Obinna Chima opines that rising inequality in Nigeria and other parts of the world should be of much concern to policy makers.
A recent report by Oxfam, a global anti-inequality movement, showed that the world’s richest one per cent hold nearly two-thirds of all new wealth worth $42 trillion created since 2020, which is almost twice as much money as the bottom 99 percent of the world’s population.
Oxfam is a global movement of people who are fighting inequality to end poverty and injustice across the world. During the past decade, the richest one per cent had captured around half of all new wealth, the report titled: ‘Survival of the Richest’, has disclosed.
According to the report, billionaires have seen extraordinary increases in their wealth. During the pandemic and cost-of-living crisis years since 2020, $26 trillion (63 percent) of all new wealth was captured by the richest one percent, while $16 trillion (37 percent) went to the rest of the world put together.
It stated that a billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90 per cent. It further revealed that billionaires’ fortunes have increased by $2.7 billion a day.
“Billionaire wealth surged in 2022 with rapidly rising food and energy profits. The report shows that 95 food and energy corporations have more than doubled their profits in 2022.
“They made $306 billion in windfall profits, and paid out $257 billion (84 percent) of that to rich shareholders. The Walton dynasty, which owns half of Walmart, received $8.5 billion over the last year.
“Indian billionaire, Gautam Adani, owner of major energy corporations, has seen his wealth soar by $42 billion (46 percent) in 2022 alone. Excess corporate profits have driven at least half of inflation in Australia, the US and the UK.
“At the same time, at least 1.7 billion workers now live in countries where inflation is outpacing wages, and over 820 million people —roughly one in ten people on earth— are going hungry. Women and girls often eat least and last, and make up nearly 60 per cent of the world’s hungry population,” the report disclosed.
Inequality is a social relationship between the haves and the have nots as well as the rich and the poor.
The existence of poverty in a society means individuals and groups are drawn into unequal relations with others who are more powerful or have more privileged positions through which they have an advantage.
For instance, analysts attributed the rising cases of inequality in Nigeria and other parts of the world to the mismanagement of resources.
This has also led to a situation where state resources in some countries are being used to oppress members of the public.
Poor leadership and greed on the part of the political leaders, weaker institutions that are not independent and in the interest of the less privileged, monumental corruption at all levels in Africa, favoritism, amongst others were some of the factors that fuel inequality.
Clearly, globally, the gap between the haves and the have nots have continued to swell.
On daily basis, thousands of migrants from Africa, mostly Nigerians enter into Europe and other continents in search of greener pastures, in order to get out of what they perceive as the excruciating poverty and seeming uncertainty in the continent.
In the course of this, a lot of them migrate through dangerous routes through to Europe through Libya, with thousands of them getting sucked into a world of violent crime and slavery.
From all indication, Nigeria, which is hit by the ‘japa’ frenzy, appears to be most hit in the continent as the country battles brain drain.
Youths, who are dissatisfied with the state of the nation have continued to seek greener pastures abroad as the country is faced with insecurity, unemployment, among other challenges.
Indeed, extreme inequality is a barrier to prosperity for most people.
In Nigeria and most countries in the continent, prosperity is not trickling down to ordinary people, but up to those at the top, whose exceptional wealth is growing ever more rapidly.
There is a growing consensus in the continent that inequality is a crucial challenge and failure to act is both economically and socially damaging.
Inequality hinders growth, corrupts politics, stifles opportunity and fuels instability while deepening discrimination, especially against women.
The potential benefit of redistributing the wealth of the very richest, by even a tiny amount, tells a compelling story.
Way Forward
However, in order to reverse this trend, the World Bank, highlighted policy options that can help Nigeria address poverty and inequality.
It stressed that Nigeria needs at least three types of deeper, longer-term reforms to foster and sustain pro-poor growth and help raise people out of poverty.
