Can Nigeria implement a social security scheme?

By Joel Nwokeoma

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 grim 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, 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 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 is susceptible to crime!

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 unavailability 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.

Essentially, the most sustainable strategy for its poverty reduction still remains the revival of the national economy, which presently is in dire straits given the parlous state of infrastructure and erratic power supply.

Nwokeoma, a journalist, researcher and policy analyst, is based in Lagos Nigeria. He can be reached on joelugon@yahoo.com

Robot  # 1 | 07.09.2009 12:28

...Read the full article.

eire  # 2 | 07.09.2009 12:50

I think the issue with Nigeria is incompetence, naivety and misplaced priorities among both Government and people. Many Nigerians write, suggest and stipulate ideologies without researching them properly. I have so many things to say about this but the simplest and most basic thing to say here is that, how can you expect a social security system to work when Nigeria has no idea how many people live in the country and of course the most important one, identification of Nigerians. Anyone (i means people from Niger republic to Timbuktu) can walk into Nigeria and claim to be a Nigerian. Before anything can happen in Nigeria (in terms of development, infrastructure, national planning), Nigeria must first create a database of its entire citizens and ID card them to ensure birth and death records are updated. in the case of Nigeria (due to massive corruption and deceit amongst its many citizens, such a database is not sufficient in its basic form, Nigerians MUST be fingerprinted, DNA samples collected to ensure they can be identified wherever they go. Biometric national ID will help cut out crime, armed robbery, social security fraud, passport fraud, identity fraud and all sorts or corruption/trickery that might ensure from national planning. It will also help to create demographics. I mean at present NEPA and whoever are putting transformers capable of supply 1 million people in a place where 20 million live because they have no idea what population they will be supplying power to. Kano state is telling the Government to give it more money per local government and we oblige them because no one knows the actual population there! No national planning of this sort will work without indices and statistics!

M. Akosa  # 3 | 08.09.2009 01:30

The problem with Nigeria is not lack of good ideas or initiatives, but the sabotage of those ideas by the enemies of progress for the Nigerian poor and under privileged. Those who will rather abuse power of office, traffic vulnerable and poor people as house maids, servants, prostitutes and use for human ritual body parts, or subject their fellow citizens to daily dehumanization and degradation of all sorts. Yes, we can have our own Nigerian equivalent of Bevridge (Father of the UK post 2nd world war welfare reform & NHS) As we had our Nuhu Ribadu of EFCC. But what happened to Ribadu? He was humiliated, hounded and chased out of the Nigerian space and public service. Who will support these technocrats that will devise and implement a functional social security and welfare system for all Nigerians. To be operated and run by the state, and made accessible to all Nigerians, regardless of religious beliefs, zone, state of origins and tribe? I am sorry to say that at the moment, Nigerians seems to be getting all fulfillments with their health, welfare and social interventions from religion and the religious organizations who gives them hope, healings and visions, rather than civil, political and social rights.

Eace  # 4 | 08.09.2009 04:51

Eire's comments on a country that cannot identify its citizens is on the money. But can we have a population database without power and technology? Impossible. We see the results of previous headcounting exercises aka census and heaven knows (as only heaven can) that we certainly cannot do better if we don't have the basic requirements necessary for technical work like setting up and retrieving biometric data. Not when we can't even maintain an efficient power generation system. In any event, before we talk about social security, we need to talk about basic needs. Water, light/energy, healthcare, education, jobs, housing, transport. All this attempts to 'borrow pose' from what the West is doing makes no sense when you don't cover the basics. The West has the basics covered and so they can talk about social security. And why do we ask these 'public figures' to tell us about social security? What on earth do they think academics are suposed to be doing? Ok.. I forgot. Academics have nothing to offer - not when they are on strike.

denker  # 5 | 08.09.2009 05:29

my people, make una stop talking in vacuum...without stable electricity...forget everyding!

computa  # 6 | 08.09.2009 10:09

It is refreshing to know that there are just somebody who can write about policy in any nigerian media. all i keep reading is complains. as to the Social Security scheme, any such scheme such start with thinking about sustainability. How do we make it a lasting system, as opposed to just for few years? In this case funding takings the prime position in the discussion. Is it a good idea to fund such a program through the budget system? I don't kind so. I will suggest we looking at establishing a fund that uses its dividend to pay the eligible citizens and that will be funded through tax and other allocations, but basically outside the budget system. You seem to suggest that we have the fund for this, but i will disagree, and i think we nigerians always think we have the money for everything in a country where less than 10 per cent of the people pay tax. Do we have the infracture for this as at yet? No but that should not preclude planning. its hard to imagine such thing working without a very credible record of citizens, but is it possible to have such a database with a steady power supply? Yes we don't have to hide on one challenge to not do anything in others. there are many businesses going on in nigeria today even without a steady power supply. Is it best to make it non contributory? Well that maybe the worst idea i have ever read. Will you be getting the money from heaven to pay people if its non contributory. It will also be good that more thinking is given getting the best demographic with the most impact on the economy, instead of just compassion. Should a guy like Gowon be leading such an effort? No. It is not personal on Gowon so dont get me wrong. but its depression to know that we keep going back to the old, instead of the new who most likely has a better idea. which is not surprising why the committee is suggesting a non contributory scheme since they believe we have all the money but just dont have enough problems for it.

agbajo owo  # 7 | 08.09.2009 11:20

It will not suprise me if they implement that recommendation. It is a sure source of "haram" money for them. All the money will be ending up in the the account except the poor old folks who are supposed to be paid. Both the government and the irresponsible committee know the truth. Money being wasted to keep these people relevant and to make them appear as concern. Nigerians irrespective of age, location or education don't need social security pay out. All we need is enabling environment to excell in our daily endeavour. We are hard working people before we lost our ways. Thanks to useless leadership.

