Structural inequalities slowing Africa’s progress in curbing extreme poverty

Structural inequalities in societal laws and institutions are at the core of Africa’s slow progress in scaling back extreme poverty, according to a new report by the World Bank Group.

The flagship publication titled ‘Leveling the Playing Field: Addressing Structural Inequalities to Accelerate Poverty in Africa’ noted that growth in the region, which accounts for over three-fifths of the world’s population of extremely poor people, has been weaker, more challenging, and prone to external headwinds in the last decade.

The arrested growth, the report stated, happened amid climate change, fragility and debt pressures across countries on the continent, which found it more difficult compared to the rest of the world to translate growth into poverty reduction as the dividends of economic growth could not reach the poorest households.

Inequality in Africa, a continent projected to rise to 2.5 billion in population by 2050 from almost 1.4 billion currently, touched a record in 2022 when it became the most unequal region in the globe after Latin America.

South Africa, Namibia, Eswatini and Botswana had the highest inequality levels in income distribution in Africa in 2023, also featuring among the top five in the world.

The report observed that much of the inequality in Africa “is structural: instead of differences in individual effort or talent, more than half of income inequality is attributable to circumstances over which individuals have no control.”

It stressed that structural inequalities comprise disparities in living standards resulting from inherited or unchangeable characteristics like people’s places of birth and their parents’ education, ethnicity, religion or gender.

“Market and institutional distortions, such as lack of competition, give some firms, farms, and workers privileged access to markets, employment, and opportunities while limiting access for the majority, curtailing their productive potential and limiting earning opportunities,” it added.

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The study proposed a three-pronged policy framework targeted at fighting poverty and inequality in the region, which includes developing productive capacities, job creation, and leveraging fair fiscal policy and state effectiveness to invest in people, firms and farms.

Nigeria, which accounts for 16 per cent of the continent’s extremely poor people, is forecasted to be the world’s third-most-populous country in 2050.

Four of the eight countries seen as contributing more than half of the global population by that time, the study said, are in Africa as the continent continues to witness rapid population growth driven by a declining mortality rate and some of the highest birth rates in the world.

“Not only will enabling talented individuals and entrepreneurs to achieve their full potential improve productivity and lead to growth, but it will also reduce poverty and inequality,” it stated.

“However, policies that address only one stage of the income generation process will be insufficient to reduce structural inequality and drive poverty reduction.”