{
  "title": "Tackling Inequality in sub-Saharan Africa Could Yield Mileage on Growth",
  "publication": "IMF Blog, November 16, 2015",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2015/11/16/tackling-inequality-in-sub-saharan-africa-could-yield-mileage-on-growth",
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  "summary": "Rising inequality in sub-Saharan Africa is both a moral and economic issue with implications for prosperity and growth.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Rising inequality in sub-Saharan Africa is both a moral and economic issue with implications for prosperity and growth.\n- The region remains one of the most unequal in the world, on par with Latin America.\n- Over the last 15 years of high growth, per capita incomes in sub-Saharan Africa have risen, but income inequality within countries has remained broadly stable and gender inequality has declined more slowly than in other regions."
    },
    {
      "heading": "Findings on inequality and growth",
      "content": "- Research by the IMF’s African Department finds that inequality has an adverse effect on growth in the region.\n  - Real per capita GDP growth in sub-Saharan African countries could be higher by close to one percentage point per year if income and gender inequalities were reduced to the levels observed in the fast-growing economies of Southeast Asia (Indonesia, Malaysia, the Philippines, Thailand and Vietnam).\n  - This potential increase is as much as half of the growth gap between those Asian countries and sub-Saharan Africa."
    },
    {
      "heading": "Heterogeneity across country groups",
      "content": "- The finding does not apply uniformly to all 45 countries in sub-Saharan Africa:\n  - Low-income and fragile countries (e.g., Niger and Mali):\n    - The drag on growth is stronger from infrastructure and human capital gaps and, to a lesser degree, from prevailing gender barriers.\n    - Policy priority: address infrastructure and human capital gaps to raise growth.\n  - Middle-income countries (e.g., South Africa):\n    - There could be a larger growth dividend from policies directly aimed at reducing inequality.\n    - The growth payoff from reducing income and gender inequalities to the Asian countries’ level appears higher than that of closing the infrastructure gap.\n  - Oil exporters (e.g., Angola and Cameroon):\n    - Legal restrictions on women’s participation in economic activities combined with the infrastructure gap are the most important factors explaining the growth differential with the Asian countries."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Fiscal policy reforms:\n  - Phase out Value Added Tax (VAT) exemptions and reduced rates for basic goods that weaken the VAT’s yield and mainly benefit the better off.\n  - Transform expenditure policy into a sharper tool for addressing inequalities.\n  - Abolish fuel subsidies, which mainly benefit middle and higher income households, and replace them with transfer schemes targeted at poor households.\n- Financial inclusion:\n  - Improve access to financial services to help address inequalities.\n  - Establish credit bureaus that centralize information to encourage banks to lend to new customers.\n  - Scale mobile banking approaches that have expanded access in some countries (example: Kenya, where nearly 60 percent of the adult population has access to mobile money).\n- Removing legal barriers for women:\n  - Abolish legal restrictions on women’s economic participation (examples include inability to open a bank account or start a new job without a husband’s consent).\n  - Eight countries in Sub-Saharan Africa still have ten or more such restrictions.\n  - Removing these restrictions can yield quick gains in labor force participation and growth (example cited: Namibia)."
    },
    {
      "heading": "Implications for sustainable growth",
      "content": "- More inclusive and better-distributed growth supports sustainable development.\n- With growth slowing down in the region, prioritizing measures that both lift growth and reduce inequality is increasingly important.\n\nAntoinette M. Sayeh, \"Tackling Inequality in sub-Saharan Africa Could Yield Mileage on Growth\", November 16, 2015.\n\n---\n\n Content in this bundle\n\n- Staff Discussion Note\n  - Staff Discussion Note (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Staff Discussion Note (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- outlook report for the region\n\nSource: https://www.imf.org/en/blogs/articles/2015/11/16/tackling-inequality-in-sub-saharan-africa-could-yield-mileage-on-growth"
    }
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    "Authors: Antoinette M Sayeh",
    "Published: November 16, 2015",
    "Rising inequality in sub-Saharan Africa is both a moral and economic issue with implications for prosperity and growth.",
    "The region remains one of the most unequal in the world, on par with Latin America.",
    "Over the last 15 years of high growth, per capita incomes in sub-Saharan Africa have risen, but income inequality within countries has remained broadly stable and gender inequality has declined more slowly than in other regions.",
    "Research by the IMF’s African Department finds that inequality has an adverse effect on growth in the region.",
    "The finding does not apply uniformly to all 45 countries in sub-Saharan Africa:",
    "Fiscal policy reforms:",
    "Financial inclusion:",
    "Removing legal barriers for women:",
    "More inclusive and better-distributed growth supports sustainable development.",
    "With growth slowing down in the region, prioritizing measures that both lift growth and reduce inequality is increasingly important.",
    "**Staff Discussion Note**",
    "[outlook report for the region](http://www.imf.org/external/pubs/ft/survey/so/2015/CAR102715A.htm)"
  ],
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