Can Nigeria implement a social security scheme?

In what could be said to be a major paradigm shift in Nigeria’s poverty reduction strategy, the Federal Government last March empanelled a National Working Committee on Social Security Policy headed by former Head of State, General Yakubu Gowon, to advise it on the modalities of implementing a social security programme in the country. Hitherto, the former administration of President Olusegun Obasanjo had adopted an economic-growth led poverty reduction strategy where it reckoned that a robust performance of the national economy would necessarily lead to job creation, reduction in unemployment and elimination of attendant misery and poverty among the citizenry.

However, with the grin reports on the country’s economic indicators by development agencies such as the United Nations Development Programme (UNDP), particularly on its poverty rate, put at 70 per cent, obviously on account of the poor performance of the economy, it is evident that the strategy has not been effective. The 2009 Fund for Peace Report, in fact, indicated that “about 54 per cent of the population in Nigeria live on less than a dollar per day”, ostensibly on account of what the United Nations Economic Commission for Africa (UNECA) claimed, in its 2009 report recently released, was the unsatisfactory performance of the economy. UNECA claimed that Nigeria’s economy recorded a six per cent growth in 2008, a fact corroborated by The Fund for Peace, which even asserted that “the indicator for the economy worsened from 5.4 in 2007 to 5.9 in 2008.

The Minister of Labour and Productivity, Adetokunbo Kayode, had noted that government’s new stance on poverty reduction was “informed by the urgent need to ensure that the Nigeria Social Insurance Trust Fund (NSITF) executes its mandate of delivering social security to the poor”. The minister lamented that the absence of a national policy had made it difficult for the Fund to perform this mandate, 49 years after Nigeria attained political independence despite the country being an active member of the International Labour Organisation.

The other day, the Yakubu Gowon-led committee submitted its final report, detailing sundry recommendations, to the Federal Government, prominent among which was the one canvassing for a non-contributory National Social Assistance Scheme. According to the panel, Nigerians above 65 years of age irrespective of whether they had worked in the formal sector or not, should be entitled to a fixed sum to help them live above poverty line. Speaking while handing-over the report, Gen. Gowon noted that Nigeria “needs a holistic social security policy to ensure a more inclusive, responsive and humane society” expressing optimism that if the recommendations of the committee were accepted by the government, the scheme would “lead to substantial reduction in crimes and corrupt practices, increased productivity, reduction of poverty and promotion of solidarity, patriotism and nationalism”. He traced the steady decline in the standard of living and ethical values among Nigerians to the ever-widening income inequality, mass unemployment, pervasive poverty and social exclusion.

Similar sentiment was, however, expressed penultimate week by the Vice President, Goodluck Jonathan, who tied the pervading graft culture in all sectors of our national life to lack of social security. He stressed that “the rate of corruption in the country including the endless accumulation of wealth, could partly be blamed on the lack of social security” noting that “the distress in the social security system is responsible for the situation where old people who are due for retirement from service are not willing to do so because of the fear they would be thrown into old age outside employment.

As laudable and commendable as the new thinking of government may be, as exemplified by the Gowon Committee’s recommendations, it is apposite to observe that the committee seems to have unwittingly paid scant attention to some weighty issues that could determine the effectiveness or otherwise of the proposed scheme. For in stance, it is left to be seen how a country that has a very large youth bulge, with 42.2 per cent of the population under the age of 15, over 70 per cent of whom are unemployed with attendant consequences, will contemplate a “non-contributory National Social Security Assistance Scheme” targeted at those from the age of 65 and above, an age group that has little to contribute to the economy and not crime-prone, and still aim at achieving “substantial reduction in crimes and increased productivity”. Obviously, this is not the age group one could expect productivity from or that accommodates a band of criminals!

