Inequality: Hard nut to crack that derails efforts to remove poverty

02Jul 2022
Daniel Semberya
Dar es Salaam
The Guardian
Inequality: Hard nut to crack that derails efforts to remove poverty

​​​​​​​THE poorest half of the global population owns just €2,900 (about 7mn/) in purchasing power parity per adult, while the top 10 per cent owns roughly 190 times as much. The richest 10 per cent today snaps up 52 per cent of all income while the poorest half gets just 8.5 per cent.

Clotilda Ndezi, representative of the Christian Council of Tanzania speaks Policy Forum breakfast debate on inequality in Dar es Salaam last weekend. Photo/Daniel Semberya

This is according to IMF’s global inequalities report for 2022/23.

In 2018, Development Finance International (DFI) and Oxfam warned that southern Africa was the most unequal region in Africa, highlighting that some of its governments had realised the need to take stronger measures to reduce inequality.

This year, using their Commitment to Reducing Inequality Index (CRII) framework, the report by DFI, Norwegian Church Aid (NCA) and Oxfam found that many Southern African Development Community (SADC) member governments’ are showing considerable commitment to fighting inequality but still nowhere near enough to offset the huge inequality produced by the market and acerbated by the COVID-19 pandemic.

Presenting research findings on SADC commitment to reducing inequality contained in the latest report entitled The Crisis of Extreme Inequality in SADC through video conference from Nairobi, Kenya, during Policy Forum’s breakfast debate on Friday last week in Dar es Salaam, Inequality Research Coordinator at Oxfam International Anthony Kamande said the organizations have produced the document to encourage member governments in the bloc to scale up their efforts to reduce inequality.

 The CRI index enables citizens and civil society organisations to hold governments to account for their real commitment and progress towards building fairer and more inclusive societies. The country-specific content was entitled ‘Leaving no one behind: Policies and approaches to reduce inequalities in Tanzania’.

It ranks 158 countries on their policy performance to reduce inequality through public services, progressive taxation and labour. It also looks at the policy taken by the governments, how successful their implementations are and the impact on inequality.

The key message from the SADC CRI report includes the finding that Southern Africa is the most unequal sub region in the world. Though some countries are trying to fight inequality, others are doing far too little.

It found that investment in agriculture is very low, impacts of climate change, rocketing food and energy prices being some of the challenges the bloc needs to address.

But it notes that it’s not too late to act, suggesting that concerted efforts from governments, regional bodies, and the international community are urgently needed to change the situation.

According to the report, 192 million people within SADC went into the pandemic with no coverage of basic health care services, 33 million of them being Tanzanians. Tanzania is on the bottom third in public services and labour, but does relatively well on taxation.

Tanzania ranks poorly on public sector pillar where it is listed 138th globally, 33rd among African countries and 14th out of 15 SADC member countries.

Low spending on health and education, and large gaps in coverage that leave the poorest behind, are significantly undermining the equality, reducing potential of essential services and social safety nets, says the study.

On education, Tanzania’s budget allocation to of 14.08 per cent ranks the country 4th lowest in SADC and puts it far from meeting the internationally recommended 20 per cent of national budget as set by Education for All Partnership. Comparatively, Namibia currently spends 25.4 per cent, which is the third-highest education share in the world.

The report has also revealed that health spending in Tanzania is very low at just 5.4 per cent of the budget. This puts the country at the very bottom of the rankings in the SADC region, and 37th in Africa.

The report says more than half of the country’s population (57 per cent) lacks access to essential health services, and 4 per cent of households had to pay more than 10 per cent of their income to fund health services.

With regard to social protection, Tanzania is the second highest spender among SADC countries as per percentage of budget at 23.4 per cent. However, this is mainly spending on civil service pensions, and most citizens left out.

The report further unveils that 86 per cent of the population is not covered by any social protection scheme and pension coverage is the second lowest in SADC at just 3.2 per cent.

Overall, public spending on health, education, and social protection is reducing income inequality as measured by the Gini coefficient by just 0.014 (3.5 percent). This ranks Tanzania 13th out of the 15 SADC countries on the redistributive power of its public spending.

On the tax pillar, Tanzania is performing well, ranking 5th in SADC and 39th globally. However, beneath this headline there are some areas that require significant improvement, especially on what the report terms “unprogressive personal income tax (PIT), regressive Value Added Tax (VAT) and poor tax collection.”

On labour rights pillar, Tanzania ranks bottom among SADC countries and 144th globally. It scores low on minimum wages and wages inequality.

The report states that Tanzania is ranked 13th among SADC countries and 39th in Africa on labour rights, citing the Penn State University Index on labour rights 2017.

One of the discussants at the debate, Fr Florence Rutaihiwa, Director of Pastoral Services at the Tanzania Episcopal Conference (TEC), commended the government for deciding to offer free education from primary to form six.

However, he called on the government to ensure there is a proportionate number of teachers and pupils so as to eliminate the existing inequality in public schools.

On health, he suggested that the government increases health budget and increase uptake and affordability of health insurance schemes to move away from out-of-pocket payment for health.

As for agriculture, he called upon the government to implement its good policies on agriculture as outlined in the just endorsed national budget to enable farmers move from subsistence to commercial farming, including value addition of produce for increased productivity and revenue.

Nelson Kisare, Menonite Church Archbishop in Tanzania, who also doubles as Chairperson of ISCEJIC said tax collection and distribution is critical for national development.

He urged the government to collect every single cent according to the law and that is due to it but was quick to caution that the state should not collect more than it is supposed to.

“If tax is collected well, it has direct impact on the lives of taxpayers. It can be applied to reduce the gap between the poor and the rich in society,” he said.

Dr Saleh Abdallah, Health Affairs Advisor at the Muslim Council of Tanzania (Bakwata) urged development stakeholders to work with the government in place and not to put it in place.

He urged his fellow religious leaders to advise decision and policy makers in the country to execute their duties diligently so as to eliminate inequalities in societies.

Clotilda Ndezi from the Christian Council of Tanzania (CCT commended the government for increased budget allocation for the agriculture sector but was quick to urge disbursement is key to ensure that funds benefit smallholder farmers who are mostly women.

Authors of the report urged the government to among others; allocate at least 10 per cent of national budgets to agriculture, especially in countries where agriculture is a key sector for employment and incomes.

They urge countries to develop national agriculture investment plans that are gender-sensitive and seek primarily to support small scale farmers in non-cash crop sectors and show how each country will achieve food security and end rural poverty by 2030.

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