Economic inequality is the difference between various measures of economic well-being among individuals in a group, among groups in a population or among different countries. Economic inequality is a measure of equity and equality of economic opportunities.
Increasing economic inequality retards long-term growth and development of a nation. While globalization has reduced economic inequality between different nations, it has actually increased economic inequality within a nation. The daily hustling of a majority Nigerians just to put food on their tables and solve basic needs in the face of accumulation of massive wealth by a few Nigerians is a clear representation of economic inequality in Nigeria. National positive economic indices are on the increase yet the poverty level among many Nigerians is also on the increase.
Nigeria represents a classical case where the benefit of the increase in economic indices is reaped by just a few individuals. According to a study done a few years ago by the National Bureau of Statistics, annual economic growth in Nigeria reached an average of over 7% in the 2000s, yet there was an increase in the number of people living below the national poverty line within the same period.
Poverty in Nigeria is higher in rural areas than in urban areas. The percentage of urban population living below the national poverty line is usually lower than the percentage of rural population living below the national poverty line.
The percentage of the population living below the poverty line is also higher in the northern part of the country than in the southern part. With figures for the lowest poverty rate in Nigeria being at about half of the population, the poverty alleviation programmes of past and present Nigerian governments have obviously failed to produce desired results. Multi-sector deprivations in education, health and welfare usually occur in most poor Nigerian homes. This is because the economic inequality is accompanied by low, unequal and inefficient provision of infrastructure and services. Multidimensional inequality in Nigeria is one of the highest in the world.
According to a 2015 human development report done by the United Nations Development Programme, Nigeria had the second highest percentage of multidimensional poverty and the highest raw figure of multidimensional poverty from a list of countries with available statistics. The incidence of multiple taxation bites the average Nigerian much more than the wealthy class.
The average Nigerian is unsophisticated and loses a substantial percentage of his income to multiple taxes while the big and sophisticated companies hire the best professional services that help them evade tax by exploiting loop holes in the existing tax laws. These professionals shift huge profits to companies in tax havens where the tax rate is lowest. Local council authority levy, land levy, market security levy among others are the multiple taxes that average Nigerians cannot avoid.
Gender discrimination also promotes economic inequality. Women face a lot of socio-cultural and traditional barriers that put them on the receiving end of gender gap indices. The nation is actually loosing from its inability to fully exploit the economic potentials and capacities of women. The womenfolk do not receive enough education, healthcare and participation in politics resulting in an inability to properly negotiate their economic welfare. Many factors promote gender based economic inequality. Most women usually find themselves in casual, low-skilled and informal employments where the financial remuneration is usually low. Sadly, agriculture which is a major employer of labour for the womenfolk is done at subsistence level.
Most of the households headed by women have little or no access to land despite the fact that many of Nigeria’s rural labour force are women. Some financial institutions ask women to present approvals from their husbands as a pre-requisite to give them loans. The resultant limited access to assets by the womenfolk is a major promoter of gender-based economic inequality.
Some employers of labour prefer to engage women to do menial labour because they know that the women are less likely to complain about low wages and poor working conditions. According to a report done by the British Council a few years ago, Nigeria has one of the lowest rates of female entrepreneurs in sub-Saharan Africa.
Pro-activeness on the part of the government is key to addressing economic inequality. The government must properly implement well-targeted income support policies and encourage access to employment.
Better access to formal education and job-related training for low-income earners should be promoted. This will go a long way to improve their productivity potential and future earnings.
Eke is a Programme Officer at Centre for Social Justice, Abuja