SADC: world's most unequal region

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By Mpho Tebele

Gaborone - The Southern African Development Community (SADC) member states are the most unequal countries in the world by any measure, a new report by the World Bank has revealed.

The World Bank report, which listed 149 countries, shows that leading the pack in the world rankings is South Africa. 

"There is no country that we have data about where the inequality is higher than South Africa," the report said.

According to the report, South Africa's neighbours, Namibia, Botswana and Zambia were second and third and fourth, respectively. 

Lesotho and Swaziland occupy the six and seventh spots just below the Central African Republic, which is fifth.  Brazil‚ Colombia and Panama completed the top 10 of the world's most unequal countries.

While the report was used to analyse South Africa's post-apartheid progress‚ focusing on the period between 2006 and 2015, it also gave a glimpse of the World Bank's estimated income inequality around the world.

On a scale of 0 to 100, 0 represents total equality. South Africa scored 63, Botswana and Namibia followed closely with 61 each, Zambia scored 57 while Lesotho and Swaziland scored 54 and 52 respectively.

"With consumption expenditure Gini coefficient of 0.63 in 2015, South Africa is the unequal country in the world and incomes are highly polarised. Wealth inequality is even larger than consumption expenditure inequality and the country is also the most unequal based on wealth distribution," the report states.  

A Gini coefficient is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents and is the most commonly used measure of inequality.

According to the report, a significant determinant of this inequality is inequality of opportunity.

The report states that although South Africa has made progress in reducing poverty since 1994, the trajectory of poverty reduction was reversed between 2011 and 2015, threatening to erode some of the gains made since 1994.

"High levels of inequality and low inter-generational mobility act as a brake on poverty reduction and, as a result, poverty is high for an upper middle-income country. Poverty is consistently highest among black South Africans, the less educated, the unemployed, female-headed households, large families, and children," the report states.

 Further, the report says, poverty has a strong spatial dimension in South Africa, a demonstration of the enduring legacy of apartheid.

"Poverty remains concentrated in previously disadvantaged areas, such as the former homelands – areas that were set aside for black South Africans along ethnic lines during apartheid," the report says.

It also found that high levels of income polarisation are manifested in very high levels of chronic poverty, a few high-income earners and a relatively small middle class.

The role of skills and labour market factors have grown in importance in explaining poverty and inequality while the role of gender and race, though still important, has declined, presenting an opportunity for policy to influence poverty and inequality outcomes.

"Social protection remains important in reducing extreme poverty, but the fiscal space for further expansion is limited. Low growth perspectives in the coming years suggest poor prospects of eliminating poverty by 2030 as envisaged in the National Development Plan. 

"Looking ahead, accelerating poverty and inequality reduction will require a combination of policies that seek to unlock the full potential of labour markets and promote inclusive growth through skilled job creation," the report states.

Commenting on the report, Dr Nkosazana  Dlamini-Zuma, Minister in the Presidency: Planning, Monitoring and Evaluation said: "While the long-term trend indicates progress in reducing poverty, inequality has remained stubbornly high."

According to Dlamini-Zuma: "The report reveals South Africa as one of the most unequal countries in the world, with consumption inequality having increased since 1994. Wealth inequality is high and has been rising over time. A polarized labour market results in high wage inequality. Intergenerational mobility is relatively low and serves as a barrier to inequality reduction."

Commenting on the statistics, Paul Noumba Um, the World Bank country director for South Africa, noted that: "Since democracy, social assistance and fiscal redistribution have generally played a more fundamental role in containing the rise in inequality. But the slow growth that generates a mismatch between labour demand and supply makes fiscal redistribution alone grossly insufficient to address the country's inequalities."

 

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