By Abdul Tejan-Cole
Last week: Oxfam – an independent NGO – focused on ending the injustices that cause poverty. Jointly with Development Finance International – a US-based international business development advisory firm – OXFAM produced a report titled: “The West Africa Inequality Crisis: How West African Governments are failing to reduce inequality and what should be done about it.” The report concludes that inequality is at “crisis levels” in West Africa.
It says: “While a small but growing number of people are becoming fantastically rich, the vast majority are denied the most essential elements of a dignified life, such as quality education, healthcare and decent jobs, despite remarkable economic growth driven by extractive industries.” It notes that governments in West Africa are the least committed to reducing inequality on the continent and warns that if they do not radically increase their commitment to reducing inequality, the crisis is likely to worsen.
The report is based on the Commitment to Reducing Inequality (CRI) Index, devised by Development Finance International (DFI) and Oxfam to assess the extent to which governments are committed to the fight against inequality and compares their efforts. The index measures the commitment of 157 governments worldwide in three areas found to be critical to reducing the gap: public expenditure and social spending, progressive taxation and labour rights.
It looked at the various facets of inequality. On wealth inequality, the disparity is disturbing. The report notes that high net worth individuals (HNWIs) – those individuals defined as holding financial assets with a value greater than US$1 million – own roughly 40% of the $2.3 trillion individual wealth held on the continent. Five of Nigeria’s wealthiest people, including Africa’s richest man, Aliko Dangote, (net worth US $14.4 billion), telecom and oil tycoon, Mike Adenuga, (net worth US $9.9 billion), and energy tycoon, Femi Otedola, (net worth US$1.85 billion), have a combined wealth of $29.9bn – more than their country’s entire national budget for 2017.
In the past two decades, African countries have consistently registered some of the highest Gross Domestic Product (GDP) growth rates. Many have recorded the massive rises in wealth – Côte d’Ivoire (by 43%), Ghana (39%) and Nigeria (19%). In 2018, several of the world’s fastest-growing economies – Ethiopia, Rwanda, Ghana, Côte d’Ivoire, Senegal, Benin, Kenya, Uganda, and Burkina Faso – were in Africa. However, most of these economies are undiversified, and the growth is driven by natural resources and commodity prices.
The record increase in wealth and GDP has, unfortunately, benefited only a select few. It is evident to everyone living on the continent that inequality has reached extreme levels. The wealthiest 1% (one percent) of West Africans own more than everyone else in the region combined; hence the region remains amongst the poorest and most unequal in the world. According to the UNDP’s 2018 Human Development Report, Niger (189) is at the bottom of the index. Sierra Leone (184), Burkina Faso (183), Mali (182), Liberia (181), Guinea-Bissau (177), Guinea (175) and Gambia (174) are the bottom rungs of the index. Malnutrition, poverty, illiteracy, inadequate healthcare plague these countries, notwithstanding the purported growth.
The Oxfam report illustrates its point with examples from Nigeria and Ghana, the two top economies in West Africa. In Nigeria, the richest man earns about 150,000 times more from his wealth than the poorest 10% of Nigerians spend on average on their basic consumption in a year. It would take 46 years for the richest Nigerian man to spend all of his wealth, even if he spent at a rate of $1m a day. It would cost about $24bn a year to lift the 50% of Nigerians below the threshold for absolute poverty of $1.90 a day (in 2011 Purchasing Power Parity dollars) out of poverty. Among Nigeria’s population of over 200 million, more than one in four do not have access to safe water, and two-thirds lack adequate sanitation. Ten million children are out of school, and more than half of the population (112 million) live in extreme poverty.
In Ghana, West Africa’s second biggest economy, the wealthiest 10% of Ghanaians account for 32% of the country’s total consumption. This is more than the consumption of the bottom 60% of the population combined, while the very poorest 10% of Ghanaians consume only 2%.
As regards income inequality, data are unfortunately sparing. The report cites the case of Ghana, where household surveys were conducted in 2012/13 and 2016/17, income disparities have widened. Oxfam states that the National Health Insurance Scheme covers less than 2% of the poor. It notes that a child born in Ghana to one of the wealthiest families is three times more likely to make it past their fifth birthday than a child born to a poorer family.
Inequality also has a strong gender dimension. In Ghana, men own 62% of places of residence and 62% of agricultural land, while only 37% of owners of real estate are female. The richest man earns more in a month than one of the poorest women could earn in 1,000 years. In the decade ending in 2016, the country saw 1,000 new US dollar millionaires created, but only 60 of these were women. While a few people grew super-rich, nearly one million more, mostly from the Savannah Region of the country, were pushed into the poverty pool, while thousands of those who were already poor sank even deeper.
All but three of the countries in West Africa – Cape Verde, Ghana and Senegal – fall into the lowest possible category on UNDP’s Gender Development Index. Gender inequalities can be found in political representation. Women in parliaments increased only marginally from 13% in 2007 to almost 16% in 2017, with wide disparities across countries ranging from 5.8% in Nigeria, 7.2% in Benin and 8.8% in Mali to 42% in Senegal. The labour market shows similar patterns, being dominated by men and displaying significant pay gaps between men and women in the few places where data are available for West Africa.
