Oxfam calls for urgent tax reforms to bridge Nigeria’s wealth gap

 

Oxfam exposes a staggering wealth gap in Nigeria in two comprehensive studies and urges the adoption of progressive wealth taxation and increased social investment to bridge the growing economic and social divide before a social bomb explodes.

The two comprehensive studies, Income and Wealth Inequality in Nigeria: Trends and Drivers, and Taxing the Rich Fair Tax Monitor expose the deepening inequality crisis. Despite being the fourth-largest economy in Africa, the benefits of economic growth have largely been concentrated in the hands of a small elite, leaving millions of Nigerians trapped in poverty.

Only 40 of the wealthiest Nigerians were found to be compliant taxpayers, according to the Federal Inland Revenue Service (FIRS) and John Bean Technologies Corporation (JBT). This represents a compliance rate of just 0.035%, meaning that over 99% of Nigeria's wealthiest citizens evade or avoid paying taxes.

Emphasizing the need for critical tax reform, John Makina, Country Director, Oxfam in Nigeria said: "The situation in Nigeria is alarming: while millions struggle to afford their next meal, the super-rich continue to amass riches without paying their fair share of taxes. Complexities in tax laws, coupled with a lack of transparency, enable this situation, depriving the country of crucial revenue needed to invest in social protection and initiatives aimed at reducing inequality. This is a scenario we can no longer accept if we are genuinely committed to building a more equitable society."

Nigeria ranks among the countries with the highest levels of income inequality in sub-Saharan Africa, with a small fraction of the population controlling the majority of the nation’s wealth. The country’s wealth Gini coefficient, a measure of income inequality, stands at 35.1, placing it 11th out of 16 West African countries and highlighting Nigeria’s severe economic divide.

The economic situation in Nigeria is critical, with millions struggling to make ends meet as prices rise faster than wages, leaving many hungry and desperate. Over 133 million people—about 7 in 10—are facing hunger, with women and girls disproportionately affected, making up nearly 63% of the hungry population. In rural areas, less than 40% of households have access to electricity, severely limiting educational opportunities and access to healthcare. Women and girls bear a heavier burden of poverty, with a 35% literacy rate compared to 59.5% for men, and they have limited access to education and land ownership.

Implementing a progressive wealth tax could generate over $7.5 billion annually. This revenue would be sufficient to double the government’s current health budget or reduce household out-of-pocket health expenditures by 40%, significantly easing the financial burden on millions of Nigerians.

To make matters worse, the country is on the verge of bankruptcy, with the poorest states, like Sokoto, suffering an 87% poverty rate, in stark contrast to just 4.5% in Lagos. The growing debt burden means that most of the national budget is spent on paying off loans instead of funding essential public services.

Lead author of the report, Henry Ushie, Accountable Governance Programme Manager at Oxfam in Nigeria highlighted the urgency for reform, saying:

"The findings of this report are clear: Nigeria’s growing inequality is not just an economic issue but a social crisis that threatens long-term stability. With the wealth gap widening every year, immediate action is needed. Increasing social spending, reforming the tax system, and investing in human capital can help reverse these trends.”

With more than 20 million children out of school, it is not acceptable to continue giving wealthy individuals and companies tax breaks, incentives, and waivers.

Oxfam is calling on the Nigerian government to adopt the following measures:

• Increase Social Spending: Nigeria currently allocates only 2-3.5% of its budget to education and 4-7% to healthcare, well below global standards. The government must raise social sector spending to at least 10% of the budget in health, education, and agriculture.
• Implement Progressive Taxation: Establish a wealth tax targeting high-net-worth individuals. A 1% tax on net worth over $1 million could raise $7.5 billion annually, which could fund critical social programmes.
• Invest in Human Capital Development: Improve education, job creation, and healthcare, focusing on rural and underserved populations. Providing living wages, reducing corruption, and enhancing educational opportunities, particularly for women and girls, will improve Nigeria's Human Development Index (HDI) by 2030.
• Support Smallholder Farmers and Reform Agriculture: Strengthen policies that improve access to credit, land, and rural infrastructure for smallholder farmers. Prioritizing women’s land rights and promoting sustainable farming practices will help bridge the rural-urban divide.
• Reform Land Policies: Establish a National Land Commission, conduct a National Land Audit, and ensure that land redistribution programmes are transparent and inclusive, particularly addressing gender disparities.
• Collaborate with Civil Society: Non-state actors, including civil society organizations, the private sector, and community groups, should advocate for pro-poor policies, hold the government accountable, and promote gender equality.

·        Develop a comprehensive wealth registry and stronger tax enforcement will ensure high-net-worth individuals contribute fairly.