Nigeria’s lamentable wealth distribution record has continued to provoke perplexing responses. She is an oil producing country that should by any standard, be considered wealthy, but the wealth is so inequitably distributed that most of it ends up in a few hands. According to the Brookings Institution, Nigeria overtook India midway into the year as the country with the highest number of people living in extreme poverty. While Nigeria, with an estimated population of 193 million, has about 87 million extremely poor people, India, which boasts a population in excess of 1.2 billion, has reduced the number of the extremely poor among its people to 73 million. While India is still reducing that number exponentially, Nigeria’s is increasing at the rate of six people every hour.
It therefore comes as no surprise that Oxfam, a United Kingdom-based charity, has just dropped another bombshell, describing Nigeria as the undisputable headquarters of inequality in the world. Oxfam’s Commitment to Reducing Inequality Index shows that, ranked on policies on labour rights, taxation and social spending, the known indicators for addressing inequality, Nigeria has fared badly for two years running, trailing countries like Uzbekistan, Haiti, Chad and Sierra Leone to occupy the bottom rung. Out of 157 countries surveyed, Nigeria placed 157th.
What that means is that it will be difficult, if not impossible, to meet the global target of extreme poverty eradication by 2030. It is also not surprising that Nigeria is facing a lot of political tension and general insecurity, as inequality is identified as a major source of anti-government sentiments, capable of fuelling civil unrest. This is why the government has to go beyond paying lip service to tackling inequality. Mark Goldring, the Chief Executive of Oxfam GB, says, “The concentration of extreme wealth at the top is not a sign of a thriving economy, but a symptom of a system that is failing the millions of hardworking people on poverty wages…”
On labour rights issues, Nigeria has got it wrong because, among other issues, the minimum wage has not been reviewed since 2011, in spite of the declining value of the naira over the years. With a monthly minimum wage of N18,000 (about $59 at the current exchange rate of N306 to one $1), a worker has to fend for the family, pay hospital bills, school fees and taxes, among many demands. What Nigerian workers are left with is but “poverty wages,” the kind that would only entrench poverty.
To worsen matters, the government has failed to properly capture many rich people in the tax net. Payment of tax has been identified by Oxfam as one of the ways of equitably distributing wealth. If handled well, it is a way of collecting the excess from the rich to fund social spending, thus helping to reduce inequality. But, at a tax-to-Gross Domestic Product ratio of six per cent, Nigeria has a notoriously low tax compliance rate, one of the lowest in the world.
Vice-President Yemi Osinbajo captured it vividly last year when he said that, out of 69 million identifiable taxable Nigerians, only 14 million were captured in the tax net. Quoting figures from the National Bureau of Statistics, he said that only 214 taxpayers paid N20 million or more annually, just as only 900 paid N10 million or more annually as tax. While all the 214 were resident in Lagos, only two of the 900 were based outside the country’s commercial capital.
But by far the most worrisome is Nigeria’s lack of adequate investment in social welfare. Oxfam explains that, from evidence garnered over 30 years from over 150 countries, “investment in health, education and social protection reduces inequality.” In Nigeria, the poor investment in health and education has been identified as reason for the death of one in 10 children before they reach the age of five and why 13 million children of school age stay out of school.
It also means that not everybody is able to access affordable healthcare and education, which are essential in addressing inequality. For instance, due to the poor funding of education and healthcare, many Nigerians opt for private schools and hospitals, which they pay for from their poverty wages, further deepening inequality and poverty.
Although the government has talked much about addressing inequality, very little has been achieved in that respect. At a lecture at the Oxford University, UK, recently, Osinbajo claimed that policies such as N-SIP and MarketMoni schemes had energised a lot of small businesses in the country. That Nigeria continues to post very poor results across all indices of human development, however, confirms that the impact of whatever the government is doing is not being felt.
As American philanthropist, Bill Gates, and other experts rightly note, the government has to increase its spending on social protection, carry out tax reforms, review workers’ wages and provide the enabling environment for private capital to create jobs if things must change for the better. The Organisation of Economic Cooperation and Development recommends investments in skills and education and a focus on promoting quality jobs as the main antidote to inequality.
Besides, Nigeria also has to keep faith with the Abuja Declaration of 2001, by which African Union countries pledged to set aside 15 per cent of their budget for the health sector and the Incheon Declaration of 2015 where 160 governments committed themselves to spending 20 per cent of their budgets on education. There are no other ways to escape from inequality other than to invest appropriately and ensure that corruption does not take away what has been earmarked for development.
