Poverty, Wealth Distribution and Income Inequality in Africa

Income inequality, wealth distribution, and poverty   are prevalent in Africa. Africa has made the least progress in improving living standards compared to other  developing regions of the world and therefore accounts for a large share of the  people living in absolute poverty.

Kibera slum, Nairobi, Kenya | flickr

 

Growth has not entirely been absent in  Africa. In the 2000s, six of the world’s ten fastest-growth countries were in Africa. This has not significantly helped to equal incomes or to redistribute wealth. Accelerated per capita growth has failed to create enough job opportunities for the young who are a large portion of the poor.

Poor economic performance is not limited to resource-poor countries of the Sahel region; it is also a feature of resource-rich countries such as the Democratic Republic of Congo and Nigeria. Coexisting with poor economic performance is widespread corruption .In resource-poor countries suffering from net trade losses due to higher import prices for food and energy, growth in per capita income is too low. Further, in resource-rich countries that benefit from net trade gains such that their real income increases faster than real output, performance has also been poor.

Structural Adjustment Program (SAPs) are being implemented in many African countries,  including the privatization of State-Owned Enterprises, mandated by the World Bank and the IMF. The private sector in African countries tends to be relatively small and weak as compared to economies elsewhere. Corruption is likely to exacerbate the inefficiencies imparted by large government sectors, thus further slowing development under such circumstances.

African countries are large recipients of external aid to spur economic development. With high levels of corruption it is possible that aid will be siphoned into private wealth, thus affecting African development. Africa’s economic growth since colonial days has been powered by foreign direct investment (FDI) . Despite the enormous amount of natural resources, FDI to African countries has been shrinking in both relative and absolute terms in recent years. This is partly due to corruption in African Countries.

Inequalities have not diminished over time. In 2010, six out of the 10 most unequal countries worldwide were in Sub-Saharan Africa, and more specifically in Southern Africa. Namibia, Comoros, South Africa, Angola, Botswana, Lesotho and Swaziland count among the continent’s top ten most unequal countries and the most striking increase in inequality is found in South Africa and the Central African Republic.

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