Rising Inequality – Impact on Africa?10 February 2014


Isabelle Alenus-Crosby

“Average wages have barely budged. Inequality has deepened; upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by — let alone get ahead. And too many still aren’t working at all.” – Obama’s State of the Union address on January 28th, 2014.

A lot of the gains of the global economic recovery that we’ve seen have gone to the people at the very top, particularly the top 1 %. – The Economist, one day later.

In the past week, economic inequality has been all over the news. As always, I read everything with interest whilst wearing my Africa hat.

Economic growth in Sub-Saharan Africa remains strong with almost a third of countries in the region growing at more than 6% according to the World Bank’s new Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects. However, as Africa’s growth rates continue to surge, Africa’s Pulse notes that poverty and inequality remain “unacceptably high and the pace of reduction unacceptably slow.”

So, what is being done?

Africa’s pulse states that following the global financial crisis, “a growing number of African countries are setting up social safety nets to protect the health and livelihoods of poor and vulnerable people during periods of adversity”. In addition, “the steady growth of the Middle class is also translating growth into much less inequality”.

However, most of what I’ve read in the mainstream papers on the subject is very pessimistic indeed, and often refer to the United Nation’s Human Development Report of 1999:

“Poverty is everywhere. Gaps between the poorest and the richest people and countries have continued to widen. In 1960, the 20% of the world’s people in the richest countries had 30 times the income of the poorest 20% . In 1977, 74 times as much. What will it be in 50 years’ time?”

I think that the whole world, in particular Africa, is therefore watching the US quite closely to see what answers they come up with.