Inequality cannot be reduced if the question of just and equitable wages is not addressed, and if the tax system is not reformed and made to ensure that corporations and the rich pay appropriate taxes, and that this tax system should be a progressive tax system where rich pay more than the poor.
This write up is based on the adaptation of presentations that I made at two consecutive forums on inequality in Nigeria organized by Oxfam in Nigeria in December of 2015.
As part of its ongoing global campaign to end what it calls ‘extreme inequality’, Oxfam, an International Development Agency and a global leader in the development and humanitarian sectors had commissioned several researches and studies on inequality, the reports of which were recently launched in Nigeria in December of 2015. [See ‘Even It Up; Time to End Extreme Inequality’; and ‘Working for the Few’ 178 Oxfam Briefing Paper among others].
The reports are quite instructive and revealing in their findings which confirm the trend already noticed by perceptive minds and social transformation activists over several years and decades, towards a deepening gorge between the poor and the rich globally, within and across countries.
Rich countries are growing richer while poor countries are growing poorer, just as similarly within countries the rich are growing richer and the poor are growing poorer.
Let us take a look at the global picture before we zero in on the continental and then national [Nigerian] outlook.
Globally for instance the combined wealth of the top 1% richest people amounts to a whooping $110tn; that is more than 65 times the total wealth of the bottom half of world population. In other words, if we approximate world population to be about 7 billion people, the combined wealth of the richest 70 million people at $110tn is 65 times more than the combined wealth of 3.5 billion people.
Looked at differently, the combined wealth of this top richest 1% is several times more than the combined GDP size of the world’s 1st, 2nd and 3rd largest economies [that is the combined size of the economies of the USA, China and Japan put together]. If we were to bring this home, this would be 220 times the size of Nigeria’s GDP.
To make this clearer this $110tn combined wealth of the top 1% is almost half of global wealth combined, while the combined wealth of the bottom half of global population, that is 3.5 billion people in all, is just about equal to the total wealth of the richest 85 people on earth! And this richest 1% have increased their share of income consistently between 1980 and 2012 in 24 out of the 26 countries for which there is the relevant data.
It gets even more interesting, and quite honestly provocative. 7 out of 10 people in the world, that is about 70% of global population leave in countries where economic inequality has increased over the last 30 years or three decades.
In the US specifically, the wealthiest 1% of the population literally captured 95% of post financial crisis growth since 2009 [The Obama Years], while the bottom 90% of the population actually became poorer.
I have very consciously inserted the US example and emphasised the Obama years because of the allure of the so-called US success story, otherwise called ‘the American dream’ for Nigeria’s political elites; and as well because of the allure of the faction of that ruling elite that has now being elevated to power for the Obama type of social transformation and social investment [Obamanomics].
I am convinced that if we fail to intervene as a people collectively, if we fail to build the necessary mass social movement platform to advance and defend our own interest, the outcome of the implementation of the change mantra and the common sense revolution would be similar to if not worse than the American outcome with respect to widening inequality.
Back to the global inequality discourse: Again the top 10% of global population holds 86% of all global assets, while the poorest 70% [that is 3 billion adults if we were to exclude children] holds just 3% of global assets.
In Europe on the other hand [another pole of attraction for emulation by Nigeria’s ruling elite], the combined wealth of Europe’s 10 richest people exceeds the total cost of the stimulus package implemented across Europe in the wake of the global crisis between 2008 and 2010. So whereas the combined wealth of these wealthiest 10 persons amounts to 217 billion Euro, the total stimulus packaged implemented across Europe in the referenced 2 year period amounted to 200 billion Euro.
In India which like the majority of countries including Nigeria, witnessed steep rise in extreme inequality, the number of billionaires [in USD] rose from 6 to 61 over a decade [that is 10 years], concentrating approximately $250bn among these top elite.
On our continent, in Africa, the top 50 richest Africans own about 15% of the combined GDP of Africa at approximately $1.184tn. In other words the combined wealth of Africa’s richest 50 persons is more than twice the size of Nigeria’s GDP, and more than the combined size of Africa’s 1st, 2nd and 3rd largest economies.
Within this context, according to the Forbes 2015 top 500 richest people report, Nigeria’s Dangote remains Africa’s richest man, while dropping to the world’s 67th richest person with a wealth of $16.7bn. Furthermore of Africa’s 50 top wealthiest, 10 are Nigerians [a drop from 13 to 10 persons over the previous year]; while 16 are South Africans [an increase from 11 in 2014].
The 10 Nigerians on Africa’s top 50 richest list occupy the following positions respectively: 1st, 7th, 13th, 16th, 23rd, 30th, 31st, 37th, 39th, and 49th; and are Dangote, Adenuga, Alakija, Otedola, Rabiu, Danjuma, Elumelu, Ovia, Indimi, and Orji Uzo Kalu in that order.
