acting as the implementing agency.

The report looked at the key drivers of China’s poverty alleviation achievements over the past 40 years, and recommends the China experience for other developing countries. China’s approach to poverty reduction has been based on two pillars, according to the report. The first was broad-based economic transformation, a model which opens up new economic opportunities thus raising the average incomes.

The second was the recognition that targeted support was needed to alleviate persistent poverty. So, support was provided in the first instance to areas disadvantaged by geography and later on, to individual households.

The report points to a number of lessons for other countries from China’s experience, these include the importance of a focus on education, sustained public investments in infrastructure, and structural policies that support of competition.

The report also highlights that the success of China’s economic development and the associated reduction of poverty benefited from effective governance, which helped coordinate multiple government agencies and elicit cooperation from non-government stakeholders.

To illustrate the role of broad-based economic transformation in poverty alleviation, separate sections of the report analyze growing agricultural productivity, incremental industrialization, managed urbanization and rural-to-urban migration, and the role of infrastructure.

The evolution of China’s approach to poverty alleviation which eventually covered the whole China with social protection policies that targeted and transformed the poor into the economic miracle that the world admires. It highlights the need to close remaining gaps in quality education between rural and urban areas and to provide better social protection to migrant workers, and the scope for improved integration of the various existing social security policies.

If Nigeria’s leaders truly want to alleviate poverty or use the palliatives as spring board for rescuing Nigerians from poverty, the best thing is to find a way to turn the beneficiaries in various states into cooperative societies and train them in agricultural sectors of comparative advantage such as poultry, fish farming, snail farming, rice farming, etc.

In this arrangement the beneficiaries would become engines of wealth creation rather than receivers of paltry handouts from government or any charity organization.

The superiority of cooperatives arrangements in poverty alleviation cannot be over emphasized. It encourages joint entrepreneurship in addition to lowering individual risk in commercial operations. Cooperatives foster a culture of shared production, decision-making, and problem-solving.

According to statistics, 60 to 80 percent of enterprises fail, comparatively, only 10 percent of cooperatives fail. We can learn to use the cooperative model that China used successfully to rescue over 800million people out of extreme poverty and apply it in the country.

That is the sustainable way to lift people out of poverty rather than the cash transfer model of former President Muhammadu Buhari, that failed and failed woefully. If the Buhari cash transfer model had worked, there would be no significant numbers of the poor in Nigeria today. Obviously, it didn’t work, one wonders why the Tinubu Administration wants to walk that failed road! 

Granted that the removal of fuel subsidy has come with considerable hardship to Nigerians. It has skyrocketed cost of living and increased the number of those caught below the poverty line. 

The federal government plans to pay the sum of N8,000 monthly to 12 million poor or low-income households for a period of six months. The plan is to pay the money directly to identified beneficiaries’ accounts.

Hopefully, the transfer would have a beneficial multiplier effect on about 60 million individual Nigerians. To guarantee the credibility of the process, digital transfers will be made directly to beneficiaries’ accounts and mobile wallets.

The programme is expected to stimulate economic activities in the informal sector as well as improve access to nutrition, health, education, and human capital development of beneficiaries’ households.

But many believe that the N8000 monthly payment is insignificant relative to the current 23 per cent inflation rate in the country. Besides, the failed Muhammadu Buhari cash transfers to the poor has turned Nigerians into cynics. No one believes that the money will truly get to destination!

Many Nigerians, judging from comments in the public space think that the programme is another elite scheme that does not address the needs of the truly poor.

The Buhari poverty alleviation scheme made no meaningful dent on poverty because it failed to take a cue from the methodology of Chinese success. It also failed because of lack of sincerity during the implementation. This Tinubu version is likely to suffer the same fate unless it goes by the Chinese playbook which is anchored mainly on sincerity and cooperatives.

 MAY NIGERIA REBOUND!

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