Oxfam's absurd poverty reduction claim

By Tunde Obadina

In a recent report on inequality in Nigeria the UK-based charity Oxfam made the incredible claim that the combined wealth of the five richest Nigerians could end extreme poverty in the country. The organisation explained that the wealth owned by the five totalled $29.9 billion in 2016 whereas only $24 billion was required to lift the 112 million Nigerians living on less than $1.90 a day from severe poverty for one year. This presentation makes eradicating poverty seem easy. All the government has to do is confiscate the wealth of five individuals and spread it among the poor masses. 

Of course this is fantasy thinking. Oxfam, which earlier made another headline-grabbing claim that in 2015 just 62 people had as much wealth as the poorest half of humanity, has a faulty understanding of wealth and poverty. For a start the $30 billion worth of assets owned by five tycoons, led by Africa’s richest man, Aliko Dangote, is unlikely to exchange into any amount near $30 billion in cash that can be given to the poor. Most of the wealth Oxfam is eying is in the form of equity holdings. Once the government or any other enforcer puts the confiscated shares on the market their value will most likely fall. This is what tends to happen when large quantities of shares are dumped on markets.

The fact is that equity wealth is volatile. At the point Oxfam made its calculations Mr Dangote was reckoned by Forbes to be worth $14.4 billion, but his net worth has since dropped to $11.9 billion as at May 2017. According to Bloomberg Billionaire Index Dangote’s net worth has plummeted from a high of $25.7bn in July 2014 to $9.89 billion in May 2017.