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    Inequality Source 01

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    ibsa
    1) Income inequality levels in sub-Saharan Africa are high, though inequality has declined slightly in recent decades. However, trends have differed across countries. 2) Drivers of inequality are complex and multi-dimensional, including dualistic economic structures, concentrated assets and human capital, and limited government redistribution. 3) Inequality generates paradoxical relationships that complicate development efforts. Specifically, population growth can both reduce and increase inequality, while conflicts are both driven by and exacerbate multidimensional poverty and inequality. 4) There are no simple solutions, and complementary multi-dimensional policies are needed that address education, institutions, agriculture, taxation, and social protection to effectively reduce both poverty and inequality

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    Inequality Source 01

    Uploaded by

    ibsa
    17 views12 pages
    1) Income inequality levels in sub-Saharan Africa are high, though inequality has declined slightly in recent decades. However, trends have differed across countries. 2) Drivers of inequality are complex and multi-dimensional, including dualistic economic structures, concentrated assets and human capital, and limited government redistribution. 3) Inequality generates paradoxical relationships that complicate development efforts. Specifically, population growth can both reduce and increase inequality, while conflicts are both driven by and exacerbate multidimensional poverty and inequality. 4) There are no simple solutions, and complementary multi-dimensional policies are needed that address education, institutions, agriculture, taxation, and social protection to effectively reduce both poverty and inequality

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    1) Income inequality levels in sub-Saharan Africa are high, though inequality has declined slightly in recent decades. However, trends have differed across countries. 2) Drivers of inequality are complex and multi-dimensional, including dualistic economic structures, concentrated assets and human capital, and limited government redistribution. 3) Inequality generates paradoxical relationships that complicate development efforts. Specifically, population growth can both reduce and increase inequality, while conflicts are both driven by and exacerbate multidimensional poverty and inequality. 4) There are no simple solutions, and complementary multi-dimensional policies are needed that address education, institutions, agriculture, taxation, and social protection to effectively reduce both poverty and inequality

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views12 pages

    Inequality Source 01

    Uploaded by

    ibsa
    1) Income inequality levels in sub-Saharan Africa are high, though inequality has declined slightly in recent decades. However, trends have differed across countries. 2) Drivers of inequality are complex and multi-dimensional, including dualistic economic structures, concentrated assets and human capital, and limited government redistribution. 3) Inequality generates paradoxical relationships that complicate development efforts. Specifically, population growth can both reduce and increase inequality, while conflicts are both driven by and exacerbate multidimensional poverty and inequality. 4) There are no simple solutions, and complementary multi-dimensional policies are needed that address education, institutions, agriculture, taxation, and social protection to effectively reduce both poverty and inequality

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 12

    ECONOMIC AND SOCIAL POLICIES TO REDUCE

    INCOME INEQUALITIES IN SUB-SAHARAN AFRICA

    Ayodele Odusola, PhD


    Chief Economist and Head, Strategy and Analysis Team
    UNDP Regional Bureau for Africa
    New York

    UNDESA EGM on Addressing Inequalities and Challenges to Social Inclusions, 25-27 June 2018

    1
    KEY MESSAGES
    • Divergence in income levels and trends across regions, groups and
    countries
    • Drivers of income inequality are multi-dimensional and complex
    • Inequality generates development paradoxes; which make
    development management more complex
    • Extreme inequality is detrimental to growth and development
    • There is no one silver bullet to addressing inequality in Africa
    • Policies that help reduce poverty are not necessarily the same as
    those that help reduce income inequality, which underpins
    complementarity of policies

    2
    Magnitude and trends of income
    inequality in SSA (1/3)
    • SSA one of the most unequal regions
    (10/19)
    • GOOD NEWS: Income inequality declined in SSA
    by 3.4 Gini points between 1990 and 2011
    ...BUT rose by 0.6 points (2008-2010) because
    of global financial crisis
    Gini for Africa and other developing countries (ODCs) 7 Outliers’ driven
    Africa ODCs Difference
    Ave. 0.43 Ave. 0.39 0.04
    Min: Egypt 0.31 Min: Ukraine =0.25
    Max: SA 0.65 Max: Haiti = 0.52
    LIC =0.42 LIC = 0.39 0.03
    LMIC =0.44 LMIC = 0.40 0.05
    UMIC =0.46 UMIC = 0.40 0.06
    3
    Magnitude and trends of income
    inequality in SSA (2/3)
    • Bifurcation in inequality trends
    existed across countries in SSA:
    Gini, where data is available,
    ✓Declined in 59% of countries
    ✓Rose in 41% of countries

