Southern Africa is one of the regions with unequal incomes in the world, with Zimbabwe ranked among the lowest in the region, a report released by the African Union (AU) and the Organisation for Economic Cooperation and Development (OECD) Centre has revealed.
Africa’s Development Dynamics 2018, which was released week at AU’s headquarters in Ethiopia’s capital Addis Ababa, noted that southern Africa contains six out of the 10 most unequal countries in the world terms of income.
South Africa had the world’s highest Gini coefficient at 63, followed by Namibia (61), Botswana (61), Zambia (57), Lesotho (54) and Swaziland (52) with Zimbabwe, Mozambique, and Angola having the lowest.
Gini coefficient is measured using the Gini index refers to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution.
The index ranges from 0 in the case of “perfect equality” to 100 in the case of “perfect inequality”.
In South Africa there are high wage inequalities as “the concentration of capital and land among the wealthier groups and cultural and historical factors exacerbate the dualistic employment market.”
The report, which indicated mixed performances of different African regions in terms of growth, jobs and inequalities, also stresses the importance of addressing inequality for the betterment of African countries as unemployment and inequality are interlinked in southern Africa.
“Addressing inequality can boost long-term growth through several channels. First, it enables the poor to accumulate productive assets and invest in human capital.
“Second, it increases their purchasing power and thus changes the structure of domestic demand for higher-quality goods and services.
“Third, it helps ensure social cohesion and political stability,” read part of the report.
The inequality in southern Africa besides wages mismatch also affect women as they face more challenges in the jobs sector than their male counterparts.
As it stands the total labour force participation rate is only 61 percent for women compared to 71 percent for men. This gap varies across countries but is more severe in Zimbabwe, Botswana, Lesotho and South Africa, reads part of the report.
The document further indicated that “the economic development of Africa using an African analytic grid, it will contribute to the definition and implementation of innovative policies that are adapted to the specific characteristics of each economy and that further the African Union’s priorities.”
Mario Pezzini, the OECD director reiterated the importance of policies and working together as Africa.
He said the report “is not the end, it’s not even the beginning of the end but the end of the beginning. We intend to continue to work together every year and produce a report ….We can together create a story, a narrative, an interpretation of what is going on and in particular to provide policy, vision, policy recommendations. That is what we want to do together . . . because Africa is multiple but Africa is one therefore it’s important to work together to define those strategies.”
For each problem the report offers African governments’ policy recommendations.
For instance, on inequality and unemployment the report notes that high inequality can lead to unemployment as it leads to liquidity constraints that prevent the poor from investing in health and education so boosting employment opportunities should be at the forefront of addressing inequality and unemployment.
However, southern Africa as a region has registered a steady economic growth since 2000 though employment and inequality remain as major challenges.