A new article appearing in Oxford Development Studies shows that decentralization in Nigeria, which was originally thought to empower impoverished rural populations, has instead led to social disorganization and political powerlessness for the poor.

Since the 1960s, the Nigerian federal government has gradually decentralized by transferring many powers and responsibilities to local governments. Supporters of decentralization saw local governance as a means of increasing governmental transparency, holding officials accountable for their actions and promoting the livelihood of the poor, a group that has historically lacked a political voice.

Nigeria now has Africa’s fifth-most decentralized government, with over 700 local government councils, yet 68 percent of the country’s population were living on $1.25 per day or less in 2010. Decentralization has not effectively reduced poverty.

The new study explains this fact by analyzing the “informal economy” in Nigeria. An informal economy is defined as operating “outside the legal regulatory framework of the state,” hence its “informality.” More than half of gross domestic product in Africa today comes from the production of informal economies, according to the study.

The theory behind informal economies is roughly the same as the theory underpinning political decentralization. Because Nigeria’s large formal economy failed to ensure the livelihood of so many Nigerians, people formed local economies.

One such group in Ilorin is estimated to have employed more than 10,000 workers at one point.

However, most groups struggled with internal tension. Many well-educated workers sought employment in informal economies whenever the formal economy struggled, which increased internal competition and put the uneducated poor out of work. As a result, in the  informal weaving industry one-third of employees now have secondary education or better.

In addition, informal economies did not pay the essential taxes and did not adhere to the labor and zoning laws that would ensure them access to state resources necessary for growth. The twin pressures of inadequate growth and of an increased demand for jobs prevented these groups from accommodating poor populations.

If informal institutions failed to alleviate poverty, some hoped the groups would still give the poor a sorely needed political voice.

Addressing this hope, the study argued that impoverished informal groups lacked the “capital, documentation, negotiating skills and political contacts to defend their interests through engagement with more powerful political and economic forces.”

This new research adds to a growing body of skepticism directed toward Africa’s widespread decentralization during the past few decades. Once extolled as a solution to poverty, belief in decentralization’s benefit to the poor has waned as institutions have become more local, but poverty has still remained a major problem.

Ryan Yanke

Sources: Food and Agriculture Organization of the United Nations, United Nations, International Food Policy Research Institute,
Oxford Development Studies: “Disempowerment from Below: Informal Enterprise Networks and the Limits of Political Voice in Nigeria”
Photo: Nigeria Intel