GIREI AISHA U14MM1019
The increasing gap between the rich and the poor undermines development by hindering inclusive economic progress, weakens democratic life and threatens social cohesion. The rapidly growing gap between the rich and the poor is intrinsically unfair. It makes the attainment of widespread human wellbeing very difficult.
Over time, the gap between the rich and the poor has been on the increase in Nigeria and most other developing nations. Internal forces like poor domestic policy implementation and external forces like globalization have combined to aggressively increase inequality by rapidly scaling up wages and premiums on skilled labor while Nigeria’s domestic policies have magnified the negative effect of globalization on income distribution. Monetary policies that deemphasized economic growth, fiscal policies that prioritized fiscal consolidation at the expense of social expenditure, labor polices weakened the bargaining position of labor as well as retrogressive taxation have all played one role or the other in making the rich to be richer and the poor to be poorer.
Reducing the gap in income inequality means that countries must take steps towards achieving inclusive growth. Inclusive growth is growth that raises the income of low-income households faster than that of high-income households. One strategy to achieve inclusive growth is to disproportionately change the patterns of economic growth to favor low-income households.
The first step to achieve this would be to create productive employments, since wages are the main source of income for the poor. Employment policies should vigorously address creating quality jobs that provide sufficient income and security. Another means to create inclusive growth is through fiscal policies. Fiscal policies provide a very powerful option for redistributing available wealth. Social protection and consumer subsidy programmes are relevant. Social protection programmes improves the income of the poorest households by providing a minimum income security which can be used for investing in human capital and income generating activities. Subsidies also improve the income of the poorest households by directly affecting the cost of basic household goods.
Social protection approach could be protective, preventive, promotive or transformative. The protective approach is to provide social assistance through cash transfers, food transfers, fee waivers for social services, school subsidies, school feeding, etc. The preventive approach is to provide social insurance through health insurance, premium waivers, subsidized risk pooling mechanisms etc. The promotive approach is to provide productive transfers, subsidies and work through agricultural input transfers, fertilizer subsidies, asset transfers, public work programmes, etc. the transformative approach is to provide social equity measures through equal rights and social justice legislations, affirmative action policies, equal protection, etc.
However, considering how deep-rooted corruption and entrenched interest has destabilized certain countries, the challenge would be the possibility of a sincere and judicious implementation of the programmes. Another strategy to achieve inclusive growth is to expand opportunities for low income households and disadvantaged groups to access employment and income generating options. Policies that remove the obstacles that prevent certain groups and disadvantage populations from accessing employment and income generating opportunities should be part of an inclusive growth strategy. Dismantling horizontal inequality usually requires legislative or administrative reforms to repeal and address discriminatory practices. Legislations that grant equal access to land ownerships is relevant. Developing an over-arching social protection policy framework is key. This will provide clear institutional roles and responsibilities to guide social protection design and implementation at the federal and state levels.
Stake holders should support political commitment to social protection at the federal and state levels while the government should allocate more resources to social protection programmes. Focus on equity should be integrated into the design and implementation of social protection programmes while the governance features should be strengthened.
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