Inequality In Africa Research Articles

Financial development and income inequality in Africa

Across the globe, a rise in income inequality has been experienced for the last two decades, particularly in developing countries. This problem of income inequality poses a challenge to Africa’s ability to attain the United Nations (UN) Sustainment Development Goals (SDGs) of reduced inequalities (SDG-10). Against this backdrop, there is a need to harness the potential of financial development to reduce income inequality in Africa. Therefore, this study empirically examines how financial development affects income inequality in Africa. Financial development dimensions, access, depth, efficiency, and stability were considered to achieve the study’s objective. The study applied the system generalized method of moments (SGMM) to analyse data and the findings showed that each dimension of financial development had a varying impact on income inequality. Access, stability and efficiency components of financial development reduce income inequality, while the depth dimension of financial development exacerbates income inequality in Africa. Therefore, the study recommends that policymakers should not neglect other dimensions of finance in facilitating economic development.

When does public debt hurt inequality in Africa?

PurposeThe question of what level of public debt can increase inequality has become crucial in Africa. In this study, the authors examine the effect of public debt on inequality in Africa and estimate the debt-inequality threshold. The authors then examine the moderating role of tax burdens and corruption in the relationship between public debt and inequality.Design/methodology/approachUsing data from the period 2005 to 2019 in 38 African countries, the generalized method of moment and the dynamic panel threshold regression techniques were employed to achieve the purpose of the study.FindingsThe results reveal that a 1% increase in public debt leads to a rise in inequality by about 0.17%. However, the effects doubles when the public debt ratio hits 57.47%. Tax burden worses the effect of public debt by about 2.9 percentage points, while control of corruption reduces debt effect on inequality by 61 percentage points.Research limitations/implicationsOwing to data availability, the study period was restricted to 2005 to 2019. Moreover, the study could not consider the disagreggation of inequality into different income groups due to pausty of data. While this could narrow the scope of the study, the results provide an important insight for policy makers.Originality/valueThis contributes to the scant literature on the effect of public debt on income inequality in African countries. This study is a novelty because its provides the level of public debt which worsens inequality in Africa, as well as the moderating effects of tax burden and corruption control.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2022-0581

Research capacity strengthening in Africa: Perspectives from the social sciences, humanities, and arts

Global and human development and freedoms increasingly thrive on robust and policy-orientated research and related activities. Yet, the African research landscape faces a myriad of challenges which have resulted in a very unequal continent in terms of research and research capacity. The prevailing research inequities and challenges in Africa are even more pronounced in the social sciences, humanities, arts, and related fields (SSHA). Here, the strengths and impact of scholarship in SSHA fields are often overshadowed by deficits and apparent preferential investment in research in science, technology, engineering, and mathematics-related fields. In response, the African Academy of Sciences commissioned a study in 2020 to generate evidence on the SSHA research support landscape in Africa. This paper summarizes findings from literature review, key informant interviews, a bibliometric analysis, a survey with a sample of 670 respondents from SSHA communities in Africa, and a series of focus group discussions. We highlight key messages and make recommendations focussing on lessons learnt, opportunities, needs, and priorities for intervention to enhance significant SSHA research leadership capacity strengthening and, ultimately, minimize research inequalities in Africa.

Mapping health service coverage inequalities in Africa: a scoping review protocol

IntroductionAddressing inequities in health service coverage is a global priority, especially with the resurgence of interest in universal health coverage. However, in Africa, which has the lowest health service coverage...

Income Inequality in Africa: Exploring the Interaction Between Urbanization and Governance Quality.

While many studies have examined the influence of urbanization on income inequality, the study on the moderating effect of governance on the relationship between urbanization and income inequality remains quite inexistent. To fill this gap in the literature, the study examines the moderation of governance quality on the influence of urbanization on income inequality in 46 African economies from 1996 to 2020. A two stage system GMM estimation approach has been used to achieve this goal. The results unveil that the impact of urbanization on income inequality is positive and significant, meaning that increase in urbanization exacerbates income inequality in Africa. However, the results show that the improvement of governance quality could contribute to improve income distribution in urban areas. Interestingly, the results show that improving governance quality in Africa could contribute to spurring a positive urbanization which could contribute to promote urban economic growth and reduce income inequality.

