Nigeria and the Misery Index: Not a miserable country

In a Report titled The Misery Index 2018 authored by Dr. Steve Hanke of the Johns Hopkins University in Baltimore, Maryland, Nigerians have been labelled the sixth most miserable people in the world. The misery index was introduced in the 1970s by Arthur Okun, an American economist, author of the seminal work, Equality and Efficiency: The Big Trade Off (1975). The original index considers such factors as unemployment rate and inflation rate. It is a formula, a methodology as it were, consistent with what is known as Okun’s law, but modified subsequently by Harvard Professor, Robert Barro and Professor Steve Hanke. The latter releases a Report annually.

He tells us that: “My modified Misery Index is the sum of the unemployment, inflation, and bank lending rates, minus the percentage change in real GDP per capita. Higher readings on the first three elements are “bad” and make people miserable. These are offset by a “good” GDP per capita growth which is subtracted from the sum of the bads. A Higher Misery Index score reflects a higher level of misery, and it’s a simple enough metric that a busy president, without time for extensive economic briefings can understand at a glance.” 

In the 2018 Report which is basically a forecast of what to expect in the year 2019, Hanke identifies Venezuela as the most miserable country in the world, followed by Zimbabwe, Argentina, Iran, Brazil, Turkey, Nigeria, South Africa, Bosnia-Herzegovina, Egypt and Ukraine. . Is Nigeria the sixth most miserable country in the world? Where is Syria? South Sudan? Somalia. Steve Hanke’s Report does not necessarily cover all the countries of the world. But certain points are clear from his submissions.

First, the Misery Index makes the point very clear that economic growth is linked to the people’s prosperity and happiness. Countries that suffer from stagflation are likely to have very miserable citizens. Second, lack of economic growth or a poor economy can result in political and social crisis as we have seen in Venezuela where inflation rate is said to be above 6,000% and Zimbabwe where inflation is allegedly over 97%, although this has been disputed in other evaluations which unlike Hanke’s Index, accommodate the employment rate in Zimbabwe’s informal economy. Third, good governance, leadership and political stability are important factors for macro-economic growth. The least miserable countries in the world as seen in the Misery Index 2018, would also seem to have strong leadership, and institutions and a certain measure of stability. Fourth, poverty should be avoided because it could lead to misery. Fifth, the state has a responsibility to prevent the growth of poverty and promote economic growth.

It is important to break down and outline some of these well-known, elementary points because I see a tendency in this season to ignore external rankings or politicize them. The People’s Democratic Party (PDP) has already jumped on the back of the Misery Index to say that the Report confirms the party’s position that Nigeria’s economy “has virtually collapsed under Buhari.” The Hanke index does not say that the Nigerian economy has “virtually collapsed”. It says the people are among the ten most miserable people in the world. It is an economist’s index not a political review.

Nonetheless, there are certain basics that should be established. Indeed, unemployment rate in Nigeria is about 23. 10 per cent (Q3 2018, an all-time high between 2006 and 2018. Youth unemployment according to the National Bureau of Statistics (NBS) is even higher. Inflation rate is about 12%. Food inflation is higher at 13.5%. Recently, the Central Bank of Nigeria reduced Monetary Policy Rate (MPR) to 13.5%, down by 50 basis points from 14%. Nigeria’s GDP growth is 1.8%.  Compared to statistics from other parts of the world, these Nigerian statistics paint a gloomy picture. Unemployment rate in India, for example, is 6.1%, Canada (5.8%), Australia (4.9%), United Kingdom (3.9%), Germany (3.1%), Ghana (2%), Cote d’Ivoire (2.6%), Saudi Arabia (12.7%) etc.

There is also no doubt that the Nigerian economy has gone through major contractions in the last five years. The sharp drop in the spot price of oil depleted the country’s reserves, created a foreign exchange crisis  and soon resulted in recession. In 2016, Nigeria faced the consequences of a negative growth of up to 2.3 %; in 2017, inflation was as high as 18%. In September 2018, the Economic Intelligence Unit of The Economist Magazine and the HSBC Research Unit predicted a gloomy economic prospect for Nigeria in 2019 and also jumped into the troubled waters of analyzing Nigerian politics, with predictions about the likely outcome of the 2019 Presidential election in Nigeria. Both the ruling party in Nigeria – the All Progressives Congress (APC) and the Nigerian government kicked. They told the “experts” to keep their opinions to themselves.

The EIU/HSBC in retrospect got the political analysis wrong (PDP lost the 2019 Presidential election, APC won) but the economic projections remain relevant and instructive. The Steve Hanke Misery Index Report may have been influenced by the EIU report. Rather than dismiss it however, the Central Bank of Nigeria (CBN) and the Presidency (Hanke insists the message is so straightforward even a busy President can follow it) should study the report and attend to the messages about economic growth and the careful management of certain indicators to deliver prosperity to the people. Nigeria’s palace economists may quarrel over the statistics and the methodology, but not the common sense.

But is Hanke’s description of Nigeria as the 6th most miserable country in the world accurate? Even if the Nigerian economy has not “virtually collapsed”, can misery be affirmed strictly on the basis of unemployment rate, inflation rate and lending rates? Does poverty necessarily translate into misery? Is the correlation absolutely given?  Nigeria ranks low in this 2019 Misery Index, just as it ranks low on the Human Poverty Index and the Human Development Index – these are challenges for governance and leadership. But does all that mean that Nigerians are miserable? The word misery connotes unhappiness, distress, wretchedness, hardship, suffering, affliction, anguish, sadness, sorrow, melancholy.

