Wednesday, September 27, 2023

SACU named the most unequal region in the world

A World Bank report, titled ‘Inequality in Southern Africa: An Assessment of the Southern African Customs Union (SACU), released this week, shows that the union is the world’s most unequal region with a consumption inequality over 40 percent higher than the averages for both sub-Saharan Africa and other upper-middle-income countries.

The World Bank says South Africa – SACU’s largest member state ranks first in both the region and among 164 countries worldwide on the global poverty database. Other SACU member states – Botswana, Eswatini and Namibia rate among the 15 most unequal countries, while Lesotho remains in the top 20.

The report state that atleast one-fifth of inequality in SACU is explained by inherited circumstances such as location, gender, age, parental background. The World Bank data also shows that when race is included in the analysis, the contribution of inequality of opportunity more than doubles. The bank says high wealth inequality limits intergenerational economic mobility, making consumption inequality persistent over time. In the labor market, it emerged that having post-secondary or tertiary education is key to both accessing jobs, and obtaining better wages once employed. The World Bank says in Namibia and South Africa where inequality is distinctly higher than the rest of the other member states, the sharp inequality in land ownership also contribute to perpetuating the historically high levels of income inequality.

“We know from this report that inherited circumstances over which an individual has little or no control, drive overall inequality, and that despite SACU countries undertaking some of the most redistributive spending in the world, particularly on education and health, inequality remains extremely high,” said Marie Francoise Marie-Nelly, World Bank Country Director for Botswana, Eswatini, Lesotho, Namibia, and South Africa.

The report identified three broad policy areas to promote equality of opportunity in the region which entails ensuring efficient and inclusive delivery of public services, strengthening the provision of early childhood development services, and supporting regional development and agglomeration.

World Bank’s Marie-Nelly said that the Levelling the playing field at birth through more inclusive delivery of quality education, health, and basic services is critical to reducing inequality in SACU.


Read this week's paper