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Income inequality in Africa highest in south
October 15, 2017, 5:15 pm

The widest gaps in income between the rich and the poor in Africa are to be found in five southern African nations, as well as the Comoros and the Central African Republic, says a pioneering new study by the United Nations on income inequality on the continent.

Titled ‘Income Inequality Trends in sub-Saharan Africa: Divergence, Determinants, and Consequences’, the report was released by the Africa bureau of the United Nations Development Programme (UNDP).

Among southern African nations where income inequality is worst are South Africa, Botswana, Namibia, Zambia and Lesotho. In contrast, income is more equitably distributed in countries in which agriculture plays a more prominent role in economies.

“Countries like Burkina Faso, Mali, Niger, Burundi, and Guinea, which are characterized by egalitarian access to land for productive engagement, especially in agriculture, appear to be performing better and rank among the most equal in the world,” says the report.

Moreover, the study adds, the inequality in southern and central African countries where the oil and mining sectors are important is getting worse, while the gap between rich and poor is narrowing in countries where agriculture dominates, which is mostly in west Africa.

Comparing income inequality across-the-board in Africa to that globally, the agency says that despite the growth in gross domestic product in recent years and an overall reduction in income inequality, sub-Saharan Africa remains one of most unequal regions in the world. The study attributes high levels of inequality to concentration of land in the hands of a few, and to weak access to agricultural assets by others.

The UNDP's Assistant Administrator and Director for Africa, Abdoulaye Mar Dieye, says in a preface to the report: “When growth occurs in sectors characterized by high asset concentration, high capital absorption and skilled-labor intensity, such as mining, finance, insurance, and real estate and the public sector, overall inequality rises. By contrast, inequality falls or remains stable if growth takes place in labor-intensive manufacturing, construction and agriculture.”

He associated inequality with “highly dualistic” economies, in which a small “labor elite” work in government, multinational companies and the resource sector, while most workers earn much less in the subsistence or informal sectors. He cited government tax policies as contributing to inequality when they fail to redistribute spending to areas such as health, education and social protection for the vulnerable and marginalized.

“Policies which reduce poverty do not necessarily reduce income inequality, for instance, quality education and enhanced productivity are potent tools for poverty reduction, yet if unaccompanied by progressive taxation and well-targeted social protection, they could accelerate income disparities,” said the UNDP official.

As well as calling for better social protection for the poor, he said policies to promote industrialization and increase the productivity of the informal sector of the economy are needed. “To achieve the (UN's) Sustainable Development Goals, governments, private sector actors, civil society organizations and development partners must focus on rapidly reducing poverty and income disparities simultaneously,” he concluded.

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