SDG #10: Reducing Inequality: Nigeria's Scorecard

HomePublicationsSDG #10: Reducing Inequality: Nigeria's Scorecard
HomePublicationsSDG #10: Reducing Inequality: Nigeria's Scorecard
The 2030 Agenda for Sustainable Development formally adopted by the United Nations General Assembly in September 2015, places on the Nigerian government and development stakeholders the sacred responsibility of taking desired policy actions that will help the country tackle poverty and reduce inequality. The implication is that Nigeria's aim of meeting the SDGs by 2030 will be achieved unless it tackles the growing economic inequality and poverty within its society. Sustainable Development Goal number 10 focuses on reducing inequality in a variety of contexts: income inequality within a country, as well as inequality by gender, age, disability, race, class, ethnicity, religion, and opportunity.SDG-10 is also designed to tackle inequality among countries in terms of voice, migration, and international aid.

SGD-10 mandates UN member countries, including Nigeria, to ensure equal opportunity and reduce inequalities of outcome, by eliminating discriminatory laws, policies and practices and by promoting appropriate legislation and actions, adopting policies – especially fiscal, wage and social protection policies – to progressively achieve greater equality.

SDG-10 is also geared towards ensuring that by 2030, every country must have progressively achieved sustainable income growth for the bottom 40 percent of the population at a rate higher than the national average; and must have empowered and promoted the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

SDG-10 also enjoins the UN to collaborate with member countries to facilitate orderly, safe, regular and responsible migration and mobility of people, through the implementation of planned and well-managed migration policies. Specifically, there should effective implementation of the principle of special and differential treatment for developing countries, particularly the least developed countries, in accordance with the World Trade Organization agreements.  The transaction cost for migrant remittances should be reduced to less than three percent, and remittance corridors with costs higher than five percent should be eliminated by 2030.

Reducing inequality as government's priority

Nigerian governments have always claimed that reducing economic inequality and widespread poverty is a top priority. Every government since Independence has pledged to implement policies, programmes and projects that will ensure the equitable distribution of national wealth, as well as fair and equal opportunities in jobs and business opportunities.

However, when it adopted Millennium Development Goals (MDGs) which set the target of halving the number of people living in extreme poverty by 2015, the Nigerian government began to make more concerted efforts to achieve results.

Several agencies and schemes were established to tackle poverty and unemployment as part of its avowed commitment to reduce poverty and inequality in the country. Agencies such as the National Directorate of Employment (NDE), the National Poverty Eradication Programme (NAPEP), the Small and Medium Enterprises Development Agency (SMEDAN) and the Microcredit and Entrepreneurship Development Schemes (MEDS) were created to address these challenges.

The government also initiated three social protection initiatives, namely: conditional cash transfers targeted at households with specific social characteristics, health fee waivers for pregnant women and children under five, and community-based health insurance plans.

Measures initiated by the administration of President Olusegun Obasanjo to tackle inequality in the country included the National Poverty Eradication Programme (NAPEP), the Youth Empowerment Scheme (YES), the Rural Infrastructure Development Scheme (RIDS), the Social Welfare Scheme (SOWESS) and the National Economic Empowerment and Development Strategy (NEEDS). Yet the African Development Bank (AfDB)'s 'African Development Outlook' report indicated that the rate of poverty in Nigeria worsened between 1996 and 2010.  It noted that though poverty rates declined between 1999 and 2004, i.e. during the first five years of the Obasanjo administration, that trend severely reversed after that.

The AfDB report correctly predicted that the effort of the Nigerian government to meet the MDGs target on poverty reduction was "weak" and unrealistic.

The African Development Outlook report also showed that inequality among individuals and households in different classes rose from 0.429 in 2004 to 0.447 in 2010, placing Nigeria among those with the highest inequalities in the world. Its startling observations read:

"Though Nigeria has seen significant economic growth as a result of the oil industry, revenue from the market typically gets funnelled to the ruling and business elite. The government has done little to temper that flow of cash, and corruption has been rampant. As a result, the poor get poorer and the rich get richer. Income inequality has been a chronic issue in Nigeria."

