Sir Pascal Ebhohimen Ph.D
The proposal to use vouchers as a targeted intervention for low-income earners is, in principle, a reasonable policy option. However, the critical questions are: Who qualifies as a low-income earner? How do we identify them accurately? And how do we ensure that the intervention achieves its intended objective?
1. Who is a Low-Income Earner?
An income test seeks to determine whether an individual or household falls below a defined income threshold. This is relatively easier in the formal sector, where income can be verified through payroll records, tax records, pension contributions and other employment-related documentation.
In the Nigerian context, individuals in the formal sector earning below the prevailing minimum-wage threshold of about ₦70,000 per month, particularly where their employers provide little or no additional welfare or cost-of-living support, could reasonably be regarded as low-income earners.
However, the situation becomes considerably more complicated in the informal and non-formal sectors.
A trader, artisan, farmer, commercial driver, domestic worker or other self-employed person may have no regular salary, no formal payslip and highly fluctuating income. Their apparent daily or monthly income may also fail to reflect their actual disposable income after business expenses, transportation costs, food costs, rent, school fees and other household obligations.
Therefore, income alone may not be a sufficiently reliable basis for determining vulnerability. A household-based means test, taking account of income, household size, assets, expenditure and other socioeconomic indicators, may provide a more realistic assessment.
2. The Problem of Identifying Beneficiaries
This is where the administration of a targeted voucher becomes problematic.
Nigeria still faces significant challenges in obtaining accurate, comprehensive and regularly updated socioeconomic data that can reliably classify households into income or vulnerability brackets.
Although the National Identification Number (NIN) provides an important foundation for establishing identity, having a NIN does not, by itself, mean that government possesses a sufficiently accurate and current database showing the income, assets, household size and economic circumstances of every citizen.
The problem is further complicated by the rapidly changing cost of living. Inflation, high food prices, rising transportation costs, housing expenses, healthcare costs and other economic pressures can quickly push households that were previously considered financially stable into vulnerability.
Consequently, a static income threshold can easily become outdated.
3. Targeted Subsidy: Yes—but Governance Is the Bigger Question
I am not opposed to targeted subsidies. Indeed, where properly designed and administered, they can provide temporary relief to vulnerable citizens while government addresses the structural causes of economic hardship.
The more fundamental concern, however, is the governance architecture surrounding the subsidy.
For a subsidy to function effectively as a policy instrument, government must establish clear rules concerning:
* Who qualifies;
* What is being subsidised;
* Why the subsidy is necessary;
* How much it will cost;
* How long it will last;
* How beneficiaries will be identified;
* How payments or vouchers will be delivered;
* Who will monitor implementation;
* How leakages, duplication and corruption will be prevented;
* What measurable outcomes are expected; and
* When and under what conditions the intervention will end.
Most importantly, there must be credible tracking, monitoring and measurement of impact.
The ultimate objective of any subsidy should not simply be the number of vouchers distributed or the amount of money spent. The real measure of success should be whether citizens’ welfare has actually improved.
4. The Risk of a Temporary Intervention Becoming Permanent
There is also a significant danger that a targeted subsidy introduced as a temporary intervention could gradually become a permanent government programme.
If there is no clearly defined start date, duration, review mechanism and exit strategy, the subsidy may become politically difficult to withdraw, even when the original circumstances that justified it have changed.
This creates a serious question of fiscal sustainability.
A subsidy should therefore have a clearly defined life cycle:
Identify the problem → Define the target group → Introduce the intervention → Monitor implementation → Measure impact → Review effectiveness → Adjust or terminate the programme.
5. Addressing the Structural Problems
Ultimately, vouchers and targeted subsidies can provide temporary cushioning, but they cannot substitute for addressing the structural causes of poverty and declining living standards.
Government must simultaneously confront the underlying problems of:
unemployment and underemployment, insecurity, inflation, food production and distribution challenges, excessive government waste, corruption, weak public-sector accountability and inefficient use of public resources.
If these structural problems remain unresolved, government may find itself repeatedly introducing subsidies to compensate citizens for the consequences of policies and governance failures.
Conclusion
Therefore, my position is not that targeted vouchers are inherently wrong. The issue is whether Nigeria has the institutional capacity, credible data, transparent processes and governance discipline required to administer them effectively.
A targeted subsidy can be a useful temporary social-protection instrument, but it should never become a substitute for good governance, job creation, economic productivity and responsible management of public resources.
The real policy question should therefore not only be:
“How do we give vouchers to low-income earners?”
It should also be:
“How do we accurately identify those who genuinely need assistance, deliver it transparently, measure whether it improves their welfare, and address the structural conditions that make such assistance necessary in the first place?”
That is the governance challenge at the heart of the debate.
