Poverty and Inequality in Africa

Structural sources of Africa's inequality are those rooted in laws, institutions and practices which create advantages for a few but disadvantages for many. They include differences in living standards that come from inherited or unalterable characteristics, such as where people are born, their parents' education, ethnicity, religion, or gender. They also arise from market and institutional distortions that privilege some firms, farms, and workers to access markets, employment, and opportunities while limiting access for the majority, curtailing their productive potential, and limiting earning opportunities. This report argues that policies to address high levels of structural inequality in Africa are also at the heart of Africa's slow progress in reducing extreme poverty. But there is nothing inevitable about structural inequality. Societies which put up barriers to opportunities can also remove and replace them with policies aimed at reducing poverty and growing faster. Indeed, across the world, countries where the gap in inequality of opportunity is narrowest grow faster and have lower poverty incidence. Broadening access to opportunities represents one of Africa's key prospects to raise productivity, earnings, fairness and accelerate poverty reduction. Leveraging the most recent data available for the region, this report provides recommendations aimed at improving the productive capacity of the poor, the ability of the poor to use their capacities once they get to the market, and the design of fair fiscal policies.