Structural Change and Inequality in Africa

AbstractThis paper examines how inequality could be tackled through structural transformation using unit record data from the Demographic and Health Surveys (DHS) for Africa. Results suggest inequality between countries tends to be higher when the share of labour employed or value-added in the agriculture sector is higher, while no association is observed for industry and services sectors contributions to GDP or employment. Within-country inequality however tends to be strongly affected by structural change. A 1 standard deviation growth in the movement of labour from low- to high-productivity sectors could decrease overall inequality by 0.5% and inequality of opportunity by 1.1%. Results from other data sources strongly support these findings suggesting that positive structural transformation could lead to sustained reduction in inequality in Africa. Other factors correlated strongly with inequality reduction include human capital, which tend to have large and significant income or asset reducing effect in Africa, particularly at higher level of education, while the pace of urbanisation exacerbates it incidence.

Intergenerational Mobility and the Growth–Inequality–Poverty Nexus in Africa

AbstractThis paper examines to what extent intergenerational mobility shapes both the impact of income inequality on growth as well as the effect that growth has on poverty and on income inequality in Africa. Thanks to newly available and internationally comparable data on intergenerational elasticities of income and education, we confirm the detrimental role played by higher inequality of opportunity as measured by intergenerational mobility. The study concludes that neglecting to address the root causes of inequality of opportunity can be socially and economically very costly.

Club Convergence in Income Inequality in Africa

Club Convergence in Income Inequality in Africa

Financial intermediation, inclusion, Fintech, and income inequality in Africa: Robust evidence from the supply and demand side data

AbstractThe current literature on the finance‐inequality nexus fall short of providing extensive evidence. This paper fills the gap by framing the financial sector; to the development of financial intermediation (supply side) and individual use of financial services (demand side). The first approach decouples the financial sector into the banking and stock market. We use the 5‐year nonoverlapping averaged data from 1980 to 2017 across 49 countries and employ a panel data fixed effect and two‐stage least squared estimation (2sls). We show that banking and stock market development widens income inequality. Besides, the effect is more prominent in countries that have a banking and stock market than countries only with the banking sector. The second approach uses financial inclusion and financial technology (Fintech) data from three waves of survey data in 2011, 2014 and 2017 on the individual use of financial services across 39 countries. We obtain three key findings. First, institutional quality significantly affects financial inclusion and Fintech. Second, Fintech positively affects inclusion and savings. Third, financial inclusion and Fintech exacerbate income inequality. Our result asserts a natural tendency that financial sector development exacerbate income inequality in Africa.

Sun, Sand, Sex, and Safari: The Interplay of Sex Tourism and Global Inequalities in Africa's Tourism Industry

Despite the increasing visibility of sex in Africa's tourism industry, the continent is typically neglected in global narratives about sex tourism. The quintessential image of sex tourism is that of Global North tourists traveling to "exotic" locations in the Global South such as East Asia, Latin America, or the Caribbean. Yet, Africa has been experiencing a growth in sex tourism bolstered by an increase in globalization-led tourism development. The continent was identified as the second-fastest growing tourism region in the world in 2019—after the Asia Pacific region—with an estimated 67 million visitors annually, and some of those tourists are bound to engage in sex tourism. Literature examining the global inequalities that inform sex tourism in the African economy using the perspectives of dependency theories and postcolonial theories is sparse but warranted. Expanding on these critiques of the politics of race, class, gender, and imperialism, this article explores interactions between Global North sex tourists and Global South hosts in the sex tourism industry in Africa. The article contends that the tourist gaze on sex workers in Africa's sex tourism industry is informed by representations of Africa and African sexuality in pop culture rooted in the colonial project and by contemporary power imbalances in the global tourism industry, which organizes raced, gendered, and classed tourist experiences.

Inequality Regimes in Africa From Pre-Colonial Times to the Present

ABSTRACT While current levels of economic inequality in Africa receive ample attention from academics and policymakers, we know little about the long-run evolution of inequality in the region. Even the new and influential ‘global inequality literature’ that is associated with scholars like Thomas Piketty, Branko Milanovic, and Walter Scheidel has had little to say about Africa so far. This paper is a first effort to fill that void. Building on recent research in African economic history and utilizing the new theoretical frameworks of the global inequality literature, we chart the long-run patterns and drivers of inequality in Africa from the slave trades to the present. Our analysis dismantles mainstream narratives about the colonial roots of persistent high inequality in post-colonial Africa and shows that existing inequality concepts and theories need further calibration to account, among others, for the role of African slavery in the long-run emergence and vanishing of inequality regimes.