I think there are gaps in the Hanke Misery Index in terms of the parameters adopted; perhaps a more holistic assessment of the connection between economic growth and a people’s response as individuals and communities may have shown that economic prosperity and growth do not necessarily guarantee a people’s happiness. There may well be more misery in all the developed countries of Central Europe taken together than may be in Kenya or Cape Verde.

There are perhaps certain anthropological factors, a certain kind of neuroscience that accounts for a people’s happiness rather than cold macro-economic statistics. In 2011, Nigeria was classified as the happiest place on earth in a Gallup Poll and its people as the most optimistic. This was within the context of widespread underdevelopment, and all forms of social sector crisis. Nigeria’s status as a happy country was again confirmed in a World Values Survey in 2014. It is noteworthy however that in 2018, Nigeria was listed as the 91st happiest country in the world, and the 5th happiest country in Africa in the World Happiness Report. Obviously so much happened negatively in Nigeria between 2014 and 2018. But the sum indication is that as at 2018, Nigerians were adjudged happier than they were between 2014 and 2016.

How then can we suddenly become the sixth most miserable country in the world a year later? The difference is who is looking at what. The UN 2019 Happiness Report, for example, focuses on the human being and community, on relationships, or the neuro-science and the anthropology of happiness, rather than economic indicators. The World Happiness Report is more reflective of the Nigerian situation in my view than the Misery Index. We may have moved from being the happiest people on earth to the 91^stin the world, a reflection of the existential crisis that Nigeria faces, but the word misery does not quite capture the people’s true essence.

My point is as follows: the measurement of happiness or its antonym, misery is perhaps more subjective and experiential than academic and statistical. Culture and context should matter. Nigeria has been described as one of the poorest countries in the world. The country faces a problem of low level insurgency in the North East. Corruption is rife. Reports of all shades of violence are common place. The country’s wealth is concentrated in a few hands. Steady economic growth is a challenge. But we the people are not in misery. There may have been a slight increase in cases of suicide and depression in the country since 2015, but generally Nigerians are a resilient lot.

The average Nigerian is imbued with a fighting spirit.  If people in other countries go through what Nigerians have gone through and are still going through, such countries would have imploded. But Nigeria has not collapsed because the people’s fighting spirit is unique. In the midst of risks and vulnerability to poverty due to economic mismanagement by Nigeria’s leaders, the average Nigerian continues to forge ahead. These are people who don’t give up easily. They believe that tomorrow will be better. When they are faced with election rigging, voter intimidation, outright theft of public resources, these are people who are likely to say: is it not four years? “Let them come and do what they want to do and go away.”  When people get killed and are abandoned by the roadside, you’d be surprised that with the corpses lying in open spaces, some Nigerians can just pull seats together and begin to have a drink, a few metres away from a decaying body.

There is no weekend when there is no celebratory feast in a Nigerian community: flashy attires, expensive cars, exotic drinks, musicians waxing lyrical, and the men and women dancing away with no care in the world. I do not know any other country in the world where the parties and celebrations are as elaborate as the parties we throw in Nigeria. The Misery Index is talking about high unemployment rates in Nigeria. This is true but the people are so resilient, they manage to get by. They have learnt to move beyond their governments. Nigeria is the biggest market in Africa. Those who cannot get formal jobs find other things to do.

Come to Lagos, Dr. Hanke. Some of the young ladies you would see on the streets of Lagos and on Nigerian Instagram are from very poor backgrounds and they have no extra-ordinary skills, but you are likely to see them driving expensive cars, wearing bespoke clothes, the type that Kim Kardashian cannot even afford. This is the “small girl, big God” generation that puts a lie to all that talk about misery in Nigeria.  Besides, thuggery and cultism are considered professions in Nigeria, and regarded as more profitable and influential than medicine, law or engineering. Thugs and cultists are patronized by political leaders and they are well-paid for their efforts, particularly during election seasons.

It is only in Nigeria I guess, that a security guard, earning less than a $100 a month will have three wives and 10 children while his own employer will be struggling to maintain a family of four. It is also in Nigeria that you will find a civil servant having five wives and two concubines, even when he has not been paid a salary for 24 months. Misery? Professor Steve Hanke is an applied economist. He may not have visited some of the countries covered by his study, but in the case of Nigeria, he should not rely on textbook statistics. Unemployment rate, lending rate, inflation rate, GDP per capita may make sense to the economists, but those things sound like voodoo to the average Nigerian.

The people live in a zone that is beyond theory. The average Nigerian is not intimidated by the gap between the very rich and the very poor, for him or her, there is a religious, rather, a spiritual side to this thing called poverty or inequality. The Nigerian is told by the large population of prosperity evangelists in the country – Muslim, Christian, and animist – that he or she can become rich overnight. In Nigeria, you can see a man as poor as a church rat in January and by December he has a mansion in his village, attended to by a retinue of hangers-on, all very happy, and he too has become an employer of labour and he is likely to pay salaries more regularly than government! Nigeria is the ultimate headquarters of trade-offs; not even Arthur M. Okun could have imagined that. The Nigerian character and attitude both raise questions about the true nature of work, employment, economic growth, or the meaning of misery beyond the theories and “forecasts”. The other question is: what is the integrity of the applied data?