Inequality Matters: Prospects and Perspectives on Africa's Disparities

The level of inequality in a society matters. Traditionally, economists have focused on poverty as the key determinant of social ills. However, in recent years scholars and policy makers have devoted considerable attention to the links between inequality and social and economic problems. Studies demonstrate strong correlations between widening inequality and rising levels of crime, insecurity and instability. And inequality has been shown to slow economic growth and poverty reduction by undermining the creation of a consumer class, skewing nations’ political economies and creating capital market imperfections that in turn perpetuate existing disparities, such as levels of education.

This Discussion Paper, by the Foundation’s Machel Mandela Fellow, Madelynne Wager, examines inequality in the context of Africa’s impressive growth record over the past decade. The Paper addresses some of the important conceptual and definitional issues of inequality, outlines some of the financial benefits realised by including low-income markets in business models, and presents the positions of senior decision makers on potential public sector actions to enable African business to propel entrepreneurship as a solution to development challenges and inequality.