Thursday, March 4, 2021

Botswana’s income inequality still among highest in the world

An African Development Bank (AfDB) report shows that at 61 percent, Botswana has the fifth highest level of income equality on the continent. Southern Africa itself has the highest income inequality in the world. For the rest of the Sub Saharan region, the Gini index of income inequality measurement ranges from 30 percent in Ethiopia to 66 percent in Seychelles. “The laudable and impressive growth witnessed recently in Africa has unfortunately not been matched with a significant reduction in unemployment and poverty.

More worrisome is the fact that inequality persists… In view of the high inequality, Africa’s impressive economic growth results in limited progress in poverty reduction. Thus, between 2000 and 2008, the proportion of people living on less than USD 1.25 a day declined slightly from 57 percent to 48 percent, in spite of the rapid economic growth in most African countries during the period. This slow pace of poverty reduction makes reduction of extreme poverty to meet the MDG target of 29 percent by 2015 doubtful,” the bank says in its “Inclusive Growth: An Imperative for Agriculture Report” report. In addition to being one of the poorest regions in the world, Africa is also the world’s second most inequitable region after Latin America. 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. The most striking increase in inequality is found in South Africa whose Gini coefficient has risen from 58 to 67 between 2000-2006. The poor (who live on less than $2 a day) account for 60.8 percent of Africa’s population and hold 36.5 percent of total income in Africa. The rich (who live on more than $20 a day) account for 4.8 percent of the population and 18.8 percent of total income. The AfDB says that these disparities are re-absorbed by the middle class in terms of embodying the concept of equity in income distribution.

“For example, the lower-middle class ($4-$10/day) is almost balanced: 8.7 percent of the population lives on $4 to $10 per day and accounts for 9.9 percent of total income. It appears that income distribution in Africa is characterised by some equity for the middle-income classes and significant differences within the rich and poor income groups,” it adds. A 2012 report by the United Nations Economic Commission for Africa and the African Union confirmed the presence of wide income inequality in Africa. This inequality has contributed tremendously to the continent’s weak growth-poverty elasticity.Sub-Saharan Africa has the lowest growth-poverty elasticity in the world:

a 1 percent increase in growth reduces poverty by only 1.6 percent, compared with 3.2 percent in North Africa (and 4.2 percent in Eastern Europe and Western Asia, which have the highest elasticity). Like the International Monetary Fund, AfDB has expressed grave concern that while Botswana has made remarkable progress in social and human development, the country’s level of poverty remains egregiously high for an upper-middle-income country.

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