Distinguished Permanent Secretary of MINALOC,
Deputy Director General NISR,
Ladies and gentlemen, all protocols observed.
Mwaramutse, good morning and welcome to this policy dialogue!
I am very happy to be here with you this morning because this is an important topic. And I am very pleased to see that EPRN is tackling these issues through its economic research work. We need more discussions and debate on matters of this nature not only here in Rwanda but across the continent, and indeed across the world.
So again, let me congratulate EPRN on taking the initiative.
I think I was invited to speak on the topic because I am an expert on both poverty and inequality. Not an academic expert, but a practical one. Someone who has experienced poverty, and also who has seen wealth, and can tell the difference between the two in terms of what they mean for a person and the opportunities he/she may have in life. Yes, I have seen and experienced both. First hand.
But let us first see what the research tells us. The data is clear. Over the past decades, billions of people have emerged out of poverty. In 1960 about 65 % of the world lived in extreme poverty. This dropped to 44 % in 1981 and is now a little over 8 % of the world population. As the World Bank President said recently, “Over the last 25 years, more than a billion people have lifted themselves out of extreme poverty, and the global poverty rate is now lower than it has ever been in recorded history. This is one of the greatest human achievements of our time.”
But that 8.6% is still over 736 million people living in extreme poverty. Sadly, the truth is also that the majority of them live in Sub-Saharan Africa. Nigeria is now seen as a the single country with the largest population of poor people.
We should also take note of the fact that the rate of poverty reduction has declined, sharply, since 2013. This has been due to many factors, including the fall in commodity prices, the increase in conflicts, and other factors that affect developing countries. So the poor will now wait longer to emerge from their poverty.
The other, perhaps more interesting data, is that globally, the gap between the rich and the poor keeps widening. We are all familiar with the staggering figures highlighted by Oxfam at Davos earlier this year, where they stated that in 2018, 26 people owned the same amount of resources and assets as the 3.8 billion people who make up the poorest half of humanity. Many people criticized this figure as being too simplistic, and maybe even inaccurate. But if it were wrong, it was not by much. Whichever way you look at it, less than 100 people own more than 3.8 billion people. And if truth be told, this gap is widening.
Growth, when it happens, has disproportionally benefited higher income groups while lower income households have been left behind. Since 1980, the share of national income going to the richest 10 percent has increased rapidly in the United States, Canada, China, India, and Russia and more moderately even in Europe. Over the same period, it has remained stable but at very high levels in Brazil, the Middle-East and, unfortunately, Africa, where the richest 10 percent of the population absorbs 54.5 percent of the national income. In Rwanda, we have noted that inequality is on the decline but has slowed. With a Gini coefficient of 0.429; UNDP sees Rwanda among the countries among the low- inequality category. But there is no room for complacency.
What else do we know? Well
- We know that the poorest countries are the most unequal.
- We also know that no country has successfully developed beyond middle-income status while retaining a very high level of inequality in income or consumption
But here is something else we need to consider: While the rich are getting richer, and the poor poorer, this is all within a system of globalisation that leads us to destroy our oceans, pollute our air and environment, wipe out wildlife, damage our eco-systems and our climate. And again, it is the poor who suffer the most from this destruction of our natural environment.
So the system that generates this inequality generates a range of other challenges.
I also want to note that when we discuss inequality it is not just economic or income inequality we are discussing. Inequality is often an issue of access – for example, there is spatial inequality which refers to people living in certain locations not having access to the same opportunities as others, such as access to quality education, social services and healthcare. We also see inequality in access by gender or others form of identity, such as people with disabilities and certain minority groups.
Together, these many forms of inequality adversely affect human life and well-being. Because our sense of well-being is grounded in how we see ourselves doing in relation to others around us.
The data is irrefutable. In every country where studies have been done, high levels of inequality is correlated with higher levels of violence, tensions, imprisonment, drug abuse, obesity, teenage pregnancy, and mental health issues. Inequality often tears at the fabric of social cohesion, and generates intolerance, discrimination against others, and the breakdown in the rule of law.
In today’s world, we are seeing some of the early signs of the likely long-term consequences of growing inequality. Tensions across countries, calls for protectionism, us-versus them barriers, shutting of borders and tighter controls on migration recreate a mythical past of harmony and prosperity.
The signs are there. But we are wanting in solutions.
When crafting Agenda 2030 the global community was mindful of this issue of growing inequality. This is why SDG Goal 10, reduced inequalities, was included. The global community realized that without a clear commitment to the reduction of inequalities globally, and between and within nations, we can have little hope of sustaining progress on poverty eradication, prosperity and peace.
This is an issue that must be on the agenda of every country, in Africa and elsewhere. This is an issue for policy makers to take seriously.
Identifying the main drivers of inequality is the first step in properly designing and targeting policies to counter it. Here, we already have enough research. What we now need are policies and programmes, both social and fiscal, to reduce inequalities.
Globalization and growth have spurred levels of economic development that many of us could not have imagined. Yet, this has not translated into reduced inequalities. Why? Because not every country, region, city and social group was equipped to reap the fruits of globalization. People everywhere do not have the same quality of education and skills, the same access to the global value chains, the same social safety nets, the same progressive tax regimes etc. that are needed to level the playing field.
A blind focus on economic growth as the only means to achieve human development will only make this problem more acute. Policies that foster growth are not automatically going to reduce poverty or inequality. For inequalities to be reduced, growth should be inclusive, and this requires a clear commitment and action from policy makers.
- Reducing inequality often means investing in education and skills development to prepare the population to benefit from economic growth.
- Reducing inequalities requires fiscal policies that redistribute national resources to reach the most vulnerable; this includes things like progressive tax systems which are not only fair, but also a key requirement for balanced development.
- Similarly, reducing inequality also means addressing the way labor and capital are rewarded in the economy; this includes putting in place appropriate labour laws and minimum wage policies that ensure that labor is fairly rewarded.
- Reducing inequality also calls for robust and well-targeted social protection policies.
- Finally, since inequality has territorial dimensions (spatial exclusion), as well as gender and group identity dimensions; optimal policies to reduce inequalities must have the ability to go sub-national and local and must be flexible and targeted as I mentioned.
To conclude, ladies and gentlemen, let me stress once again the necessity to put inequality on top of our agenda.
There is a line I have always loved from Bob Dylan’s song, Blowing in the Wind. It says,
Yes, 'n' how many times can a man turn his head,
And pretend that he just doesn't see?
Just doesn’t see the poor, just doesn’t see the inequality, just doesn’t see the exclusion and barriers that many people face to enjoying a decent quality of life.
Let us not be blind to what is happening around us.
Thank you for your kind time and attention.
Murakoze cyane, thank you!