This came as a surprising verdict to some, considering that Nigeria not only maintained its place as the wealthiest nation in Africa, recording an average GDP growth rate of 6.7 per cent during the period under review following a prolonged period of high oil prices.  But despite the observed upward trend in economic performance during the period, the pitiable living conditions of the majority of people did not change. The high inequality manifested in highly unequal income distribution and differential access to basic infrastructure, education, training and job opportunities.

jonathanTo reduce unequal income distribution, the administrations of Presidents Umaru Musa Yar'Adua and Goodluck Jonathan experimented with various initiatives to empower more people through mechanized farming and vocational skills.  For instance, in May 2012, President Jonathan inaugurated the Agriculture Transformation Implementation Council (ATIC).  Its mandate was to drive his administration's ambitious Agricultural Transformation Agenda (ATA) which was to be a major tool for driving rural income growth, accelerating the achievement of food and nutritional security, generating employment and transforming Nigeria into a leading player in the global food market.

The Jonathan administration also took further steps to addressing unemployment in the country by creating initiatives to empower youths to become entrepreneurs rather than job seekers. Job creation programmes such as the Youth Enterprise with Innovation in Nigeria (YOU-WIN), Graduate Internship Scheme (GIS), the SURE-P Technical Vocational Education and Training Programme (TVET) and the Youth Employment in Agriculture Programme (YEAP) were set up and actively promoted.

However, just like previous policies of government conceived with much hype and lofty promises, these efforts to address poverty and inequality failed to produce the intended results.

So far, not much success has been recorded in the quest to tackle economic inequalities in income, gender, age, disability, race, class, ethnicity, religion, and opportunity in Nigeria. The consequence has been that the gap between the small group who enjoy the wealth of the country and the majority of the masses who are poor and barely struggling to survive has continued to widen.

Studies have consistently shown that the Nigeria's economy is structured in such a way as to ensure that the rich get richer while the poor get poorer.  This has had adverse consequences on the social well being of the populace as a whole.

Victor Emejuiwe, a Programme Officer (Good Governance) at the Centre for Social Justice in Abuja, says that the huge gap between the rich and the poor in Nigeria can be traced to unequal in income distribution among workers:

"Income inequality gives birth to corruption, insecurity, lack of efficiency and capacity in the workplace. It retards growth and development of both the individual and the nation. With the exception of a few corporations, income inequality exists amongst large percentage of the workforce in the private and public sectors in Nigeria.  The approved minimum wage of N18, 000 is not feasible in the present economy. Workers have relied heavily on kickbacks, and partake in all sort of sharp practices just to meet up with the demands for survival. The low income wage ensnares workers to corruption, hence making a majority of Nigerians guilty of corruption."

Emejuiwe noted that President Buhari's fight against corruption is a welcome development, but that corruption must be fought on all fronts by addressing the wage disparity that exists between highly placed public officials and the ordinary workers. He noted that the current situation where less than one percent of Nigerians who are members of the National Assembly consume much of the country's budget as recurrent expenditure would further increase inequality. He said that in order to successfully address inequality, the salaries of all public office holders should be reviewed, with the aim of cutting down some of the unreasonable entitlements.

He added that to address income inequality, the focus should be granting workers access to reasonable purchasing power that meets the competing demands of society.

Buhari administration's inequality reduction efforts

President Muhammadu Buhari achieved an historic victory in the 2015 presidential election against President Goodluck Jonathan largely on the strength of his party's 'Change' mantra.  Among the key promises made to Nigerians by the victorious All Progressives Congress (APC) during the electoral campaign and in the wake of their triumph, was that action would be taken to reduce poverty and inequality in the land.

In his inaugural address, Buhari was unequivocal in his pledge to address the widening gap between rich and poor in the country, and to ensure that economic opportunities were evenly spread through job creation and boosting domestic productivity.

Prior to his March 28, 2015 victory, Buhari had specifically promised to ensure the equitable distribution of national wealth if elected into office.  He reiterated that all Nigerians deserve to "benefit from our collective wealth."

