West Africa Governments’ Commitment to Reducing Inequality (CRI) Index report reveals Ghana among the worst countries within the sub region
- On July 10, 2019
PRESS RELEASE
WEST AFRICA INEQUALITY CRISES:
9TH JULY 2019
West Africa Governments’ Commitment to Reducing Inequality (CRI) Index report reveals Ghana among the worst countries within the sub region
- Ghana and other West African governments are the least committed to reducing inequalities in Africa according to Oxfam International and Development Finance International’s first ever West Africa Commitment to Reducing Inequality (CRI) index 2019.
- The CRI index measures, compares and ranks West African governments’ commitment to tackle inequality based on three pillars where there is strong evidence that firm government action, irrespective of the wealth of the country, can curb inequality. the three areas are: (i) public spending (mostly on education, healthcare and social protection), (ii) taxation, and (iii)labour markets. The report also contextualises an analysis of agriculture and land rights.
The West Africa CRI index shows that, of the five major economic blocs in Africa, West Africa is trailing behind all the others in tackling inequality. In fact, West African citizens are living under governments that are only half as committed to reducing inequality as their counterparts in Eastern and Southern Africa.
Overall, Ghana ranks 4th (behind Cape Verde, Mauritania and Senegal) in West Africa in the CRI index. In Africa, Ghana ranks 29th out of 41 countries ranked by the CRI Index.
Ghana makes one of the least investments in healthcare, education and social protection (i.e. social spending). Ghana ranks 12th on social spending, coming behind countries such as Cape Verde, Cote d’Ivoire, Burkina Faso, Mali, Niger, and Mauritania, the Gambia and Togo in West Africa on government’s commitment to social spending. This means that these countries are more committed to providing inequality-busting public services to their populations than Ghana, which is West Africa’ second biggest economy.
While some governments in West Africa are doing little or nothing to tackle inequality, and some through their actions are even making it worse, a few are taking a different route. Senegal has increased its public spending on health services and education, making it one of the highest-spending countries in the world. Senegal also has one of the largest safety net programmes in Africa – and on education. Nigeria, Africa’s largest economy and the continent’s most populous country ranks at the bottom of the regional Index.
Inequality and poverty are not preordained: they are the products of political choices and public policy. Tackling inequality is critical to the fight against extreme poverty. But unless countries significantly close the gap between the richest and the rest, ending extreme poverty will remain just a dream. Governments are not the only ones who need to work to reduce inequality, but without them success will be impossible.
Ghana’s low score and ranking on social spending show that the country is investing less (not more) funds in healthcare, education and social protection, especially for the most vulnerable in society. It also means that the poorest Ghanaians are subsidizing the living standards of the richest in society.
The regional CRI index confirms a recent Oxfam and partners, SEND Ghana and Ghana Anti-Corruption Coalition research study on Inequality in Ghana which established that inequality is widening at an alarming rate in the country. For example, one of the richest men in Ghana earns more in a month than one of the poorest women could earn in 1,000 years. In the decade ending in 2016, the country saw 1,000 new US dollar millionaires created, but only 60 of these were women.
While a few people grew super-rich, nearly one million more, mostly from the Savannah Region of the country, were pushed into the poverty pool, and thousands of those who were already poor sank even deeper. The wealthiest 10% of Ghanaians now account for 32% of the country’s total consumption. This is more than the consumption of the bottom 60% of the population combined, while the very poorest 10% of Ghanaians consume only 2%.
There will always be some differences in income due to talent and effort. However, the huge inequalities we see today are the result of a rigged economic system, which has enabled a small minority to amass huge fortunes through political capture, monopoly, cronyism and inheritance. According to the West Africa Index, about US$2.3 trillion of individual wealth is held on the African continent of which US$920bn – or roughly 40% – is held by high net worth individuals (HNWIs) i.e. those who own US$1m or more in net assets.
The amount of wealth held in Africa rose by 13% between 2007 and 2017. The West African countries that recorded the largest increases in wealth were Côte d’Ivoire (by 43%), Ghana (39%) and Nigeria (19%). These increases in national wealth presented an enormous opportunity to improve the lives of the many, unfortunately much of it has benefited only a select few, and much has been hidden away offshore and untaxed.
Ghana, along with Togo and Benin, top in progressive taxation in West Africa. This means the country’s tax policies are comparatively progressive than its West African neighbours. But income disparities have widened over the last decade in Ghana. This means a further concentration of income in an increasingly small number of hands. Progressive taxation, where corporations and the richest individuals are taxed more in order to redistribute resources in society from rich to poor and to ensure adequate funding of essential services, is a critical tool for governments that are committed to reducing inequality.
Despite the comparative progressive tax system, Ghana is failing to mobilise tax revenues and it is also heavily underinvesting in essential public services, which are critical to tackling inequality in the country. Ghana’s tax-GDP ratio is one of the lowest in Africa. Ghana’s tax-to-GDP ratio of 17.6% in 2016. This was lower than the average (18.2%) of the 21 African countries in Revenue Statistics in Africa. Even worse, up to 55% of Ghana’s tax revenues goes into servicing debt. In 2018, Ghana raised about GHc GHS37.8 billion in tax revenues and spent GHc21.1 billion to service loans.
The CRII Report reveals that ECOWAS governments are underfunding the agriculture sector on one hand, while under-taxing corporations and the wealthy, and failing to clamp down on tax evasion, tax avoidance and corruption, on the other.
For example, 35% of West Africa’s economy is agriculture, employing about 50 percent of the work force, especially women. Despite this, most West African governments fail to honour the Malabo commitments to invest 10 percent of their national budget in agriculture.
ECOWAS countries lose an estimated $9.6 billion to corporate tax incentives offered to multinational companies. This would be enough to build about 100 modern and well-equipped hospitals each year in the region or seven brand new hospitals per country in one year.West Africa’s universal health coverage is the lowest of all sub-regions of Africa. The average universal health coverage in the ECOWAS region is 38%. It is 47.2% in Eastern Africa and 50.2% in Southern Africa.
Inequalities between rural and urban populations are particularly noticeable in West Africa. For instance, in Ghana, 62.3% of urban households have access to treated water but just 17.1% of rural households, and 88.6 per cent of urban population are connected to the national grid, compared with 48.3 per cent of the rural population. There is nothing inevitable about the crisis of inequality that defines the West Africa region, but without concerted effort by governments the crisis is likely only to get worse. In short, the key is for West African governments to radically increase their commitment to tackling the issue.
It is time for West African governments to act decisively by promoting progressive taxation, boosting social spending, strengthening labour market protection, investing in agriculture and strengthening land rights for smallholder farmers.
The Index and report set out a policy agenda that could help to dramatically reduce inequality in the West Africa region. We can only beat poverty by fighting against inequality. And we call on our government and West African Governments to lead the fight selflessly.
Partners:
For further information contact:
George Osei-Bimpeh: Country Director, SEND Ghana on 0501204944
Zakaria Sulemana, Ghana Inequality Lead on 0244738605