Oluwafemi Ogunjobi: Payment of N5,000 Stipend By Nigerian Govt Is Creating Another Welfare State

Almost two years after it came on board, the President Muhammadu Buhari-led administration has commenced payment of N5,000 monthly stipends it promised to poor Nigerians and the unemployed. The development was substantially embedded in the campaign promises of the ruling All Progressives Congress, APC during the 2015 presidential election. The Programme is also a part of the Conditional Cash Transfer (CCT) of its Social Investment Programmes, SIP for which N500 billion was appropriated in the 2016 national budget.

The CCT also targets one million Nigerians who would receive N5000 monthly payments as a form of social safety net. Nine states are mapped out for coverage in this first batch and already, many of the beneficiaries were reported to have started receiving their first payments by Friday last week. The states were Borno, Kwara, Bauchi, Cross Rivers, Niger, Kogi, Oyo, Ogun and Ekiti. Of the states, Borno, Kwara and Bauchi have started receiving the money while the rest of the states in the first batch would commence the CCT payments soon.

As expected, some Nigerians have applauded this move by the government, especially with the biting economic situation that the nation is enveloped in, and with the opinion that it was not only an indication of better things to come but indeed showed the commitment of the Federal Government in fulfilling one of its ‘stubborn’ campaign promises and alleviating the sufferings of the common man. But, business and economic sense would tell us that such move is one with telling negative consequences on the economy.

The action of the government is synonymous to creating a Manna economy, and a Welfare state – where people rely on government for sustenance. A welfare state is counter-productive and unsustainable. It destroys the incentives for hard work and enterprise and discourages people from building up the capital that boosts the productivity of the whole society. In its place, government should look into Economic dynamism that gives entrepreneurs new market opportunities. The chief beneficiaries of this dynamism are the poor. It channels people’s self-interest in socially beneficial directions.

The move of the President Buhari-led administration in legalizing paid idleness will kill  a troubled, borrowing, and poor economy like ours.  It will make more people live by the begging bowl. Nigeria’s Federal Government need to know that the cost of welfare will keep rising, and poverty will not reduce. Instead, it creates a culture of entitlement, drains the fiscal purse of the government, and robs other Nigerians of their honest and hard-earned profit.

There is no income gained by doling out money to people, but there’s much income when people engage in productive activities. What the government can do to ‘move people out of poverty’ is to drastically reduce all levels of taxation which cripples productive energies, savings and investments; to reduce government expenditure, and removing its own barriers from their productive energies. Heavy license fees and restrictions prevent the poor from starting small businesses and creating jobs on their own. People should not be afraid to exchange value for money. The real solution lies in an open economy, respect for the rule of law, jobs and opportunities.

Welfare programs are not long term social safety nets, they cannot be sustained. Money is earned by producing what other people want and are willing to pay you for – not government’s handouts.

Oluwafemi Ogunjobi is Chairperson of African Students For Liberty Executive Board