Tackling Economic Inequality

Economic inequality is a serious challenge among countries in Africa. In this report, Ugo Aliogo focuses on the Nigerian situation

Economic inequality, also known as income inequality, is the unequal distribution of a country’s wealth. The issue, unfortunately, is not assuming a positive narrative in Nigeria and sub-Sahara Africa.

Oxfam International in a report stated that economic inequality in Nigeria has reached extreme levels, despite being the largest economy in the continent. The country, it noted, has an expanding economy with abundant human capital and the economic potential to lift millions out of poverty.

The report further stated that the combined wealth of Nigeria’s five richest men, which is at $29.9 billion, could end extreme poverty at a national level, but demurred that in the face of such stupendous wealth, five million Nigerians face hunger.

It added that more than 112 million people are living in poverty in the country, yet the country’s richest man would have to spend $1 million a day for 42 years to exhaust his fortune.

At her recent visit to Cape Town, South Africa, the British Prime Minister, Theresa May, noted that most of the world’s poorest people are Africans, adding that increasing wealth has brought rising inequality, both between and within nations.

May explained that much of Nigeria is thriving, with many individuals enjoying the fruit of a resurgent economy, but stated that 87 million Nigerians live on less than $1.90 a day, “making it home to more very poor people than any other nation in the world.”

According to Africa Renewal, a United Nations publication, many countries in Africa such as Cote d’Ivoire, Mauritius and Rwanda have registered remarkable economic performance over the past decade, lifting millions out of extreme poverty and making schooling and health care available to larger shares of their populations; whereas others have lagged.

It also noted that when the international community adopted the Millennium Development Goals (MDGs) in 2000, their focus shifted more towards anti-poverty measures and improvement in social well-being.

The report further stated that poverty subsequently fell in many African countries that were experiencing economic growth. Yet despite the generally robust growth, nearly half the continent’s people still live on less than $1.25 a day. Studies have shown that where there is less inequality, the benefits of growth reach wider sectors of the population. In more unequal nations, however, the rich garner the biggest share and the poor get little.

It added that this realisation underlay the 2015 negotiations over the Sustainable Development Goals (SDGs). The global goals call not only for ending poverty, but also for reducing inequalities within and among nations. The UNDP terms this a “radical shift” intended to address the “last mile of exclusion” that prevents many people from improving their lives.

“In analysing income inequality in Africa, the UNDP report focuses on 29 sub-Saharan countries (which account for 80% of Africa’s population) for which there is adequate data on household consumption. It also shows that between 1991 and 2011, 17 of those countries managed to reduce their degree of income inequality. But the remaining dozen registered an increase in income inequality over the same period,” it noted.

To understand the issue properly from a development perspective, THISDAY spoke to the former Governance Adviser/Regional Coordinator, Department for International Development (DFID), Dr. Sina Fagbenro-Byron.

In assessing the issue of economic inequality, Fagbenro-Byron stated that it was an aftermath of post-independence conflicts, which he noted include military regimes and coup d’etat. “Conflict situations results in displacement, and an erosion of accountability in governance,” he stressed.

He added that the second cause of inequality is social exclusion and could be in terms of attitudinal, environmental and institutional exclusion. He observed that the major people suffering from this exclusion are the youth, women, the disabled, and the elderly.

He said the government had failed in constructing an inclusive society, where everyone has equal access to social and economic amenities; political structures, and administrations.

Fagbenro-Byron who expressed displeasure with the situation, said that the country had at least 112 million people that were living below the poverty line as at 2010-2011. He added that it becomes very unacceptable, especially when the risk of economic growth itself in Nigeria might have been increasing from 2003, 2004.

“So, you have an economic growth that is increasing without the impact of the economic growth being felt by the poor, which simply means that the minority, which is a very small population, is either responsible for or is benefitting from the economic growth,” he noted.

He explained that the situation the country is faced with is growth without development, noting that the fact that country’s economy is growing does not reflect that growth in the well-being of the larger population.

Another individual who shed light on the issue with the purpose of bringing deep insights and understanding into the topic, is the Acting Head of Department, University of Lagos, Dr. Ibrahim Bakare.

