THE WORLD Bank has urged five southern African countries, including South Africa, to put in policy frameworks to address the highly skewed distribution of productive assets, in a bid to reduce the persistently high inequality.
South Africa, the largest country in Southern African Customs Union (Sacu), is the most unequal country in the world, ranking first among 164 countries based on gini coefficients of income per capita.
Released yesterday, the World Bank’s report assessing inequality in the region showed that disparities at birth were a crucial driver of inequality in the region.
The report found that at least one-fifth of inequality in Sacu was explained by inherited circumstances such as location, gender, age, parental background.
However, when race was included in the analysis the contribution of inequality of opportunity more than doubled.
In South Africa, the report found that the legacy of colonialism and apartheid, which was rooted in racial and spatial segregation, continued to reinforce inequality of outcomes.
For example, the World Bank said the top 10 percent of the population in South Africa held 80.6 percent of financial assets.
World Bank country director Marie Francoise Marie-Nelly said that levelling the playing field at birth through more inclusive delivery of quality education, health, and basic services was critical to reducing inequality in the region.
“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,” Marie-Nelly said.
The report showed that Sacu member countries of Botswana, Eswatini, Lesotho, Namibia, and South Africa represented the world’s most unequal region.
Inequality in household wealth and low intergenerational economic mobility were also found to entrench inequality of opportunity.
The report said high wealth inequality limited intergenerational economic mobility, making consumption inequality persistent over time.
In the labour market, having post-secondary or tertiary education was key to both accessing jobs, and obtaining better wages once employed.
It said that the sharp inequality in land ownership in Namibia and South Africa, where inequality is distinctly higher than the rest of the countries, also contributed to perpetuating the historically high levels of income inequality.
Pierella Paci, World Bank practice manager of the Poverty and Equity Global Practice for Eastern and Southern Africa, said the report showed that the lack of access to key productive assets such as skills and land was slowing progress towards a more equitable income distribution.
“Improving access and availability of private sector jobs and access to productive assets such as land will help equalise opportunities,” she said.
Paci said Sacu members must start enhancing the impact of fiscal policy on inequality by improving the equity and efficiency of social spending.
She said these countries must also strengthen resilience to climate change risks and economic vulnerability, especially droughts and floods, which result in loss of labour income, a loss of assets, and health shocks, among other effects.
The report identified three broad policy areas to promote equality of opportunity in Sacu region.
These include ensuring efficient and inclusive delivery of public services, strengthening the provision of early childhood development services, and supporting regional development and agglomeration.
“Improving access to and the quality of early childhood care and development is central to reducing inequality of opportunity,“ Paci said.
“Enhancing the efficiency and effectiveness of social spending, and improving the targeting of key social protection programs to redirect resources toward the most vulnerable for more sustainable and efficient fiscal redistribution, is key for accelerating reduction in inequality.”
siphelele.dludla@in.co.za
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