Inequality in Africa: A Research and Policy Agenda Ravi Kanbur IPD Africa Task Force Meeting Columbia University, November 13-14, 2012

Outline Global Patterns African Patterns Opening Up and Inequality Non-Economic/Non-Individualistic Dimensions of Inequality Research and Policy Questions

Global Patterns OECD—Rising Inequality, with some exceptions. Latin America—Declining Inequality from late 1990s onwards. Significant portion of decline is policy driven. Conditional Cash Transfers are give some of the credit. (Lustig et. al.) Asia—Kanbur-Zhuang Theme Chapter in Asian Development Outlook, – Rising Inequality. 82% of Asia’s population lives in countries with rising inequality. Had inequality not risen in these countries, their growth rates could have supported lifting an additional 240 million people out of poverty. – Contrast with Latin America – Web-Based Policy Maker Survey

Global Patterns Asian Policy Makers Survey

Global Patterns Asian Policy Makers Survey

Africa Patterns Start with income/consumption inequality. Africa as a whole. Sala-i-Martin and Pinhovskiy – Based on estimation of distributional functional forms from survey data. – Africa wide Inequality fell from the early 1990s onwards. – Within-country component of inequality decomposition also fell from 1990s onwards. – But (i) study has its critics (eg Andy MacKay) and (ii) pattern across countries is obscured.

Africa Patterns Country specific analyses. Mixed bag on standard income/consumption inequality (McKay) – Increases in countries like Ghana, Uganda, South Africa, Nigeria, Zambia, Mozambique, etc – Decreases in countries like Ethiopia, Kenya, Senegal, Guinea, Mali, etc This mixed pattern opens up research and policy questions – What structural differences account for differences? – What policy differences account for differences?

Opening Up and Inequality Africa has indeed opened up to global markets in the 1990s and 2000s. Standard “East Asia” opening up in the 1960s and 1970s was predicted to, and did, reduce inequality as unskilled wages rose relative to skilled wages.

Opening up and Inequality However, Africa’s opening up in the 1990s and 2000s is in a different context. – Global trend of widening skilled-unskilled wage differentials (part of explanation for rising inequality in Asia). – Four factor model of land, capital, unskilled labor and skilled labor can lead to very different predictions if “land” is equated with natural resources (Adrian Wood’s work in the late 1990s and early 2000s). – But if “land” is equated with small holder agriculture for export, then equity implications can also be very different from the natural resources case. These structural differences across African countries could explain inequality outcomes. Plus policy differences, of course. In general, we need a systematic analysis of country differences in inequality trends in Africa. (McKay)

Non-Economic/Non-Individualistic Dimensions of Inequality Two senses of going beyond standard Gini to “non-economic dimensions.” – Non-income dimensions eg health, education, etc. – Non-individualistic dimensions; inequality across groups: regional, racial, ethnic. I will focus on the second, which is often less well appreciated. In Africa and elsewhere, it is the structural dimensions of inequality which are often most important (Stewart, Kanbur-Rajaram- Varshney, Dasgupta-Kanbur).

Non-Economic/Non-Individualistic Dimensions of Inequality In Africa, it is the group-based dimensions of distributional questions which are often the most significant. – In Kenya the Gini fell over the ten year period 1994 to 2005/6. Yet the story of 2007/8 was the post election violence between Kikuyu on the one hand and Luos and Kalenjin on the other. – In Mali, a falling Gini did not prevent longstanding divisions between south and the northern regions of Timbuktu, Kidal and Gao (“Azawad”) morphing into rebellion (the situation being complicated considerably by Islamist influences in these regions).

Non-Economic/Non-Individualistic Dimensions of Inequality – In Ghana, poverty has declined nationally, but it has reduced much more slowly in the North than in the South. Thus a significant dimension of rising inequality is that between the (mainly Islamic) North and the (mainly Christian or animist) South. – In South Africa there is increasing focus on interpersonal inequality as the wealth of the new black elite enters the political consciousness. But there is no question that the policy priority is still addressing historical racial inequality that is the legacy of apartheid. Gender Inequality is another important group dimension of inequality. There is little systematic cross-regional analysis of the evolution of this dimension of inequality in Africa.

Research and Policy Questions A selection of questions (there are many others, of course). Research – What accounts for the different patterns of inequality across African countries? – How will greater global integration of African economies affect inequality trends, in natural resource based and other economies? – What are the overlaps and intersections between economic and non- economic inequalities? – What are the views of Africa policy makers on Inequality? Policy – Are alternative patterns of global integration available which will be less disequalizing? – Are CCTs a feasible and desirable policy option for Africa to address educational (and health) inequality? – How can gender inequity in access to land be addressed?

Thank You!