Kenya should mind the inequality gap

There is no doubt that Covid-19 has accelerated inequality in Kenya. And considering that the vaccine is still not available, the pandemic will continue to widen the inequality gap unless there are deliberate interventions. Are we therefore doing enough to fight inequality and what mitigation measures do we have in place?

A recent publication by Development Finance International and Oxfam, Fighting Inequality in the Time of Covid-19: The Commitment of Reducing Inequality Index 2020, suggests that there are three measures that can be used to mitigate against increasing inequality.

These measures include spending on public services such as education, health and social protection; progressivity of tax, that is, income tax, corporate tax, value added tax and other harmful tax practices; and taking into consideration women’s labour rights and minimum wages. These are also the same measures that have been used to develop the Reducing Inequality Index (RII).

The findings from the 2020 index focuses on the best practices from leading countries and suggest interventions that will be necessary for lower ranking nations to improve on their equality performance.

Although Kenya’s overall index score as per 2020 index was 76, the country still needs to do more on its public service pillar with an index of 110. Within the that pillar the country has an index of 22 in education. And the social protection and health index score are poor. They are at 140 and health 105 respectively.

Ethiopia which came second from the top has been spending heavily on education. Its efforts have paid off as the country is now the fastest in terms of progress towards achieving the 2030 education targets in sub-Saharan Africa.

Nigeria, which spends the least in education, is at the bottom of the rankings and has the highest number of out-of-school children in the world. This populous nation in Africa is performing poorly in other indices like incidences of poverty compared to others in sub-Saharan Africa.

Whilst health expenditure in most countries have increased from 10.8 percent in 2018 to 10.9 percent in 2020 of the budgets, Kenya’s spending on health remained below five percent as several countries increased their budgets. Kenya still has not hit the average target for lower middle-income countries.

With the impact of Covid-19 and considering that every citizen is needing a vaccine, the country must re-think how to finance its health budget commensurate with her position in development.

In terms of social protection, Kenya ranks at the bottom. This measure uses pension coverage as a proxy for overall social protection. There are only 40 countries in the world that have achieved 100 percent coverage.

And about 68 percent of older people in the world have at least some coverage. The sub-Saharan Africa has particularly not done well in this area.

And with more than 80 percent employed by the small and medium enterprises, a significant number of people will not have social protection. A policy change to make pension mandatory could change the fortunes of older people.

Although there is no country that uniformly does well in the tax indicator, currently five of the top 10 countries with a progressive tax regime of personal income tax are in Africa and Kenya is among them.

The measure focuses on systems that are relatively progressive in policy and have a good tax collection. The report, however, warns that for the top countries, their performance is good because all others are performing poorly.

To fight inequality through labour rights and wages measure, a country has to look at policy coverage and impact in three areas namely: respect for labour and union rights; legal protection for women; fair minimum wage. In all these three areas Kenya is doing poorly despite the fact that there are strong unions in the country.

There is dire need to address inequalities especially at this time when Covid-19 is accentuating the gap.