A new World Bank report has identified Southern African Customs Union member countries of Botswana, Eswatini, Lesotho, Namibia, and South Africa, as representative of the world’s most unequal region.
This is despite various differences across these SACU countries, with Namibia and South Africa being confirmed as having higher inequality than the rest and Lesotho being the least unequal in the region.
The World Bank report titled ‘Inequality in Southern Africa: An Assessment of the Southern African Customs Union’, was released last week and examines the process of household income generation to identify sources of inequality in the region.
Consumption inequality across the SACU region is found to be more than 40% higher than the averages for both sub-Saharan Africa and upper-middle-income countries. South Africa, the largest country in SACU, is the most unequal country in the world, ranking first among 164 countries in the World Bank’s global poverty database. Botswana, Eswatini, and Namibia are among the 15 most unequal countries, and despite recent improvements, Lesotho still ranks among the top 20%, the report shows.
To rectify this inherent inequality, the report suggests promoting policy measures that foster equality of opportunity and address the highly skewed distribution of productive assets. This, the World Bank stated, is critical to reducing the persistently high inequality in the five SACU countries. The report also suggests enhancing capacity to respond to increasing climate and economic shocks that generally affect the poor more severely. Enhancing the efficiency and effectiveness of social spending and improving the targeting of key social protection programmes to redirect resources towards the most vulnerable for more sustainable and efficient fiscal redistribution, is key for accelerating reduction in inequality, the World Bank proposed.
“We know from this report that inherited circumstances over which an individual has little or no control, drive overall inequality, and that despite SACU countries undertaking some of the most redistributive spending in the world, particularly on education and health, inequality remains extremely high,” said Marie Francoise Marie-Nelly, World Bank country director for Botswana, Eswatini, Lesotho, Namibia, and South Africa.
“Levelling the playing field at birth through more inclusive delivery of quality education, health, and basic services is critical to reducing inequality in the region,” she added.
Meanwhile, at least one-fifth of inequality in SACU is explained by inherited circumstances such as location, gender, age, and parental background and when race is included in the analysis, the contribution of inequality of opportunity more than doubles. High wealth inequality limits intergenerational economic mobility, making consumption inequality persistent over time.
In the labour market, having post-secondary or tertiary education is key to both accessing jobs, and obtaining better wages once employed.
In Namibia and South Africa, where inequality is distinctly higher than in the rest of the countries, the sharp inequality in land ownership also contributes to perpetuating historically high levels of income inequality.
“This report shows that lack of access to key productive assets such as skills and land, is slowing progress towards a more equitable income distribution,” said Pierella Paci, World Bank practice manager of the Poverty and Equity Global Practice for Eastern and Southern Africa.
“Improving access and availability of private sector jobs and access to productive assets such as land will help equalise opportunities,” said Paci.