Report: Income Inequality Skewed Wealth, Resources to Pockets of 20% of Nigerians

The high rate of income inequality has skewed wealth and resources in the country away from the masses to the pockets of the top 20 per cent, a report has stated.

The Financial Derivatives Company Limited (FDC), which stated this in its latest monthly economic bulletin, noted that given Nigeria’s level of development, such level of inequality was no surprise.

Nevertheless, it pointed out that such a situation raises a cause for alarm.

As measured by the Gini Coefficient, Nigeria ranks second out of 16 West African countries, nineth out of 54 African countries and 26th out of over 190 countries in the world.

“Those at the bottom of the in-come pyramid, who number over 100 million, brawl over a measly portion of the national income pie. Policies to improve the educational system and promote credit accessibility to the lower class will work to curb income inequality and stimulate national growth and development,” it added.

From 2010 to 2014, Nigeria’s population grew by 12 per cent while Gross Domestic Product (GDP) rose by 54 per cent during the same period. This implies increased economic well-being and gains for GDP per capita. By 2014, Nigeria’s GDP per capita had grown to $3,203, a 38 per cent increase from 2010’s level of $2310.

Research shows that the minimum yearly income needed to sustain a living that provides the basics in Nigeria stands at $1,016 per year in urban areas (N203,000 per year or N16,900 per month) and $758 per year in rural areas (N151,600 per year or N12,600 per month).

However, 74 per cent of Nigerians live below this income level. Out of this, some 40 per cent live under the poverty line i.e. live on less than $1.25 per day. This translates to N7,500 per month and N91,500 per annum, 49 per cent and 48.4 per cent lower than that required as monthly and annual income respectively.

It added: “The variance between Nigeria’s GDP per

capita and the actual average income of the population reflects the problem of income inequality. Income inequality refers to the manner in which income is unequally distributed amongst the population.

“Income inequality in Nigeria is so deeply rooted into the very mechanics of the country that many have become desensitised to the problem and lost sight of its genesis. Firstly, the disparity in income is the result of a segmented labour market (into the formal and informal sector). Such segmentation also has its roots in the ailing public education system. The direct relationship between educational level, skill, and income follows the basic principles of demand and supply; as there is a low supply of skilled workers relative to unskilled workers, the price for skilled workers, i.e. wages, are relatively high.

“The gap is further exacerbated by the unavailability of jobs and the inaccessibility of credit and financing. Thus, those in the lower class have limited to no opportunities to get a part-time job or a loan to help provide the funds needed to finance their educational or vocational training.