Africa's Poverty and Inequality

Africa’s new wealth is increasingly concentrated in only a very few hands. Disappointingly, 10 of the world’s 19 most unequal countries are in sub-Saharan Africa. Economic inequality, or income inequality, is the unequal distribution of a country’s wealth. In highly unequal societies, such as South Africa, most people live in poverty while a minority amasses enormous wealth.

South Africa, the continent’s most developed economy, is also the world’s most unequal. Botswana, Namibia and Zambia are also among the top 19. While Ethiopia’s economy is growing at 8%, it is impossible to miss its impoverished citizens in the streets of its capital, pulling donkeys to transport goods while the rich and famous drive around in luxury cars.

In Nigeria “the scale of inequality has reached extreme levels,” reports UK charity Oxfam in a study published in May 2017. Five of Nigeria’s wealthiest people, including Africa’s richest man, Aliko Dangote, have a combined wealth of US$29.9 billion—more than Nigeria’s entire 2017 budget while about 60% of Nigerians live on less than US$1.25 a day, the threshold for absolute poverty.

In the 1980s and 1990s, many African countries buckled under pressure from the International Monetary Fund, the World Bank and Western nations to implement structural adjustment programmes (SAPs), which led to cuts in subsidies for health, education, transportation and other sectors that help poor citizens.

Some historians and economists now say those cuts fostered inequality. “Under the influence of Western donors, austerity became African leaders’ default coping mechanism for periods of economic stress,” writes Nicholas William Stephenson Smith, a freelance researcher and historian. For many countries SAPs widened the wealth gap rather than providing macroeconomic stability, said Said Adejumobi, director of Southern Africa’s subregional office for the UN Economic Commission for Africa. Adejumobi added that structural adjustment stalled mobility, frayed communities and sharpened divisions along socioeconomic lines. Currently “a tiny group of 4% captures a large chunk of the income and wealth in Africa’s changing tide of capitalist progress,” he said.

 Former South African president Thabo Mbeki, estimates  Africa loses up to US$50 billion annually to illicit flows. Mr. Mbeki urged countries to punish multinational companies that are overinvoicing, underpricing or funneling money to tax havens.