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The saddening implication of economic inequality in Africa
It is reported that the world's richest one percent own 45 percent of the world's wealth. Adults with less than $10,000 in wealth make up 64 percent of the world's population but hold less than 2 percent of global wealth.
Away from global averages, in richer jurisdictions, the statistics are equally disconcerting. In the recent past in the USA, the share of wealth owned by the one percent richest households shot up by nearly three percentage points.
Wealth owned by the bottom 90 percent, meanwhile, was falling. The top one percent of households there owns more wealth than the bottom 90 percent combined.
By 2019, it was reported by Oxfam that the 26 richest individuals in the world owned as much wealth as the poorest 50 percent citizens of earth. Economic inequality is therefore a global challenge.
Africa herself is a highly inequitable continent. The continent had four of the five most inequitable countries in the world, considering statistics between 2010 and 2015.
The undoing of wide economic inequality is broad and in different forms, but this commentary will pick out the most relevant for Africa’s current circumstances.
Among other things, economic inequality is a major hindrance to growth. In the midst of widespread poverty, there is usually poor public health and if the cost of food as well starts to rise, governments have to refocus from pro-growth strategic initiatives to address the general poverty related challenges faced by the masses.
Today’s Africa is generally in this position. Basic food needs are threatened by climate change and the continent has to import food. Governments on the continent must assign resources to take care of the basic health and nutrition needs of the population.
This happens as a tradeoff of other needs such as infrastructure development, which for Africa are in their critical phases, for development purposes.
With an exploding population, the continent’s development priorities therefore continue to get compromised by the rising mass of poor citizenry since a huge majority of children get born into poor households and need care.
Economic inequality is also a known cause of political instability in many ways.
In recent times, however, indication of global trends of mass uprisings are a key threat to stability of nations and aside from issues internal to nations, the masses can be incited by foreign factors. It is easier for this to happen in environments of mass poverty.
For this reason, Africa therefore runs a unique risk of potential distortion of socio-political order due to her rising population, widespread poverty along with high levels of foreign interest in the affairs of the continent. Foreign interests in Africa are influenced by many factors, including natural resource supply and others.
Some scholars have presented the fact that a widening rich-poor gap results in fewer individuals having funds to invest in training and education.
This results in human resource challenges, curtailing economic growth. The highly disproportionate trend between population growth and lack of requisite skilling can be so crippling to nations.
High population implies greater need for production and service delivery, and yet the lack of skills results in the lack thereof, with the consequence that there is a huge but unproductive population to take care of.
The burden will fall on government as well as the few productive individuals. The consequent high dependency ratios can take a toll on the development agendas of individuals. It constrains capital accumulation. For Africa, there is a great need for growth of the entrepreneurial class and thus the above is quite disadvantageous.
There are certainly other concerns around economic inequality such high crime levels, general decline in health and the side-line disadvantages related to them.
For example, the World Bank has previously indicated that the gap between the rich and the poor in education and health remains striking in most African countries. Poor children are more likely to be malnourished, less likely to use health care and less likely to complete five years of primary school.
Without initiatives that close the rich-poor gap therefore, the continent will continue to battle the problems above. African governments may not be able, in the short, to shoulder the resultant responsibility. The continent needs to adopt a preventive approach to the problem. Initiatives like free education for all are good and significant steps in this right direction.
In a holistic approach, the content and quality of education will have to be aligned with the continent’s needs. There are other programmes around motivating entrepreneurship, especially with focus on youth, which some African governments have adopted. These are critical and should be sustained and intensified.
Raymond is a Chartered Risk Analyst and risk management consultant
