A new report by Development Finance International and Oxfam International, a charity organization in 90 countries globally, has revealed that Nigeria is the country least committed to reducing inequality. The report called the Commitment to Reducing Inequality Index 2018, placed Nigeria on the 157th position from 157 countries where the survey was done.
This year’s report, which is its second edition after the first was released last year, showed that some countries are making efforts to reduce inequality. They include South Korea, Namibia, and Uruguay.
On the other hand, inequality is getting worse in India, and Nigeria, who was also last on the index last year, while the US, one of the richest countries in the world, also perform badly on the index owing to the tax breaks given to the rich one percenters in the country by President Donald Trump.
The inequality gap, the factor which this survey examines, is the gap between the richest and the poorest citizens in these countries. The Index ranks countries according to their government’s commitment to closing that gap, and not on the actual closing of the gap. Hence, the index is a matter of policy formulation and implementation, and to see if there is a political will in these governments to make changes.
To enable it to measure accurately, the report looked at three criteria for the Commitment to Reducing Inequality (CRI) index: social spending, tax policies, and labor rights.
African countries in the index
The top 5 African countries in the index include South Africa, Namibia, Seychelles, Mauritius, and Lesotho. The last 5 African countries on the list are the Democratic Republic of Congo, Madagascar, Sierra Leone, Chad and Nigeria.
South Africa replaced former President Jacob Zuma in February this year after he was charged with corruption allegations, nepotism and overseeing economic slowdown in the country.
Zuma was replaced by Cyril Ramaphosa, a member of ruling party ANC, a billionaire and a former leader of one of South Africa’s biggest labor union the National Union of Mineworkers.
This year, South Africa increased its budget for education, health, and social welfare, with the aim of increasing access to higher education for all South Africans. This has made it move up on the CRI index measuring social protection.
The country was ranked number 1 last year for its progressive tax policies and has continued its good run with policies, which functionally places more of the tax burden on the people who can afford it the most.
For the third criteria, labor rights, South Africa’s parliament has made some policy changes to Unemployment Insurance Benefits and introduced three new forms of leave for employees.
The remaining four African countries in the top 5 have also made some changes in the past one year that has led to a move up the index for them. Lesotho increased its budget spending for education to 14 percent, 12 percent for health, and also has one of the most ‘progressive tax structures’ for a lower-middle-income country. It also has labor policies that are inclusive of labor unions and women rights.
Namibia is fifth on the CRI for middle-income countries. The report notes that, though the country is one of the most unequal countries in the world, into terms of the gap between the wealthiest and the poorest, the government is continually making efforts to close that gap, with inequality taking a steady downward trend since 1993. It is also no longer the world’s most unequal country.
Namibia is committed to social spending, with this commitment epitomized by free secondary school education in the country. The government has also increased the minimum wage while its taxation policies have helped to reduce inequality faster. Apparently, Namibia is not where it ought to be, but it’s making progress, which is the objective of the CRI index.
At the other end of the spectrum, the African countries not committed to reducing inequality have many things in common; a lack of commitment to spending money on social programs over the years.
The Democratic Republic of Congo is one of the most unstable countries in the world, with many militant factions fighting over the country’s rich mineral resources. The Central African country in the past year has increased taxes on natural resources and revoked guarantees for mining companies in the country. For a country desperately in need for foreign investment, these tax policies will make the financing of new projects near impossible.
The government of the DRC has cut budget spending in both health and education, despite 3.5 million children of primary school age are not in school and an estimated 70 percent of Congolese have little or no access to health care.
With 77 percent of DRC’s population of about 80 million people living in poverty, the country cannot afford to not find the political will to commit to reducing inequality.
Nigeria’s ‘commitment’ to an unequal society
For Nigeria, the report is damning. To put into context, countries like Syria, Iraq, who are fighting presently fighting wars are more committed to reducing inequality than Africa’s biggest economy. Nigeria also has the highest number of people leaving in extreme poverty, about 86.9 million of its citizens, despite having Africa’s richest billionaires. The combined wealth of the 5 richest Nigerians could lift the country out of poverty.
“In the past year, Nigeria has seen an increase in the number of labor rights violations. The minimum wage
has not increased since 2011. Social spending has stagnated.” the index said. “There is still significant potential for Nigeria to raise and collect more tax, so it scores very badly on this aspect too.”
However, the report says there are new developments regarding taxation policies in the country which would be reflected in next year’s report. One of such policies is VAIDS; Voluntary Assets and Income Declaration Scheme, which was described as ‘time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods and pay any taxes due.’
With reports that there are now 13.2 million out-of-school children in Nigeria, the highest of any country in the world, and an exigency for better maternal and child health, Nigeria’s budgetary allocation for these two sectors has been underwhelming. Nigeria budgeted 7.03 percent of its 2018 budget to education, far below the 20 percent benchmark set by the United Nations Educational, Scientific, and Cultural Organization (UNESCO), while it also budgeted 3.9 percent of the budget to health, which was also far below 15 percent commitment signed by African leaders in 2001 in Abuja.
For Nigeria to reduce inequality, the government needs to formulate policies that would lead to the registration of more children in schools, adult literacy campaigns to increase the skilled workforce in the country, increase budgetary allocation to education and health.
There is hope that the present administration in Nigeria is committed to reducing inequality in the country with social intervention programmes like the Trader Moni, a cash transfer of 10,000 naira given to small-scale traders and market women. Social spending like this, with the adoption of better tax policies, and better labor rights for Nigerian employees will reduce inequality (beginning with an increase in minimum wage), and close the gap between the richest and the poorest.