The price of inequality in Africa

The price of inequality in Africa

Income inequality in Africa, 1990–2019: Measurement, patterns, determinants

This article estimates the evolution of income inequality in Africa from 1990 to 2019 by combining surveys, tax data, and national accounts. Inequality in Africa is very high: the regional top 10% income share nears 55%, on par with regions characterized by extreme inequality, such as Latin America and India. Most of continent-wide income inequality comes from the within-country component rather than from average income differences between countries. Inequality is highest in Southern Africa and lowest in Northern and Western Africa. It remained fairly stable from 1990 to 2019, with the exception of Southern Africa, where it increased significantly. Among historical determinants, this geographical pattern seems to reveal the long shadow of settler colonialism, at least in Sub-Saharan Africa; the spread of Islam stands out as another robust correlate. The poor quality of the raw data calls for great caution, in particular when analyzing country-level dynamics.

ENTREPRENEURIAL DEVELOPMENT IN AFRICA: A BOON TO INCOME EQUALITY

The interconnection between income inequality and entrepreneurship in African economies is examined. The study provides answers to two critical questions: (1) Does income inequality affect entrepreneurship? and (2) What is the implication of entrepreneurship for income disparity in Africa? With the Gini coefficient used as a proxy for income inequality, data from 23 selected African countries over the period 2006-2018 are analyzed. The analysis is based on panel data econometrics, and reveals that income inequality increases entrepreneurship in Africa. It is also discovered that entrepreneurship reduces income inequality. These findings persist after utilizing the Palma ratio as an alternative proxy for income disparity in African economies. In terms of policy implications, the study shows that income disparities serve as a push factor toward entrepreneurial activities. Entrepreneurship may serve as a veritable tool for policies aiming at reducing income inequality in Africa.

Financial Inclusion, Fintech, and Income Inequality in Africa

Financial inclusion and Fintech have revolutionized the financial sector and fundamentally changed how we store, save, borrow, transfer, and invest money. This paper investigates the impact of financial inclusion and Fintech on income inequality using waves of survey data for 2011, 2014, and 2017 across 39 African countries. By using pooled ordinary least square and two-stage least square (2sls) estimation methods, we obtain three key findings. First, institutional factors such as political stability, control of corruption, and government effectiveness determine Fintech and financial inclusion. Second, Fintech encourages individuals to have a formal bank account, thereby promoting financial inclusion. Third, financial inclusion and Fintech exacerbate income inequality. The direct implication of our findings is that policymakers make tradeoffs whether they seek to achieve higher inclusion and Fintech or to reduce income inequality. We highlight that a pro-poor financial sector development is vital. Easing the bottleneck in obtaining loans, offering agriculture-based Fintech services, and improving digital literacy are important steps to gain the most out of inclusion and Fintech in reducing income inequality.

Bridging Africa’s income inequality gap: How relevant is China’s outward FDI to Africa?

• This study examines whether Africa’s institutional fabric propels Chinese FDI to reduce income inequality in Africa. • The focus is on 48 African countries for the period 1996–2020. • The empirical evidence is based on the dynamic Generalised Method of Moments. • Although Chinese FDI contributes to equitable income distribution in Africa, the effect is weak • Political stability, corruption control and voice and accountability are key for propelling Chinese FDI to reduce income inequality. This study examines whether: (i) the remarkable inflow of Chinese FDI to Africa matters for bridging the continent’s marked income inequality gap, (ii) Africa’s institutional fabric is effective in propelling Chinese FDI towards the equalisation of incomes in Africa and (iii) there exist relevant thresholds required for the various governance dynamics to cause Chinese FDI to equalise incomes in Africa. Our results, which are based on the dynamic GMM estimator and macrodata for 48 African countries, reveal the following. First, although Chinese FDI contributes to fairer income distribution in Africa, the effect is weak. Second, although Africa’s institutional fabric matters for propelling Chinese FDI towards the equalisation of incomes across the continent, governance mechanisms for ensuring political stability, low corruption, and voice and accountability are critical. Finally, the critical masses required for these three key governance dynamics to cause Chinese FDI and other income inequality-reducing modules to reduce income inequality are 0.8, 0.5 and 0.1, respectively. These critical masses are thresholds at which governance is necessary but no longer sufficient to complement Chinese FDI to mitigate income inequality. Hence, at the attendant thresholds, complementary policies are worthwhile. Policy recommendations are provided in the conclusion.