Four months after his inauguration, in his maiden address to the 70th session of the United Nations General Assembly, Buhari told world leaders that the core objectives of the SDGs were at the centre of his administration's agenda.  He said that under his leadership Nigeria intended "to tackle inequalities arising from massive unemployment and previous government policies favouring a few people to the detriment of the many."

fig1He did not stop there. In his 2016 Budget Speech, President Buhari also expressed confidence that his government's first Appropriation Bill would go a long way towards addressing the core socio-economic challenges that had bedevilled the country for so long, creating a widening gap between the poor and the rich.

In Nigeria's 2017 Budget Proposal tagged "the Budget of Recovery and Growth," Buhari again reiterated the determination of his government to tackle the root causes of the country's socio-economic challenges to lay a solid foundation for the golden era of shared prosperity and equal opportunities.

After two years in office, it is appropriate to find out the extent to which the Buhari administration has implemented SDG-10 in terms of reversing the trend of poverty and economic inequality. Cursory checks on key economic indicators show that the country's prevailing circumstances have not improved as significantly as some would have anticipated. For instance, Nigeria's unemployment rate climbed to 13.9 percent in the third quarter of 2016 from 9.9 percent and 7.8 percent in 2015 and 2014 respectively. It was the highest level since 2009.

The youth (15-24) unemployment rate increased to 25 percent in the third quarter of 2016 from 21.50 percent in the first quarter of 2016.  It had averaged 17.51 percent from 2014 until 2016 when it reached an all time high of 25.00 percent.

Employment rates, however, remained unchanged at 86.40 percent in the third quarter of 2016 from 86.40 percent in the second quarter of 2016.  The employment rate in Nigeria averaged 89.79 percent from 2014 until 2016, having reached an all-time high of 93.60 percent in the fourth quarter of 2014 and a record low of 86.40 percent in the second quarter of 2016.

The individual Living Wage in Nigeria remained unchanged at 43,415.20 NGN/Month in the third and fourth quarters of 2016.

Nigeria's GINI Index also confirmed the widening income inequality in the country, being measured at 48.83 in 2010, up from 43 in 2004, according to the World Bank. The rise from 43 to nearly 49 in six years shows the growing gulf in the country's income distribution.

soludoNigeria's worsening poverty

A former Governor of the Central Bank of Nigeria (CBN), Professor Chukwuma Soludo, offered a damning verdict on Nigeria's recent economic performance. According to the renowned economist:

"Nigerian workers have suffered a double whammy: average nominal wages are declining while real wages dramatically shrunk (with high inflationary pressures). Asset prices have collapsed, and household wealth has shrunk".

It is rather paradoxical that a country like Nigeria with abundant human and natural resources has majority of its citizens poverty-stricken. Olufemi Awoyemi, the Chief Executive Officer of Proshare Nigeria observed that statistics appears to have grossly under-estimated the immensity of poverty that defines Nigeria's paradox of 'rich country with poor masses'. He argued that:

fig2"More than 90 percent of Nigerians are poor and exist largely at the mercy of fate. These realities are much more obvious in rural areas and slums. In these places, people die because they cannot afford N500 to purchase needed medication or basic public health care. Worse still, people around may not be able to help as they too may not be able to collectively raise that amount of money. It is a very obvious reality in today's Nigeria!"

Arinze Nwobu, an assistant director with the Chartered Institute of Stock Brokers also lamented that "it is a paradox", that a Nigerian economy brimming over with both natural and human resources, is still bedevilled by a vicious cycle of poverty. Nwobu went further to make the following stark observations:

fig3"Presently, all macroeconomic indices have turned hostile to the welfare of citizens. In January, 2017, inflation rate spiked to 19 percent, unemployment rate rose for the seventh straight quarter to 13.9 percent in the third quarter of 2016, reported to be the highest level since 2009. Poverty rate stands at 62.6 percent with almost 100 million people living on less than US$1 a day, reinforcing a vicious cycle of poverty."

Labour/wage issues

In both the private and public sector, Nigerians who work are supposed to enjoy some fundamental rights and benefits as provided in labour laws such as the Labour Act of 1971, (amended in 1990).Under its provisions, workers are supposed to receive remuneration commensurate with their service.

Apart from the benefits, labour laws make provision for contractual agreements that should guide the relationship between employees and employers, to ensure that no party short-changes the other. The aim of such detailed labour agreements is to ensure that both parties adhere strictly to labour laws and uphold the tenets of the dignity of labour.

