Inequality in Africa: What drives it, how to end it and what some countries are getting right

Complex issue
  • 23 Hours Ago
African governments’ policy decisions over the past decades have often exacerbated inequality, shaping who benefits from growth and who is left behind. Several key policy areas stand out.

Structural adjustment programmes are a major factor. Many African countries adopted these policies in the late 20th century under pressure from international financial institutions. Measures included public sector retrenchments, subsidy removals and cuts to social services. While intended to stabilise economies, they disproportionately affected the poor by reducing access to education, healthcare and other essential services. Free-market approaches were prioritised over social protection, and attempts to mitigate negative consequences were often delayed or insufficient.

Taxation and fiscal policies have also contributed. African tax systems typically rely on indirect taxes, such as VAT, which place a heavier relative burden on low-income households. Progressive taxes on income and wealth are underdeveloped or easily evaded, while efforts to tax the informal sector have been limited. Early post-independence fiscal policies did little to redistribute wealth, failing to capture resources needed for social spending.

Investment in education and healthcare has frequently favoured urban areas and elite groups. This “urban bias” in public spending reinforced existing inequalities, leaving rural populations with limited opportunities. Weak social protection systems until the 2000s left many Africans vulnerable, with inadequate safety nets to absorb economic shocks.

Economic structures have also reinforced inequality. Policies often favoured extractive industries, resource sectors controlled by politically connected elites, or sectors concentrated in urban areas. Land tenure, trade policies, and access to state contracts and licences commonly advantaged elites, while women, youth, and marginalised groups were excluded. Only in recent decades have governments made some attempts to address these gaps.

Elite capture is a central factor. Policies are frequently shaped to protect the interests of a narrow group, perpetuating colonial and postcolonial patterns of resource control. Many African economies remain dependent on extractive industries, with trade and land policies that favour politically connected actors.

Fiscal policy designs, such as reliance on indirect taxation, largely avoid taxing elite wealth, while public services primarily serve formal-sector workers and urban populations. Political patronage reinforces these inequalities, with resources, contracts, and positions channelled to loyalists or family networks.



The three biggest drivers of inequality are:

• Regressive fiscal policies, which disproportionately burden the poor while sparing the wealthy.

• Elite-led privatisation and market liberalisation, concentrating profits in politically connected hands and leaving informal workers and small firms disadvantaged.

• Under-investment in universal social services, including health, education and safety nets, which restricts upward mobility and reinforces regional and gender disparities.

Resource dependence further entrenches inequality. Many economies rely on oil, minerals, or cash crops, benefiting elites while excluding most citizens from wealth creation.



Countries that have made progress include:

Rwanda, with a progressive income tax system, exempting low-value mobile transactions and retaining public ownership of key utilities. Policies include quotas for women, rural investment, and health and education expansion.

Botswana, which maintains majority state ownership of diamonds, telecoms and banking, using resource revenues to fund education, health and infrastructure, while maintaining political stability.

Ethiopia (pre-2020 reforms) invested heavily in primary education, health services and rural infrastructure, while limiting large-scale privatisation. Manufacturing and export-led growth generated jobs and reduced reliance on primary commodities.



Digital divide

Technology has affected inequality in varied ways. Digital advances can reduce barriers to markets, services, and financial inclusion, but gaps in infrastructure, affordability, and skills often reinforce existing disparities.

The digital divide is stark, particularly between urban and rural areas, women, and less-educated groups. Mobile technology has enabled financial inclusion in some contexts, such as M-Pesa in Kenya, but large populations remain excluded due to cost, electricity shortages, and limited digital literacy. Limited integration into global value chains and a small high-tech sector mean most jobs remain low-productivity and informal.

Unequal effects arise from late and uneven adoption of technology, coupled with colonial and postcolonial legacies that left gaps in education and infrastructure. Policy and market failures - high device and data costs, weak regulation and limited digital public goods - further restrict inclusive benefits. Digital skills shortages exacerbate these divides, leaving technology to disproportionately advantage urban, educated and wealthier groups. – The Conversation