What is more interesting in the inequality narrative is that the combined wealth of this top 10 richest Nigerians at about $28bn [amounting to about 5% of Nigeria’s GDP] is almost equal to the size of Nigeria’s external reserve at $29bn as at December 2015.
Again although globally inequality increased and deepened over the last three decades, nevertheless it is only in Latin America of the six continents where inequality actually significantly decreased.
This was precipitated largely by the redistributive, socially inclusive social spending and social investments of left wing governments in the most significant and largest Latin American economies.
It is important to contrast the socially inclusive and wealth redistributive social investments policies, programs and planning of these Latin American countries to the Obamanomics of the US or even the dominant austerity based monetarist policies in Europe.
Nigeria as a country was one of the countries where the gap between the rich and the poor widened into a gorge leading to a situation where the top richest 10% of the population owned 40% of national wealth, with bottom 40% owning a mere 12% of national wealth. Even more damningly, for the bottom 20% their share of national wealth is a paltry 4%.
In the face of these grave scenario and reality, it is important that we ask some fundamental questions, such as what is responsible for widening inequality in Nigeria? What are its dimensions? And how might we overcome these and build a more socially inclusive society?
It is equally important to stress at this point that the spirit and letter of the 1999 constitution of Nigeria as amended did not envisage extreme inequality and in fact prohibits this happening.
That constitution in all the sections of Chapter 2 outlines the obligations and duties of the state to its people and emphatically sets out the duty of the state as that of ensuring the prevention of extreme inequality and ensuring inclusive social transformation.
And although there is a lot of argument and disputation around the justiceability of chapter 2 of the constitution; the fact that the constitution defines the provisions of this chapter as fundamental obligations of the government; and the fact that it then proceeds to state that ‘it shall be the duty and responsibility of all organs of government to conform to, observe and apply the provisions of this chapter’ in my own views makes their observation obligatory and therefore justiciable.
The causes of inequality or the factors that have enhanced and driven the process of deepening inequality are multi-faceted. They are also structural, and are rooted in the manifest fault lines of a society based on class division and ruthless class exploitation.
The structure and consequent cost of governance; the regressive and exploitative tax system, tax evasion by the powerful, as well as corruption all play significant roles in creating and deepening the process of inequality.
What do I mean? Let me explain. Let us begin with structural factors like government policies and cost of governance. I have argued elsewhere that the cost of governance in Nigeria is disproportionately high compared with the efficiency and impact of governance. But I have also argued that the way to address this is to decide and determine the focus and aim of governance; develop an appropriate plan to achieve these aims; and then determine the size and cost of governance that will be required to implement this development plan and fulfill the mission and aim of governance.
That said however, let us examine an example of the structural factors which drive inequality using the current cost of governance in Nigeria as example.
Nigeria has a category of state functionaries at all three levels of government [that is Federal, State and Local government] called Public, political and judicial office holders.
There are 17,474 personnel of this category defined by legislation across all three tiers of government in the country. And according to the Revenue Mobilisation Allocation and Fiscal Commission [RMAFC], a body empowered by legislation and the constitution to fix the salarires, emoluments and allowances of this category of officers, Nigeria spends N1.13tn annually on the total salaries and emoluments of these 17,474 political, public and judicial office holders.
This amount is more than the capital vote of the annual Federal Government budget in each of the years from 1999 to 2015; and it is 50% of the capital vote of the 2016 budget proposal, and about 16% of the total N6.08tn 2016 budget proposal of the FGN.
And although this amount is meant to directly cater for only 17,474 persons out of a population of 170 million, it is more than the combined security vote of the 2016 budget proposal.
This N1.13tn is expended as follows: N173.7bn at the Federal level for a mere 1,078 such officers; N360.091bn for the equivalent of such officers across the 36 states of the federation; and N592.865bn for the equivalent of such officers across the 774 plus Local government areas across the country.
Put in proper context, the N173.7bn spent on salaries and emoluments of 1,078 federal political and jucial office holders is more than the 2016 annual budget [proposals] of the majority of states across the federation, including – Kaduna: N166bn; Anambra – N101bn; Ekiti – N67bn; Osun – N150bn; Edo – N111bn; Oyo – N165bn; Kwara – N116bn; Kebbi – N107bn; Enugu – N85bn; Kogi – N74bn; Gombe – N76bn; Plateau – N154bn; Borno – N155bn; Adamawa – N120bn; Niger – N74bn; Yobe – N88bn; Abia – N96bn; Benue – N133bn; and Imo – N102bn among others. And it is just about the size of Sokoto state’s 2016 budget proposal at N174bn.
This kind of comparison enables us to understand how inequality can emerge and deepen just on the basis of structuring of salaries of workers.
