Today, the OECD (Organization for Economic Cooperation and Development) (and often called the rich countries’ club) releases a report “Divided We Stand” (click here for more information and summary of Divided We Stand). It says that even though we have seen a period of growth, inequality between high income earners and low income earners in the OECD is on the increase and it is the biggest since 30 years.
However, what if we make that comparison outside the OECD…?
A few days back the Africa Governance Initiative, led by Tony Blair organized a high level forum to discuss Africa from a positive, forward-looking and empowered perspective. In the write-ups for the lovely website, Africa’s countries’ growth rates are positively discussed:
“there is a new story about Africa that is less familiar. It tells of an Africa in which poverty fell from 52% in 1990 to 40% in 2008. An Africa in which economic growth averaged 4.9% from 2000-2008”
The Economist in its Africa Rising issue (out now!) shares the view:
“Over the past decade six of the world’s ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.//Africa now has a fast-growing middle class: according to Standard Bank, around 60m Africans have an income of $3,000 a year, and 100m will in 2015.”
I am not saying they are wrong, actually it is ever so nice with some Afropositivism, but living in Ghana, a country where economic inequality stares me in the eye every hour of every day, I would like to say that looking at macro growth rates is not very informative.
Also, in saying that 60 million Africans, out of the 1 billion Africans in total, have a specific annual salary is not saying much (by the way, who in Europe be glad about USD 3000 per annum?) Without mentioning the cost of living, where African cities actually are among the most expensive in the world (Luanda, Njamena and Libreville in the top 10), food is getting more expensive by the day and did I mention clean water is a large share of weekly expenses in Ghana? Further: inflation is high, there is lack of credit, falling exchange rates, stagnating salaries – that USD 3000, does not go very far.
In light of these events, I suggest looking at the income equality between rich and poor, world wide, using the Gini index (courtesy of Wikipedia).
We see on this map that Africa is extremely unequal, ranging from green (0.35) to dark red (>0.60), but with also many countries not even being able to report data (gray).
It is easy to conclude, that without spreading the wealth, that celebrated economic growth is worth very little to the average African.
(…and possibly also to the rich who then need to invest heavily in security, but that is a different story).