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Bridging The Inequality Gulf



It is now a common but distressing fixture that whenever any comparative study is carried out on any subject that touches on socio-economic wellbeing, the outcome always returns a dismal performance by Nigeria.

The latest is a study on inequality gap between the rich and the poor – a collaborative work by Oxfam International and Development Finance International (DFI), both based in the United States of America.

The report on this study ranked Nigeria as the worst among 157 countries on the Commitment to Reducing Inequality (CRI) index, which rates governments based on what they are doing to close the gap between the rich and the poor.

The 2018 report released recently at the annual International Monetary Fund and World Bank meeting in Bali, Indonesia, based the ranking on three major indicators – social spending, taxation and labour rights, especially as it concerns women. The three are considered critical areas in closing the inequality gulf.

According to the CRI, a rise in labour rights violations and reduction in social spending over the past one year have caused Nigeria’s position to remain stagnant.

Denmark sit atop this year’s CRI Index with the highest score, followed by Germany, Finland, Austria and Norway – countries credited with having the most progressive taxation policies and best labour market practices in the world.

On the flip side, Nigeria has the unenviable distinction of being at the bottom of the Index for the second year running, with abysmally low spending on health, education and social protection.

For instance, in the N7.44 trillion ($23.7 billion) budget for 2017, the health ministry got just 5.36 per cent while education was allocated a paltry 3.4 per cent of the total budget, a far cry from the 26 per cent threshold recommended by United Nations Children’s Fund (UNICEF).

This is not helped by the fact that a huge chunk of this already low government budget is lost to pervasive and systemic corruption.

It is not surprising that, instead of reducing, the figure of out-of-school children has risen beyond the 10 million it was a few years ago, the highest in the world. Also, a tenth of Nigerian children do not reach their fifth birthday and 3000 women and children die daily due to avoidable diseases and lack of access to health care. 

The Oxfam-DFI report also found that Nigeria scored low on workers’ rights and wages, especially in the case of women. Nigeria ranked 118 out of 144 countries in the 2016 Global Gender Gap Report; the average income of a Nigerian woman ($4,280) was more than $3,000 lower than that of a male counterpart ($7,483).

In the past year, Nigeria has witnessed a lot of labour tensions. For many private sector workers, they are left to the devices of their employers with no institutional support to enforce workers’ rights or negotiate just wages, while the long negotiations for a new national minimum wage has not made much headway, hinting at another nation-wide strike. In both public and private sectors, salaries and pension are owed for months, plunging wage earners deeper into the poverty pool. Where salaries are paid, inflation and devaluation have nullified their purchasing power. All these have resulted in the very poor social outcomes for the citizens.

Sadly, Nigeria is a country of economic extremes. The vast majority of the country’s wealth is concentrated in the hands of few who control the extractive and manufacturing industry.

It is reported that the wealth of five individuals, can wipe out poverty in Nigeria. Oxfam International estimates that eradicating extreme poverty in Nigeria would cost about $24 billion, $5.9 billion less than the combined wealth of the richest five.

The third plank of the inequality indicator is taxation. While low income workers and small businesses are plagued with all manner of taxes by local and state governments, wealthy industrialists and big conglomerates dodge paying taxes by obtaining waivers and other concessions.

A former finance minister disclosed that these waivers set Nigeria back to the tune of N800 billion from 2011 to 2013 alone.

We agree with the report that inequality slows economic growth, undermines the fight against poverty and increases social and economic tensions.

It is, however, encouraging that this social dislocation can be reversed through targeted government policy. But while some governments are tackling it by increasing taxes on the richest earners, dramatically increasing the minimum wage and spending on health, education and other social services in a bid to close the rich-poor gap, Nigeria is reported to have shown no concern.

This needs to change.  Since the research has identified the three critical variables for bridging this inequality gap, government at all levels should enunciate pro-poor policies such as free and qualitative education, comprehensive health coverage, stable power and soft loans, in addition to progressive taxation and decent wages for workers.





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