According to the report, an estimated 70% of the poorest girls in Niger have never attended primary school; among those who have attended, school supplies and materials account for almost 75% of spending on education for the poorest households. Niger is the least educated country in the world, with an average length of schooling being just 18 months. Only one in two girls goes to primary school, one in 10 to secondary school and one in 50 to high or tertiary school.
The report cites rural urban inequality as one of the greatest inequalities, with sharp divides across all countries between rural-urban and north-south, with sharp divides across all countries between rural-urban and north-south. These divides take the form of higher levels of inequality, poverty and poor human development outcomes in rural areas compared with urban centers. Although the rural economy is the backbone of most economies in the region, rural communities have the least access to all forms of public services, from education to healthcare.
The Oxfam report notes that inequality and poverty are not preordained. They are the products of political choices and sound public policies. Tackling inequality is critical to the fight against extreme poverty. Like Nigeria, Brazil is one of the most unequal societies in the world. The wealthiest 5% of the population have as much wealth as the remaining 95%. The six richest men in Brazil have as much wealth as the poorest 50% of the population – over 100 million people who live in favelas – slum dwellings – without access to basic essential services and employment. However, as Oxfam notes, Brazil has been able to reduce inequality by taking millions of people out of poverty, thereby raising the base of the social pyramid. It has demonstrated that proactive policy interventions can reduce distorted wealth accumulation and resultant wellbeing inequalities.
The report proffers several prudent approaches to address the problem and improve commitment to reducing the disparity gap. Although many policy interventions are highly context-specific, many of these recommendations are highly relevant. They include sufficient spending on universal quality public services; allocating a minimum of 20% of government budgets to boost universal public quality education that is free of charge, with a special emphasis on improving access to high-quality primary and secondary education and allocating a minimum of 15% of government budgets to fund a public health sector that is free of charge, universal, easily accessible and of high quality. It also recommends the enactment of universal social protection programmes that are adequately funded and beneficial to mainly the poorest people; implement universal tax-based public services and social protection programmes and the redistribution of wealth from the rich to the poor through progressive taxation.
On taxation, the report recommends increasing tax revenues by collecting more from those who have more in order to better fund basic social services; increase the overall progressivity of the tax system by expanding taxes that are typically paid by the rich, such as wealth taxes, taxes on capital gains, personal income tax for top earners and property taxes, as well as corporate income tax for large companies, and by reducing dependence on consumption taxes such as VAT, which tend to fall disproportionately on the poorest people and in particular on women. It advocates for measures to ensure that multinational corporations pay their fair share of taxes by strengthening anti-tax avoidance policies, transfer pricing legislation and counter-measures against tax havens and the introduction of robust regulations and improving the capacity of national revenue authorities to curb illicit financial flows.
To address gender inequality, the report calls for legislation to enforce equal pay for equal work for men and women and invest in skills and on-the-job training for women. It also urges governments to increase support and implement policies to better help small-scale farmers by allocating at least 10% of government budgets to support agriculture, developing National Agricultural Investment Plans that are gender-sensitive and seek primarily to support small-scale farmers in non-cash crop sectors; strengthen the land rights of the poorest people by inter alia stopping the large-scale land grabbing that is currently happening at the expense of small-scale farmers.
Although the report does not mention it, another key recommendation will be to provide universal access to affordable, reliable and sustainable energy. This is crucial for sustained and equitable growth. More than 640 million people, two-thirds of the continent’s population, do not have access to electricity. Improving access to energy will help ensure that medical care is safer, agriculture more productive, services are efficiently delivered and move people away from subsistent job. In short, addressing energy poverty will improve lives in Africa. It is a prerequisite for achieving wider poverty reduction goals and reducing inequality.
Addressing inequality is a no-brainer. Failure to do so drives poverty upwards, fuels human rights abuses and undermines the ability of governments to fulfil their obligations to citizens. Many reports have pointed out that in highly unequal poor countries, the lives of millions of people are harsher and shorter, many of those who cannot afford life-saving healthcare face preventable deaths or disabilities and opportunities to escape from poverty and progress up the social ladder are limited compared with more equal countries.
Inequality is not unique to West Africa. However, it is a relatively recent phenomenon in the region. The many social safety nets and welfare state provided by governments and extended families are increasingly crumbling and giving way to a capital-driven market economy. The Bretton Woods institutions have spearheaded neoliberal reforms in Africa, which in turn spurred GDP growth and while widening inequality and weakening the capacities to deliver social benefits.
For many African governments, growing GDP became an obsession. This helped ensure that almost every African country is today less equal than it was in 2010. The trickle-down benefits of economic growth have been negligible. Focusing exclusively on economic growth has only led to the accumulation of wealth by a few and deepened the poverty of many.
Sustainable Development Goal 10 enjoins all nations to take steps to reduce economic inequalities by, among other things, empowering those at the bottom of the income ladder. I fully agree with Oxfam that acting to roll back the economic divide in West Africa is an urgent priority, given the widespread poverty and insecurity, the fragility of fledgling democracies and poor access to essential services that characterize the region. Governments in the region must show more commitment and reduce inequality to help address poverty, reduce crime, manage conflict and social tension and prevent future conflicts.
© 2019 Politico Online
