Tuesday, December 7, 2021

Botswana is an unequal society – UNDP

Botswana remains one of the most unequal countries in the world having the 9th highest Gini coefficient, indicating the degree of inequality of incomes, the United Nations Development Program (UNDP) has said in a new report. 

In the report entitled, “inequalities in Botswana,” UNDP said both theoretically and empirical studies have shown the negative effect of inequality on long-run growth, poverty reduction, social and political stability.

The report says inequality in Botswana has been a pressing policy in Botswana since it peaked and subsequently plateaued in the 1970s, overlapping approximately with the transition of Botswana’s economy from cattle dependence to diamond dependence. 

The UNDP says the uneven distribution of the benefits of economic growth and prosperity warrants thorough investigation of levels and trends of inequality in the formulation of policies to foster a more inclusive society.

“Differences in living standards are very pronounced in the country, with urban areas consuming 76% more than rural areas. Consumption appears to be concentrated in the districts that play host to the capital city Gaborone-home to financial services and the headquarters of the largest corporations in Botswana, but also in areas where the large-scale mines are located,” says the report. 

It says 40% of households in the top 10 in Botswana live in the South East district, while 24% live in Central district.

Meanwhile, the report says fewer than 1% of the highest-consumption households live in Ghanzi. The report says the wealthiest districts such as South East and Central appear to be the most unequal ones but also districts that contribute the most inequality at a national level. 

The report states that Botswana is experiencing a process of structural transformation with a premature tertiariisation of the economy. 

“The importance of mining to the economy has waned, ceding its position to the hospitality and Trade sectors and fire sectors.

“However, the trade and financial sectors, are characterized by high income inequality, a finding which may explain the recent increase in inequality,” the report says. 

According to the report, “Disaggregating inequality by household characteristics showed that those households with members employed in the public sector, living in urban areas and with higher education showed both higher consumption and contributed more to over inequality. Public and parastatals employees tend to report higher wages, fueling inequality. The role of tertiary education as a major contributor to inequality is also clear from the analysis”.

This study was commissioned by UNDP, in an attempt to assist Botswana in understanding the drivers of inequality beyond income and to assist Botswana to achieve its SDG 10 targets.

The report says the adoption of the 2030 Agenda for Sustainable Development and the associated Sustainable Development Goals in 2015 shone a spotlight on the achievements that the world has made in raising living standards.

However, the report says the process has also served to highlight the extent of the challenges remaining, including addressing the issue of inequalities. Sustainable Development Goal 10 aims at reducing inequality within and among countries. This goal calls for reducing inequalities in income as well as those based on age, sex, disability, race, ethnicity, origin, religion or economic or other status within a country.

The report says 2020-2021 Covid-19 pandemic has further exposed and exacerbated inequalities, undermining the previous gains. At UNDP, we have long committed to generating an evidence-driven understanding of inequality. Many factors contribute to creating and re-creating inequalities across societies and over time, as highlighted in our annual global Human Development flagship reports. Unfortunately, Botswana is currently one of the most unequal countries globally, having the 9th highest Gini coefficient, indicating the degree of inequality of incomes, according to the most recent UNDP report (2020).

Both theoretical and empirical studies have shown the negative effect of inequality on long-run growth hence this study was therefore commissioned by UNDP, in an attempt to assist Botswana in understanding the drivers of inequality beyond income, as part of Botswana’s commitment to implement Sustainable Development Goals (SDGs).

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