He noted that every economy generally focuses on economic disparity in three metrics: the wealth, the income, and consumption. He said that the issue of economic inequality is relevant to the quality of outcome and opportunity.

Bakare explained that economic inequality in the county is on the higher side; because there is a rich minority, which constitutes less than one percent of the population structure, in possession of the income of the country. “The gap between the rich and the poor will be very wide, given the prevalent poverty situation,” the don emphasised.

He argued that in an economy where poverty is prevalent, it is impossible to rule out a situation where the ‘have-nots’ would be more relative to the ‘haves’, adding that some of the factors responsible are corruption, economic problems, political instability, institutional failures, and gender inequality.

Gender Inequality
Another major issue under this subject-matter is gender inequality. According to UNDP publication on Africa Human Development Report 2016, titled “Advancing Gender Equality and Women’s Empowerment in Africa”, gender inequality is costing sub-Sahara Africa, on the average, $US95 billion a year, “peaking at US$105 billion in 2014—or six percent of the region’s GDP, jeopardising the continent’s efforts for inclusive human development and economic growth.”
The report highlighted that in sub-Sahara Africa, household income disproportionately favours adult males and gender discrimination is acute and endemic.

The report correlates gender equality with human development, noting that Mauritius and Tunisia have low levels of gender equality and high levels of human development. “Conversely, Chad, Mali and Niger have high levels of gender inequality but low levels of human development,” it observes.

Bakare said the gender inequality in the country is on the high side, considering that the indicators show the male dominate the female in the political and economic space.
He called for recognition of the rights of women in the political and economic settings as a key measure to promote gender equity and justice.

His argument on the issue is that there is a gender gap in favour of males against females in the labour market, and women are usually discriminated against.

He said for women, relocation, marriages, and pregnancies are also other factors responsible for the issue of gender inequality.

The University lecturer remarked that the gender inequality concept establishes the relationship between male and female in terms of how they are situated in the economic and social systems.
Bakare espoused that economic inequality could be seen as the bigger picture that affects males and females on a general note,

The Ag. HOD posited that it would not be wrong to assert that economic inequality between genders could be said to be the leading cause of economic inequality; “whereas, inequality between social classes could be said to be larger causes of inequality.”

In suggesting the necessary recommendations to address the issue, Fagbenro-Byron, said citizens’ participation and access to governance are strategic, adding that there are two sides to governance: the demand and the supply side.
He said the citizens would provide the demand side and noted that only an enlightened citizenship can provide the demand side of good governance. “Where you have a mass population that is illiterate, they will only reinforce that poverty,” he noted.

According to Fagbenro-Byron, “there is the need for zero tolerance for illiteracy.”
“There is also the need for the strengthening of certain laws, especially the ones relating to gender. We have to make sure that the Nigeria Gender Policy of 2014 is enforced and adapted in all States. There is also Violence Against Persons Prohibition Law which has to do with gender, but it is protective of certain populations. We should make the tax system more equitable.

“Presently, those benefitting from the tax system are the rich, while the small companies are suffering at the state government levels. At the state government levels, they are very irrational with the way they handle their tax regimes and they attack the informal sector and small businesses.

“We have to put in place, anti-trust laws. We have to empower small holder farmers’ in order to increase food production. We have to go back to micro financing. Micro-financing deals with small holdings and small areas. Our economy can only be diversified when those who have the creative elements to run the economy has access to finance.”

In his recommendations, Bakare urged government to put in place proper institutions necessary for correcting the mistakes of the past and the institutions should be no respecter of the ruling class.

According to him, “In Nigeria, we need an enabling law where the effect of all and sundry will be documented.
“We also need a justice system that will allow Nigerians to be treated equally.

“Government should put in place necessary fiscal policy measures whereby the rich is tasked more and whatever that is realised is used to provide basic amenities for the poor.

“Here, what I imply is that there is need for a progressive tax system. It is a type of income distribution mechanism. Government should do a lot in providing the enabling environment where entrepreneurial efforts and innovations will strive.

“Government should also ensure that corruption is reduced, because in fighting inequality, the illicit wealth in the hands of most Nigerians should actually be taken through due process. Government should not focus on the opposition in fighting anti-corruption; it should be balanced,” Bakare counselled.

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