“With Nigeria’s young population continuing to grow, the urgency of these reforms cannot be overstated. Now is the time to ensure that the country seizes its potential demographic dividend. First, macroeconomic reforms, including to fiscal, trade, and exchange rate policy, could help diversify the economy, invigorate structural transformation, and create good, productive jobs, especially wage jobs that offer the best pathways out of poverty.
“Despite crude oil’s vast contributions to exports and government revenues, less than one per cent of Nigerians are employed in mining and extractives, underlining the need to allow other, more labour-intensive sectors to flourish. Government spending could also be increased for pro-poor causes, such as health, education, and infrastructure—the main concerns among Nigerians themselves—by improving revenue collection and redirecting spending from expensive subsidies that benefit the rich more than the poor.
“Second, structural transformation and the creation of productive wage jobs on a large scale may not happen overnight, so policies to boost the productivity of farm and non-farm household enterprises will be crucial in the meantime. For farms, this includes developing new and more resilient crop varieties, as well as investments in storage, transport, and market access. For non-farm household enterprises, policies that ease credit constraints could be especially important.
“Third, for Nigerians to seize the opportunities available to them, the bedrock of infrastructure needs to be strengthened. The correlation between monetary poverty and access to electricity, adequate drinking water, and improved sanitation is extremely high in Nigeria. Yet information and communication technologies, including mobile phones, could also be used to help boost access to jobs and markets and to support the rollout of social protection programmes and other redistributive government policies,” the Washington-based institution stated.
Also, in a recent report titled, “Nigeria’s Poverty Trap and How to End It,” the Institute for Governance and Economic Transformation (IGET), recommended that the federal government should set aside between N5 trillion and N7 trillion yearly to fund the operation of a thorough, well-managed social security system, as well as a comparable, separate allocation for education, healthcare, water, and sanitation, in order to address rising poverty in the country.
It declared unequivocally that, “poverty is a significant strategic threat to Nigeria’s future. An estimated 95 million Nigerians live in extreme poverty, with more at risk from deprivation and loss of purchasing power from inflation and a stressed macro-economy, and the country’s population is growing rapidly.”
It also stated that the country required, “a new elite development consensus on development that cuts through partisan political and other divides, as well as a unity of purpose that is focused on the human development of its 216 million citizens, in order to start making meaningful progress in the eradication of poverty.”
The report added: “Abolition of the Land Use Act, civil service and security reforms to improve state capacity and gender empowerment, intensified family planning education and services, and resolution of the conflicts (or ‘silent wars’) in various parts of Nigeria that have caused and exacerbated poverty through internal displacement and decreased food production are all structural changes necessary to enable millions of Nigerians to escape the poverty trap.”
Commenting on the development, an Executive Director at Oxfam International, Gabriela Bucher, stated: “Taxing the super-rich and big corporations is the door out of today’s overlapping crises. It’s time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else. Forty years of tax cuts for the super-rich have shown that a rising tide doesn’t lift all ships —just the superyachts.”
Oxfam also called for a systemic and wide-ranging increase in taxation of the super-rich to claw back crisis gains driven by public money and profiteering. It pointed out that decades of tax cuts for the richest and corporations had fueled inequality, with the poorest people in many countries paying higher tax rates than billionaires.
“Worldwide, only four cents in every tax dollar now comes from taxes on wealth. Half of the world’s billionaires live in countries with no inheritance tax for direct descendants. They will pass on a $5 trillion tax-free treasure chest to their heirs, more than the GDP of Africa, which will drive a future generation of aristocratic elites.
“Rich people’s income is mostly unearned, derived from returns on their assets, yet it is taxed on average at 18 percent, just over half as much as the average top tax rate on wages and salaries,” it added.
Therefore, there is need for governments and policymakers to ensure that economies work for everyone and not just the fortunate few.
Efficient infrastructure, adequate access to financial and human capital, better living conditions, safety and security, good governance and the rule of law are some of the drivers of enabling productivity and must be addressed to ensure equal economic opportunities for all.