Agricultural Trade Liberalisation and Agricultural Total Factor Productivity Growth Convergence in Africa

Reducing income inequality in Africa rests on agricultural total factor productivity (TFP) growth and convergence. Liberalizing agricultural trade has emerged as a force of agricultural TFP growth convergence. Notwithstanding increasing agricultural trade, TFP in Africa is falling while the differences in TFP growth rates remain wide. We provide evidence on the impact of agricultural trade liberalization on agricultural TFP growth convergence. We examine trade by origin, disaggregated into intra-Africa, and rest-of-the-world trade. Also, we recognize the uniqueness of agricultural trade liberalization and analyze the effect of the removal of trade-distorting agriculture support. Using maize and rice data for the period 2005-2016, we apply a Feasible-Generalized- Least-Squares estimation of panel data models derived from Barro and Sala-i-Martin (1990). We find evidence for both absolute and conditional convergence, which is stronger for maize. Moreover, agricultural trade openness speeds up TFP growth convergence for both crops. Convergence speed is higher for intra-Africa trade. Estimations on domestic agriculture support suggest that reduction of support beyond distortion-free levels enhances TFP growth convergence. Our findings call for more agricultural trade liberalization. We appeal that the recently launched Africa Continental Free Trade Area prioritizes intra-Africa agricultural trade liberalization and further elimination of trade-distorting domestic agriculture support.
 Vol. 9, No. 2, August 2022: 71-88

The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces

Reducing income inequality is a crucial goal of sustainable development as income inequality often viewed as harmful to economic growth. The main aim of this paper was to empirically assess the macroeconomic and institutional drivers of income inequality in Africa. We use a Kuznets curve framework, which emphasises the role of income per capita in explaining the time path of inequality. In contrast to much of the literature, we explicitly examine the possibility of the existence of multiple income steady states. Using the concept of clubs of convergence, we show that per capita income is divergent and identify four steady states to which groups of economies converge (i.e., high-income to low-income economies). Using panel data models and a data set encompassing 52 African countries spanning the years 1980–2017, we show that once these multiple steady states are accounted for, the Kuznets curve relationship becomes unstable. Our findings suggest that inequality may be increasing in high-income countries in Africa, while decreasing in low-income or the least developed economies. In addition, the role of macroeconomic and institutional factors in explaining income inequality is limited and differ across convergence clubs. Evidence suggests the importance of fiscal, employment and monetary policies and the rule of law to tackle inequality in high-income economies, while they have no statistically significant role in low-income economies’ income inequality.

Remittances and income inequality in Africa: Financial development thresholds for economic policy

This study employs macrodata on 42 African countries to examine whether remittances and financial development (including its sub-components of access, depth and efficiency) contribute to the equalisation of incomes across the continent. Robust evidence based on the dynamic GMM estimator shows that: (i) remittances heighten income inequality in Africa, (ii) Africa’s financial system is not potent enough for propelling remittances towards the equalisation of incomes, and (iii) vis-à-vis financial access and depth, inefficiencies characterising Africa’s financial institutions is the main reason remittances contribute to the widening of the income disparity gap. Nonetheless, the optimism which we provide by way of threshold analysis shows that channelling resources into the development of Africa’s financial sector could yield shared income distribution dividends. In particular, efforts should be made to achieve a minimum threshold of 23.05 (index) for financial access, and 3.02 (index) for that of financial institutions efficiency if Africa’s financial sector is to repackage remittances towards the equalisation of incomes. A few policy recommendations are provided in the end.

‘Our old pastor thinks the mobile phone is a source of evil.’ Capturing contested and conflicting insights on digital wellbeing and digital detoxing in an age of rapid mobile connectivity

While Africa has largely been considered a digitally-disconnected country, recent studies have shown that connectivity figures are on a rise. In this paper, we theorize digital wellbeing in a context characterized by a fast-growing number of mobile data users despite a historically low Internet penetration. It is focused on an ongoing ethnographic research on mobile users and digital inequalities in Africa, zooming in on results from an explorative study featuring 10 in-depth interviews with young adult heavy users (more than 4–5 hours a day) and seeking to understand strategies they use in attaining digital wellbeing. The findings show how the sampled young adults (18–30 years old) struggle with the daily realities of digital participation including addiction and generational conflict in technology use. Results also reveal ways through which electronic connectivity is perceived both be a tool of freedom as well as a subtle form of potential digital enslavering.