However, in the public sector, Nigeria's civil service is still bedevilled by impunity and non-compliance with either local labour laws or global standards.

For instance, while it is unlawful under Nigerian Law for an employer to encourage its employee or for the employee to elect to be paid a "special" holiday allowance so that the employee not to go for the annual leave/holiday; this practice has continued to be flouted despite the fact that medical and human resource experts discourage it.

Sadly, employers of labour, especially in the private sector have continued to take advantage of the unemployment situation in the country by underpaying or over-tasking their employees.

However, with the devastating impact of the economic recession on the incomes and wellbeing of Nigerian workers and their families, the demand for an upward review of the national minimum wage has been intensified. Labour leaders and government negotiators led by the Minister of Labour and Employment are still trying to reach agreement on a new minimum wage.

The challenge remains finding a way to improve workers' wages in line with the prevailing economic realities without exacerbating the country's woes. Already, many state governments have been struggling to pay salaries based on the current minimum wage.  There are fears that any major increase may trigger a wave of retrenchment in the public service.

Some experts argue that a unilateral hike in the minimum wage may not be the best way to address income inequality. The last national minimum wage increase of 63.7 percent from N11,000 to N18,000 which became effective from August 2010, was criticized for failing to bridge the income gap because it led to a pay rise which cut across all levels, and succeeded in making the highest paid civil servant on the highest grade level (17, step 9) earn about N453,444.67 per month, or N5,444,336 per year.  Meanwhile, the lowest grade workers who would now be earning N18,000 per month or only N216,000 per year.  The increase thus failed to bridge the wide gap in pay differentials among staff of various sectors of the civil service.  Moreover, the minimum wage was not made binding on private sector employers.

As labour leaders in Nigeria mount pressure for another increase in the minimum wage, the challenge remains how to use the pay structure to address the widening gap between the rich and the poor, and address income inequality. There is no sign yet that the proposals for a new minimum wage will close any of the loopholes of previous ones, or address the critical issue of income inequality.

Economic empowerment

The Buhari administration has also tried to create employment opportunities in its bid to bridge the inequality gap. Thus it budgeted the sum of N542,889,800 for the rehabilitation of five model skills centres in five states, rehabilitation of 63 skills centres in 21 states; and retooling of  68 skills centre in 21 one states in the 2016 budget.

It also rolled out the first of its N500 billion social investment programmes in June 2016. The Teacher Corps, nicknamed "N-Power Teach", is one of the three direct job creation and training schemes launched by the government in June 2016.  It is a paid volunteer programme of two-year duration will enable government train 500,000 selected unemployed Nigerians to serve in teaching, instructional, and advisory roles in primary and secondary schools, agricultural extension systems and in public health and community education (including civic and adult education).

edmondOther social investment programmes launched by the presidency to address unemployment and entrepreneurial challenges in the country include the Conditional Cash Transfer that pays N5000 monthly to one million Nigerians, the Micro-Credit Scheme for over 1.5 million Nigerians, the Home-Grown School Feeding programme that will serve 5.5 million Nigerian pupils in primary schools free meals, and the Education Support Grant Programme for 100,000 tertiary students in Science, Technology, Engineering and Mathematics (STEM).

Apart from these social investment programmes, the Nigerian government recently began the registration of unemployed citizens through an online portal: Edmund Onwuliri, the Deputy Director for Information and Public Relations at the National Directorate of Employment (NDE), explained that this would enable the agency to serve as a clearing house to job seekers with vacancies in government agencies and the private sector.

Despite these initiatives by the Buhari administration to tackle unemployment and boost shared prosperity, concerns remain that Nigeria may still not meet the SDG10 targets.

Adetokunbo Mumuni, the Executive Director of the Socio-Economic Rights and Accountability Project (SERAP) believes that efforts of both the past and present governments in Nigeria have not been able to address the root causes of widening inequality and poverty in the country because of poor planning and implementation.

Mumuni said that to significantly reduce inequality in Nigeria, government must be sincere about creating an enabling and sustainable environment for the fair and equitable distribution of national wealth and economic opportunities to make it possible for Nigerians to live and operate in a more equal society.fig4
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