By: Vaishakh Pillay, Tan Chok Geow
Research Head: Tan Chok Geow
Editor: Sakshi Sanganeria
Illustration by Jasmine
Abstract Africa suffers from the highest income inequality levels in the world. Yet, it has been difficult to determine the root cause of the issue due to the myriad of factors which play a part- ranging from management of governments and persisting inequalities to geographical locations of countries. This article assesses each factor and assesses the magnitude of impact that each factor could have on the problem of income inequality. After careful consideration, we conclude that the lack of a proper education system is not the main cause of income inequality and that each of the factors mentioned play a significant role and must be addressed with the same intensity by policymakers.
According to the World Inequality Index (WID), Africa ranks highest in income inequality levels in the world- compared to the Middle East, India and Brazil. It has a top 10% national income share of 54% and a bottom 50% share below 10% from Figure 1 (Appendix 1). In addition, Africa has the highest gap between the average income of the top 10% and is about 30 times higher than those of the bottom 50%. More in-depth research shows that the income earned by the top 10% of the distribution ranges from 37% in Algeria to 67% in Botswana, while the bottom 40% is at most 14% from Algeria and is as small as 4% in South Africa. There are many causes of such high income inequality in Africa. However, the root cause remains undecided and is particularly challenging to address because of strong data limitations, as well as the specificity and diversity of Africa’s economic and political structures. In this article, we look at education, management of governments, persisting inequalities, and geography as potential contributors to the high-income inequality in Africa. 1. Education is not one stop solution It was widely claimed by African leaders in 2019 that education can be the main tool to help post- independence Africa lift itself out of poverty and reduce income inequality. According to Zipporah Musau (2018), Africa’s current primary school enrolment rate is above 80%, which is a relatively healthy percentage. However, the quality of the education system in Africa is ‘questionable’. Claims exist where most of Africa’s education and training programs suffer from low-quality teaching and learning, as well as inequalities and exclusion at all levels. Reportsabout income inequality trends in Sub-Saharan Africa by the United Nations Development Program (UNDP) show that the unequal distribution of essential facilities (such as schools) is one of the drivers of wide income disparities. Low enrolment rates in secondary and tertiary education (where only 4 out of 100 children in Africa are expected to enter a graduate and postgraduate institution, compared to 32 out of 100 children in Europe) only exacerbate the problem. Surface findings suggest that Kazakhstan benefits from education-based policies to reduce income inequality. According to Esme Kadzamira (2018), Malawi, alongside Ghana and Sierra Leone, has abolished secondary school fees in a bid to raise enrolment. However, there have been reports that illustrate how it is common to find 200 students being taught by one teacher and without proper tables and chairswithin the school compound in rural areas. Most students are concentrated in the lower levels of schools, as they find it difficult to progress higher up without a proper system, illustrated in Figure 2 (Appendix).
2. The critical role of government policy
While education does play a role, we cannot undermine the importance of the policies implemented by the African governments. Policies introduced in Africa mainly lean towards manufacturing and industrialization and neglect agriculture (which is the largest contributor to African economies in terms of GDP). The agricultural sector contributes approximately 15% of the continent’s total GDP, more than $100 billion dollars. Only 8 countries in Africa are investing 10% of the national budget to agricultural development. Securing investment and development opportunities in the agricultural sectors does not appear to be the primary priority of Africa. According to a report from the United Nations, Africa has been actively implementing policies in favour of investment and funding of infrastructure such as roads, rails, air, and port, in a bid to address supply-side constraints and bottlenecks which are hindering intra-African trade. Coupled with low social mobility, many workers are trapped in this low-income stagnant sector.
3. Getting around the barriers of culture and geography
Moreover, persisting social and economic inequalities play a role in income inequality in Africa as well. For instance, countries like Cote d’Ivoire, Mauritius and Rwanda have registered remarkable economic performance over the past decade, lifting millions of people out of extreme poverty. But Namibia, for example, has failed to do so having inherited the highest levels of income inequality in Africa when it gained independence in 1990. From a social aspect, gender discrimination has also contributed to persisting income inequalities in Africa. Several countries in Africa still have restrictions on womens’ rights, including women not being able to open a bank account or start a new job without the consent of their husband.
Geography plays an equallycritical role. Countries with high and rising income inequality in Southern and Central Africa have capital-intensive oil and mining sectors with limited employment or are former settler societies that still have large landholdings. Countries with declining income inequality, mostly in North and West Africa, generally started with lower levels of inequality and have mainly agricultural sectors.
4. The failure of cookie cutter policies In conclusion, the lack of a proper education system in Africa is not the main cause of income inequality. Instead, it is a collective impact of education, government management, and the geographical location of the country. Therefore, a one-size-fits-all policy will never work in Africa. To reduce income inequality, policies should be universal in principle, focusing on strengthening the existing comparative advantages Africa has while taking into account the country-specific circumstances.
1. Ayodele Odusola. Giovanni Andrea Cornia. Haroon Bhorat. Pedro Conceicao. (2017). Income Inequality Trends in Sub-Saharan Africa, Divergence, Determinants, and Consequences. United Nations Development Program. Retrieved from: https://www.undp.org/content/dam/rba/docs/Reports/Overview- Income%20inequality%20Trends%20SSA-EN-web.pdf
2. Esme Kadzamira (2018). Who benefits from abolishing secondary school fees in Malawi, and what are the costs?. World Education Blog. Retrieved from: https://gemreportunesco.wordpress.com/2018/10/19/who-benefits-from-abolishing-secondary-school- fees-in-malawi-and-what-are-the-costs/?fbclid=IwAR1Uz2Cixjod4AgRb- ZSaGBHHAe1kFLzrxxK02_hIl8onlk21TLBfAZJZJk
3. United Nations (N.d.) Goal 10: Reduce inequality within and among countries. Sustainable Development Goals. Retrieved from: https://www.un.org/sustainabledevelopment/inequality/
4. Zipporah Musau (2017). Africa grapples with huge disparities in education. Africa Renewal. Retrieved from: https://www.un.org/africarenewal/magazine/december-2017-march- 2018/africa-grapples-huge-disparities-education