Bridging inequality gap requires national attention
In its assessment of the 2024 Mid-Year Budget Review, the Institute of Statistical, Social and Economic Research (ISSER) highlights the disconnect between positive economic outlooks and the harsh realities faced by many.
Advertisement
As the country’s macroeconomic indicators appear to be improving, with Gross Domestic Product (GDP) growth rebounding to 2.9 per cent in 2023, there must be a corresponding effect on the lives of the people.
In the first quarter of 2024, the economy grew by 4.7 per cent, against a target of 3.1 per cent, the highest growth since 2020.
Inflation has also declined from a peak of 54.1 per cent in December 2022 to 22.8 per cent in July 2024, although food inflation continues to be a major concern for the economy.
Much as these numbers look good, there is a complete disconnect between statistical progress and the reality on the ground which raises questions about the true impact of economic growth on the lives of citizens.
According to ISSER, Ghana's economic indicators paint a starkly different picture from the daily economic struggles of its citizens. Despite a notable increase in per capita income from $1,979 in 2016 to $2,365 in 2023, ISSER notes that widespread inequality persists.
Citing Afrobarometer surveys from the first quarter of the year, ISSER points to growing hardship due to rising food prices, transport fares, fuel and cement cost.
To address this disparity, ISSER recommends that the government not only continue to drive economic growth but also implement effective policies to redistribute income and reduce inequality.
This includes targeted measures to alleviate the burden of increased costs on vulnerable populations and ensure that economic growth benefits all segments of society.
The Daily Graphic fully aligns itself with the observation of ISSER because the widening inequalities in the country where the rich are getting richer and the poor poorer are obvious.
For many decades, governments have not been able to have a firm grip on the implementation of their own policies designed to elevate the poor from their unfortunate state to become people who earn a decent income to make life more meaningful, a development which has forced many economic and social experts to seek reforms to close the yawning gap.
The challenge of wide inequality between the rich and the poor is extremely serious with far-reaching consequences for individuals, society and the economy.
This is because it can lead to social tensions, protests and even violence, resulting in higher crime rates, inequality and hindering economic growth,
The Daily Graphic underscores the fact that inequality is linked to poor health, reduced life expectancy and higher infant mortality rates. It can also lead to unequal access to equal education, perpetuating the cycle of poverty.
Addressing income inequality is crucial for building a more just, stable and prosperous society. Therefore, bridging the gap requires a multifaceted approach that addresses the root cause of inequality.
One of the approaches is to implement a fair and progressive tax system where the wealthy are taxed at a higher rate to reduce income inequality.
Admittedly, even though our tax system is informed by some of these considerations, a lot more needs to be done since taxation is used as a policy tool.
The fact that the nation is recording a wide inequality gap is indicative of the need to have a second look at some of government’s interventions and their collective impact on the intended beneficiaries who are mostly the poor and marginalised in society. This is because their aim is to bridge the inequality gap.
To bridge that gap, it is important to hasten the process of decentralisation and local governance by empowering the metropolitan, municipal and local assemblies to address local needs and priorities in order to reduce reliance on the central government.
The Daily Graphic believes that the country must be intentional about fostering inclusive growth by promoting sectors that benefit low-income earners, such as agriculture and small-scale industries.
We need to build a more equitable society.
Advertisement