Federal Government’s Cash Palliatives Plan Faces Criticism from Experts
Amidst rising inflation and a depreciating Naira, financial experts have expressed concerns over the Federal Government’s recent plan to distribute N75,000 cash transfers to vulnerable citizens. They argue that this initiative may exacerbate inflation and prove ineffective in tackling poverty, drawing comparisons to similar unsuccessful policies from past administrations.
Professor Nentawe Yilwatda, Minister of Humanitarian Affairs and Poverty Reduction, announced that the scheme aims to provide financial support to around 70 million Nigerians by the end of January 2025. The registration process, facilitated through the National Identity Number (NIN) system, intends to cover up to 18.1 million households.
However, financial analysts believe the approach is flawed, citing concerns over inflationary pressures, economic dependency, and potential mismanagement of funds.
Cash Palliatives May Aggravate Inflation and Dependency
Victor Chiazor, Head of Research at FSL Securities, acknowledged that while the initiative offers temporary relief, it could lead to inflationary consequences. He emphasized the need for more sustainable strategies, such as access to affordable credit and entrepreneurship development.
“Past implementations of similar cash transfers failed to improve poverty levels. Investing in education, skills acquisition, and job creation would yield more sustainable economic benefits than short-term financial aid,” Chiazor noted.
Additionally, he warned that corruption might hinder the program’s effectiveness, with funds potentially being misappropriated instead of reaching the intended beneficiaries.
Experts Warn Against Fiscal Burden and Economic Setback
David Adonri, Vice Chairman of Highcap Securities, criticized the initiative, labeling it a politically motivated policy that could further strain Nigeria’s economy. He pointed out that the government’s financial constraints make the expenditure of ₦525 billion on this initiative impractical.
He argued that the best way to combat poverty is by investing in productive sectors that create employment, rather than distributing cash that merely increases consumption without addressing supply deficits.
Adonri urged the government to focus on mobilizing domestic production factors and developing a self-sustaining economy to generate long-term wealth and employment.
Palliatives as a Political Tool? RenaissanceAfrica CEO Weighs In
Ejike Nwuba, CEO of RenaissanceAfrica, condemned the cash transfer policy, stating that it does not genuinely alleviate poverty but instead serves as a political tool.
“Handing out money to indigent citizens has never been a viable solution. The government should prioritize investments in education, vocational training, infrastructure, and small business incentives to create real economic opportunities,” he asserted.
Nwuba further criticized political leaders for using poverty alleviation schemes to maintain control over citizens rather than fostering genuine economic development.
Structural Reforms Needed for Sustainable Solutions
Eze Onyekpere, Director of the Centre for Social Justice, questioned the effectiveness of palliatives, arguing that they fail to address the root causes of poverty.
“The Federal Government is merely targeting symptoms rather than implementing long-term solutions. Additionally, the lack of a transparent and verifiable database of poor Nigerians raises concerns about potential mismanagement,” he explained.
He emphasized that borrowing funds for temporary relief measures is unsustainable and could further burden the economy. Instead, resources should be allocated toward economic reforms, job creation, and infrastructural development.
High-Impact Policies Over Cash Transfers: Experts Recommend Alternatives
Aigbe Austin, a Senior Program Officer at the Centre for Development of Democracy (CDD), recommended alternative approaches such as reducing the cost of living through subsidies on essential goods and services.
“The best palliative is one that lowers living expenses. Direct cash transfers without corresponding productivity measures do little to address the real issues causing hardship,” Austin stated.
Similarly, Global Rights Nigeria Executive Director, Abiosun Bayeiwu, argued that financial handouts fail to create lasting economic impact. She pointed out that poverty is not just a lack of cash but a lack of opportunity.
“Without industrialization, job creation, and affordable healthcare, one-time cash transfers will only provide temporary relief,” she noted.
Bayeiwu also cited previous failed programs, such as TraderMoni and MarketMoni, as evidence that cash-based initiatives do not produce significant long-term benefits.
ActionAid Nigeria: Cash Transfers Are Not a Viable Poverty Reduction Strategy
Andrew Mamedu, Country Director at ActionAid Nigeria, expressed skepticism about the effectiveness of the cash transfer program. He highlighted that past social protection programs in Nigeria failed to significantly reduce poverty due to a lack of economic reforms.
“With inflation above 34.8% and rising living costs, ₦75,000 per household is inadequate to cover even basic needs. A more sustainable approach would be to integrate financial support with livelihood programs, skills training, and job creation,” Mamedu explained.
He also raised concerns over corruption, noting that previous social welfare programs were plagued by fraudulent beneficiary lists and fund mismanagement.
To ensure transparency and efficiency, he recommended biometric registration, real-time tracking of disbursements, and independent monitoring by civil society organizations.
Conclusion: The Need for Sustainable Economic Policies
While the Federal Government’s cash palliative program aims to provide relief, experts argue that without structural economic reforms, it may only offer short-term benefits while exacerbating inflation and dependency.
To achieve lasting poverty reduction, financial analysts suggest prioritizing investments in education, vocational training, infrastructure, and entrepreneurship. A comprehensive approach that fosters self-sufficiency and economic growth will yield far greater benefits than periodic cash transfers.
For further insights into global economic policies and their effectiveness, explore this IMF analysis on poverty reduction strategies.
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