Serengeti  # 8 | 09.09.2009 14:15

Honestly people, I don’t know. But first of all, excellent article; addresses the key issues. Really, when will we learn that without the basics we are going nowhere fast? How can we talk about flying when we’re still struggling with crawling, eh? Never mind the ludicrous proposed means of funding (budgetary allocation, :rolleyes:), how on God’s earth do we think we can pull this off? If we really have that money- the billions which would no doubt find their way into private pockets faster than you can say 'Social Security' - then we should invest it in providing credible healthcare services. Free healthcare for all will go a much longer way than freebie cash that could well go to bogus people. If we are able to build (or renovate), equip and maintain at least three ‘Super’ hospitals per state, where treatment is completely free and medication is either free or subsidised and set up well equipped primary health care centres staffed by fully trained professionals, we would not only be saving lives, we would be creating jobs. Hospitals would need staff from doctors, nurses, lab technologists and dietitians to administrators, auditors, cleaners and caterers. Invest in high tech diagnostics equipment, train people to man them and pay them competitively, and the brain drain would hopefully be reversed. Revive our University Medical departments and ensure that the training is up to scratch. Why do you find a lot of our doctors and nurses in the Gulf or in the Caribbean? The over-65s will benefit from free healthcare - statistically they would be most in need of it, anyway. However all this can only function effectively with the key basics in place, electricity and running water. No use running out to switch on the generator in the middle of a brain surgery. And heaven forbid there’s a tanker drivers strike and therefore no diesel to run the generators…. And of course there’s the conundrum of – who really is a Nigerian? At an estimated 150 million souls, we have our work cut out. Some of that money could be spent towards establishing a national register of Births and Deaths. As at today, you can obtain a birth certificate showing you as having been born anywhere in the country, if you pay the right person. Heck, you can have multiple birth certs if you so desire showing whatever you want them to. We need to establish consistency. Then for the already born, there should be a validation exercise – I by no means have all the answers- but we need to identify how best can we verify and register all Nigerians because me I no know o! That should be an interesting task. We need clean running water. It is not a big deal. It is not rocket science. We have various rivers running through our country, we have a coastline, we should not be drilling boreholes all over the place in order to have access to water (which we can’t even drink, we still buy drinking water!). It's not even such a high tech solution, especially as once upon a time we were able to manage it. Why have the taps gone dry? Transportation in at least our major cities should be fixed. I don’t know an economy that has blossomed without a respectable transport network in place. Again it is not an insurmountable task. We have an existing rail infrastructure that we can revamp and strengthen – even if it will initially serve for freight alone, leaving the roads free for other road users. All this business of swimming to work during the rainy season should really not be happening. We used to have a good drainage system once upon a time. What happened to it? The last I checked, we still has a Ministry of Works and Transport – so how come our major expressways are still a network of death traps, punctuated every so often by robbers in uniform? How come there is still only one bridge across the Niger? And oh, Security of life and property. I don’t know what can be done to our police force to make them serve the purpose for which a police force is normally established; but for now they remain available for ‘hire’ by whoever can afford them for personal purposes, be it bodyguarding or intimidating and locking up adversaries. In fact, all this re-branding talk, maybe they should look into the NPF for rebranding. About time too because Nigerians need to start believing in their Police force, and the force equally need to start respecting and protecting its citizens. Maybe review their pay for a start! They say when you pay peanuts you get monkeys…enough said. Only when these basics are addressed, will the economy jumpstart itself, then and only then can we can start attempting to be like the Joneses and not look really ridiculous. There are other things like a fair and impartial justice system, affordable housing, transparent governance and development of indigenous industry that will perhaps take longer to achieve, but should nevertheless be aspired to. But we have to start from somewhere. And we have to get our priorities right; collectively as a nation, as well as individually.

busanga  # 9 | 09.09.2009 17:02

Who is Nigeria to plan a social security scheme? When the likes of Okonjo-Iweala and Ekwensili will drop the axe and punish us poor people for daring to aspire to what the white massa get and gives his own people? __ World Bank may axe Nigeria, others over schemes The Guardian Nigeria and other developing countries that are on the verge of introducing social security schemes may face sanctions from the World Bank, if feelers from the Bretting Wood institution were anything to go by. A report, "Doing Business 2010", which was launched on Wednesday by the Bank discouraged countries from adopting social protection schemes by designating governments, describing the moves as anti-business. It also recommends that countries should reduce severance pay for dismissed workers and reduce or eliminate requirements for prior notice about job cuts. A statement by the General Secretary of the International Trade Union Confederation (ITUC), Mr. Guy Ryder which was made available to The Guardian from its Brussels, Belgium headquarters on Wednesday said the union observed that the latest posture of the World Bank was a sharp contradiction of its earlier position which encourages countries to protect the poor and working class. ITUC said though the World Bank had endorsed improved social safety nets to protect the millions of workers who have lost their jobs due to the global economic crisis, the latest edition of the Bank's highest circulation publication discourages countries from adopting social protection schemes by designating governments that do so as anti-business. http://www.ngrguardiannews.com/breaking_news/article01