    • Four distinct groups emerged:


    ✓Declining
    ✓ Rising
    ✓U-shaped
    ✓Inverted U-shaped
    4
    Cornia (2017)
    Magnitude and trends of
    income inequality in SSA
    (3/3)

    Seven OUTLIER countries make Africa’s Gini


    to be above the world average – using
    consumption measure:
    1. South Africa
    2. Namibia
    3. Botswana
    4. Central African Republic
    5. Comoros
    6. Zambia
    7. Lesotho
    GOOD NEWS:
    14 African countries are among the lowest
    Gini in the world,
    mostly agrarian West Africa

    5
    Structural drivers of inequality (1/2)
    1. Highly dualistic economic • Inequality rises when growth occurs in:
    structure – labour elite Sector high asset, capital and skilled-labour
    (mining, MNCs, FIRE, Pub. concentration sectors BUT falls or remains
    stable in labour intensive mfg., agric. and
    Service) Vs informal and construction sectors.
    subsistence sectors • Inequality falls as result of:
    2. High concentration of land, ➢Improved distribution of human capital
    physical and human capital ➢Increased direct taxes, efficiency of tax
    administration, well-targeted social protection
    3. Limited redistributive capacity ➢Better distribution of socio-economic facilities
    – roads, electricity, schools, hospitals, etc.
    of the state manifested by:
    natural resource curse, urban bias policies, ➢Enhanced productivity in agriculture
    regressive tax, ethnic and gender
    inequalities
    Message Two: Drivers of income inequality are multi-dimensional and complex 6
    Structural drivers of inequality (2/2)

    •Inequality is a by-product of:


    • Regressive taxes (29/47)
    • Unresponsive wage structure
    • Inadequate investment in health education and
    social protection for the marginalized
    • Discriminatory social norms especially for women

    7
    Emerging puzzles requiring further investigations
    1. No clear link exists
    3. Conflict-Inequality
    between resource 2. Population growth and
    relationship creates a
    dependence and inequality creates a puzzle
    puzzle
    inequality

    Population-poverty relationship is Intensity of multi-dimensional


    BUT resource-dependence poverty drives conflicts
    positive:
    growth presents obvious
    inequality RISKS: Most countries with fertility rate of 6.0+ Most countries with poverty rate
    have high poverty rates >60% experienced intense conflict
    – e.g. Burundi, CAR, DRC

    Population-Inequality relationship
    Inequality Risks are high: is negative: Countries with high Gini are
    1. Corruption and Illicit Most countries with fertility rate of 6.0+ non-conflict prone countries
    outflows have low Gini(<0.44); (e.g. Botswana, Namibia, RSA
    2.Weak governing institutions Most countries with low fertility rate have Harold Laski Hypothesis
    high Gini(>0.54)
    – resource curse

    Message Three: Inequality generates development 8


    paradoxes; which make development mgt. more complex
    Emerging lessons

    Policies that help reduce poverty are


    No homogeneous solution; not necessarily the same as those that
    multi-dimensional responses help reduce income inequality.
    are needed
    • Education, institutions, • Complementarity of policies matter:
    modernized agriculture and
    industrialization ✓Quality education and enhanced
    productivity are important tools to
    reduce poverty
    • Distribution matters: wealth,
    opportunities and power [PM] ✓YET, if unaccompanied by progressive
    taxation and well-targeted social
    protection, they could accelerate income
    • Equalizing social protection disparities
    [FDR].
    Message Four: There is no one silver bullet to addressing inequality in Africa
    9
    Planting and Nurturing Tree of Equity in Africa

    10
    Conclusion

    Reflection from Former President Mandela:

    “As long as poverty, injustice and gross inequality persist in


    our world, none of us can truly rest”.

    11
    THANK YOU

    12

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