Admitted that the scheme could eventuate, as projected, a reduction in corruption and promote patriotism, the proponents seemed silent on how it could be funded given that it is essentially “non-contributory”. Put differently, where will the funds for its execution come from, budgetary allocation, employers or both? But, if the words of the committee’s vice chairman, Prof. Dayo Akeredolu-Ale, are anything to go by, it looks like the government would depend on yearly budgetary allocations to fund the scheme. He disclosed that “Nigeria’s Gross Domestic Products (GDP) is estimated to be around $300 billion right now. One percentage of that is N450 billion and even if we come to the budget with about N2.5 trillion yearly, and …we have a percentage of that, we are talking of N50 billion….We have that kind of money which we can use to cover social security initiatives …if only we have the political will”.

Well said, but with our sad experience in budget implementation in the last 10 years, this is one big misadventure the country can ill- afford. Someone once said that what works in other countries do not work here for many reasons. In the United States of America, which began its scheme in 1935 under President Franklin D. Roosevelt’s New Deal, social security benefits are funded by taxes imposed on wages of employees and self-employed persons as well as from the federal budget allocation. It is reputed to be the greatest expenditure in the federal budget, constituting 37 per cent of government expenditure and 7 per cent of the Gross Domestic Product and is “currently estimated to keep roughly 40 per cent of all Americans aged 65 or older out of poverty”. In 2004, alone, the U.S. Social Security System paid out $500 billion in benefits.

A country like Nigeria with a higher percentage of the unemployed, the few employed would eventually be over-taxed. Incidentally, with electricity supply at an embarrassing state, any talk of boosting economic growth in order to generate more employment has become a huge illusion. A very recent report by The Employment and Growth Study commissioned by the International Development Association, an arm of the World Bank, in collaboration with the Federal Ministries of Labour and Commerce and Industry claimed that “inspite of the strong growth in the country’s non-oil economy, unemployment hardly recorded any significant decline between 1999 and 2006, with youth unemployment maintaining an increase during the period”. What the foregoing shows is that government took up the option of the social security because its efforts to grow the economy to act as a poverty reduction strategy has not yielded the results needed.

Another challenge that could hobble the scheme is that of lack of clarity about the implementation architecture of the scheme. Will it be implemented from Abuja or the states? Did the states have a buy-in in the recommendations of the committee? If not, how would they be expected to provide the architecture for its implementation, something witnessed in the Millennium Development Goals (MDGs) in the country?

But by far the greatest challenge is that of unavailabili

ty of records that could help to check abuses. In the climes where the scheme is implemented, every beneficiary has a Social Security Number (SSN) which would make it possible for one to be traced. In Nigeria where record keeping, documentation and data gathering are hard tasks, there are widespread fears that this noble initiative could run into troubled waters. Till date, there are contestations over the 2006 census while the National Identity Card scheme is mired in corruption and controversy. There are reports of even the Nigeria Police not having records of criminals and criminal convictions across the country. Against such backdrop, how do we check abuses such as when someone who resides, for instance, in Sango Otta in Ogun state goes to Lagos by noon to collect benefits after doing just the same earlier in his area of residence? Does Nigeria even have a correct and accurate database of its nationals, and how can we ensure that non-nationals from neighbouring countries, who have taken advantage of our porous borders to flood the country from Niger, Benin and Chad, do not claim the benefits? Also, how do we ensure that there is no multiple registration of claimants, if our experience in voter registration is anything to go by? And, with our unstable and erratic power situation, how do we keep the data to mitigate manipulation? In manual registers or computers? Even in rural areas?

Related to the above is the possibility of the scheme being turned into another avenue for self-enrichment by the politicians much in the same way the Peoples Bank as well as the bursary scheme of days of yore. With the difficulty in prosecuting the anti-graft war, throwing up huge public funds without adequate control and deterrent mechanisms is tantamount to creating another avenue for a few individuals to corner public funds for their private use, leaving their anticipated beneficiaries to simmer in misery and poverty.

Given this, it is imperative that the government takes another look at the recommendations of the committee and ensure that the necessary mechanism is put in place before undertaking to implement the scheme. As it stands, Nigeria lacks the machinery, availability of funds notwithstanding, to undertake a social security scheme. The most sustainable strategy for its poverty reduction still remains the revival of the national economy, which presently is on dire straits given the parlous state of infrastructure and erratic power supply.

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