John Makina, the Country Director of Oxfam International in Nigeria, recently emphasized the pressing issue of wealth inequality in Nigeria, stating that the nation could generate over $7.5 billion annually through the implementation of a progressive wealth tax. This statement was made at the launch of two crucial reports by Oxfam in Abuja, which laid bare the stark contrast between the flourishing wealth of a small elite and the persistent poverty affecting millions of Nigerians. Makina argued that tax reform is an urgent necessity as Nigeria’s current tax system predominantly benefits a select few while leaving the majority impoverished and struggling to access essential services.
During his address, Makina articulated that the potential revenue from a progressive wealth tax could have a transformative impact, enabling the Nigerian government to double its current health budget or reduce household out-of-pocket health expenditures by 40%. This would significantly alleviate the financial strain on vulnerable populations. He pointed to Nigeria’s convoluted tax framework and lack of transparency as major contributors to ongoing inequality, which robs the nation of vital resources required for social welfare programs and poverty alleviation initiatives. Oxfam’s reports, titled “Income and Wealth Inequality in Nigeria: Trends and Drivers” and “Taxing the Rich: Fair Tax Monitor,” further detail the severe economic disparities in the country, emphasizing the need for immediate intervention.
Despite being one of Africa’s largest economies, Nigeria’s economic growth has disproportionately benefited a minuscule segment of the population, resulting in widespread poverty. Makina highlighted alarming statistics showing that only 40 of Nigeria’s wealthiest individuals are compliant with tax regulations, translating to a compliance rate of a mere 0.035%. This stark figure reveals that over 99% of the elite evade or avoid paying taxes, exacerbating the already critical wealth gap. The Gini coefficient, which quantifies income inequality, further illustrates Nigeria’s challenging economic landscape, as the country ranks poorly among its West African peers in terms of equitable wealth distribution.
In his remarks, Makina reiterated the transformative potential of enacting a progressive wealth tax. Not only is there a pressing need for economic reforms, but there is also an urgent call to redirect financial resources towards essential public services in health and education. He articulated that fiscal policies could drive significant changes in the lives of millions, providing them with crucial support and access to public services currently hindered by inadequate funding. This moment is pivotal for Nigeria, where financial crises loom due to disproportionate national budget allocations favoring debt servicing over vital public investments.
Adding to the discourse, Henry Ushie, the Accountable Governance Programme Manager with Oxfam Nigeria and the lead author of the reports, called for immediate reforms that would increase social spending and address systemic inequalities within the nation. Ushie’s advocacy centered around enhancing investments in human capital and stimulating growth in key sectors such as health, education, and agriculture. He stressed that implementing a wealth tax, particularly a 1% levy on individuals with net worth exceeding $1 million, would not only raise crucial revenue but also foster a culture of accountability among the wealthy elite.
In conclusion, Oxfam’s recommendations for the Nigerian government encompass a multi-faceted approach to tackle these urgent issues. Proposals include raising social sector spending to at least 10% of the national budget and reinforcing human capital development through targeted investments and inclusive policies. By supporting smallholder farmers and instituting necessary reforms in land policies, the government could drive economic empowerment among marginalized populations. Finally, fostering collaborations with civil society organizations would help promote pro-poor policies, emphasizing the importance of collective efforts in addressing the alarming wealth inequality and enhancing the overall wellbeing of Nigerians.
