Sunday, October 25, 2020

Botswana’s top 10% earned 67% of national income in 2009

A historic study by a Paris think tank that estimates the evolution of income inequality in Africa from 1990 to 2017 shows that the share of national income earned by Botswana’s top 10 percent was 67 percent in 2009. The bottom 40 percent earned only 4 percent of the national income.

The study marks the first attempt to estimate the evolution of income inequality in Africa from 1990 to 2017 by combining surveys, tax data and national accounts in a systematic manner.

The bad news notwithstanding, income inequality did actually decrease in Botswana, Lesotho, Swaziland and Namibia: “Top shares fell significantly in the three last countries (by around 6 percentage points), while inequality at the bottom declined at various paces: very importantly in Lesotho, that has one of the highest score over SDG 10.1 (the bottom 40 percent grew by 88 points more than the average), to a lesser extent, but substantially in Botswana and Swaziland, and much less in Namibia (where the bottom 40 percent grew by 10 points faster than average).”

However, such decrease is insignificant because Sub-Saharan Africa’s income inequality has remained stable at “extremely high levels.” 

From 1980 to 2018, average incomes in sub-Saharan Africa (and South America) fell behind the world average and average North Americans earn close to ten times more than average Sub-Saharan Africans. The Parisian think tank attributes this inequality to the fact that Sub-Saharan Africa – like the Middle East and Brazil, has never gone through the “post-war egalitarian regime.” The latter refers to the socio-political and economic order following World War II that sought to bring about equality. Combined, these regions have set the world’s “inequality frontier.” Analyses on African inequality levels are typically made on the basis of household surveys, which provide a rich set of socio-economic information on inequality.

Data used in this analyses was drawn from the World Wealth and Income Database which is part of the World Top Incomes Database project at the Paris School of Economics in France. Researchers at the university are conducting a study on the historical evolution of the world distribution of income and wealth, both within and between countries. They have constructed top income share time series which they keep extending forwards and backwards for selected countries – which include Botswana. The study will cover the Bechuanaland Protectorate years when present-day Botswana was a colonial territory ruled by the British.

The project’s data shows that global wealth inequality is extreme and on the rise. It also predicts that even with relatively high income growth predictions in Africa, Latin America, and Asia in the coming three decades, global income inequality will also increase if countries prolong the income inequality path they have been on since 1980.

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