Corruption of course is in the Nigerian context one of the, if not the main driver of inequality. This is because resources meant for the generality of citizens are cornered by a few. The Abacha loot, Dasukigate, the corruption in the fuel subsidy regime that amounted to about N2.7tn in 2011 alone are examples of how collective wealth are illegally cornered by a few.
The Punch Newspaper in one of its investigative Editorial report in mid-2012 calculated that corruption cases involving N5tn was exposed in the public domain between July 2010 and June 2012, amounting to what I have called a Monthly public theft rate of about N220bn, an amount bigger than the annual budgets of more than 20 states in the federation.
It is easy to see how these scope and scale of corruption can beget and drive inequality. If we add to this the privatization exercises which transferred publicly owned corporations and public wealth at rock bottom prices to private hands, then the processes conducing to inequality become enhanced.
The dimensions of inequality on the other hand are the modes of manifestation and framing of inequality. This can be political, economic, socio-cultural etc. In economic terms for instance about 69% of the population, that is more than 110 million people are categorized as poor; while in political terms, it is in fact true that it will be far more easier for a Carmel to pass through the eye of a real sewing niddle than for a poor person to aspire for and win political office in Nigeria. Wealth, social status and association with the wealthy determine political representation.
Socio-cultural inequality describes inequality that stems from socio-cultural values, and results in the subjection of individuals to unequal treatment on the basis of group identity, such as gender, religion, or due to birth place or parental background.
So for instance taking gender inequality; female adult literacy is far lower than male adult literacy rate, while enrollment figures for women in schools are also far lower. The consequence of these has been a situation where there is a gender disparity for instance in professions including: only 2.4%of architects are women; 3,5% of quantity surveyors; 25.4% of lawyers; 11.8% of lecturers; 8.4% of gynecologists; 33.3% of pediatricians; and 18.3% of media practitioners. And of course with respect to political representation, the inequality is even wider. At no time since 1999 has women constituted more than 10% of membership of National Assembly of Nigeria.
So what must be done? What can we do to ensure that wealth is redistributed, that we build a more socially just and inclusive society? What can we do to ensure that we are not short changed by this change and process of implementation of their common sense revolution?
The answer lies in developing and implementing socially inclusive and wealth redistributive policies as was done in Latin America, and as a number of new left wing and radical political formations are now demanding across Europe leading to electoral successes for them as in Greece, Portugal etc.
But more importantly it shall require that the popular masses and activists build a mass national social and political movement platform that can become a viable opposition to the ruling class as a whole, and the faction of it recently elevated to power in particular.
It is only such a movement that can ensure that the burden of their historic misrule, malfeasance, corruption, maladministration, light fingeredness will not be transferred unto the shoulders of the masses.
We must organize and mobilise that this social spending and social investment is not captured by the elite and does not become the source of deepening the already wide gulf between the haves and the have-nots.
The questions that we must ask and the solutions we must insist on should be such that the policies and programs of the government are such that returning Nigeria to the part of improved GDP growth as the 2016 FGN budget proposes to do [increasing GDP growth to over 4% from the present less than 3%] actually leads to inclusive growth.
We must demand from the government the comprehensive development plan spanning at the minimum the length of their current tenure.
This plan must respond to issues such as by how much would the poverty rate have been reduced by the end of their tenure? By how much would the current 17 million housing deficit [that is subhuman habitation for nearly 80 million people at average household size of 6] have been reduced by the end of their tenure? By how much will the current composite general and youth unemployment rates at 24% and 80% respectively have been reduced by 2019?
How will the proposed social investment budget allocation of about N500bn in the 2016 budget be allocated in such a way that there is appropriate targeting rather than elite capture; and in such a way that it can actually stimulate and reflate the economy rather than create a few more billionaires at one pole and millions more impoverished people at the other end?
How many of the 11 million out of school children will be enrolled in school by the end of the current tenure?
How many hours of stable electricity supply will be achieved per day? And how many households will be covered by the end of the current tenure? How affordable and accessible will electricity be? Resolving this issue in a socially inclusive manner requires not only significant increases and improvements in power generation, power distribution and power transmission capacities across board; but will also include measures to ensure that ordinary citizens can actually access and afford the power supply, and that businesses, particularly small and medium scale businesses are not suffocated and do not have their overheads further bloated by the cost of power.
To conclude and sum up, inequality cannot be reduced if the question of just and equitable wages is not addressed, and if the tax system is not reformed and made to ensure that corporations and the rich pay appropriate taxes, and that this tax system should be a progressive tax system where rich pay more than the poor.
Ensuring that all of these happen is our bounden historical duty.
Jaye Gaskia is National Coordinator of Protest To Power Movement [P2PM], and Co-convener of Say No Campaign [SNC]. Follow me on Twitter:@jayegaskia; and interact with me on Facebook: Jaye Gaskia