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Income Inequality Trends in sub-Saharan Africa

Divergence, Determinants, and Consequences

image of Income Inequality Trends in sub-Saharan Africa

Sub-Saharan Africa (SSA) recorded a remarkable economic performance in the first 15 years of the 21st century. Such an encouraging trend, which reversed the stagnation or decline of the prior 25 years, was accompanied by a perceptible, modest, but uneven decline in aggregate poverty, together with substantial cross-country variation in the poverty-reducing power of growth. This is reflected in, and partially driven by, the variation of inequality levels and trends among the African countries. Proper documentation of inequality levels and trends in the region therefore becomes essential in order to better understand the slow and varying rate of decline of poverty reduction in the region. To this end, this book, an outcome of a comprehensive study of income inequality in SSA, documents the initial conditions and changes in income inequality that have taken place in the region since the early 1990s. It proposes hypotheses to account for this experience and draws relevant lessons that could help accelerate reduction in income disparities.

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The dynamics of income inequality in a dualistic economy: Malawi over 1990-2011

Malawi is a small country located in Southern Africa. It has a surface area of 118,000 km2, a total length of 540 miles and a maximum width of 150 miles. The country is landlocked and the nearest harbours, Beira and Nacala (both located in Mozambique), are around 1,000 km from Lilongwe, Malawi’s capital. The country became a British colony in 1893 and gained independence in 1964. In 2011, the last year with inequality data, the total population was 15.5 million and its growth rate was around 3.0 per cent (UN DESA, Population Division, 2015). The population density is high, at 182.6 people per km2, against an average of 37 for sub-Saharan Africa (SSA). The mainstay of the economy is agriculture, which currently employs 65.0 per cent of the workforce and generates about 36.0 per cent of GDP and 90.0 per cent of foreign exchange earnings. This sector is characterised, historically, by the dualism between small subsistence farms versus large estates run by white settlers during colonial times and by domestic elites after independence.

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