Regional Inequalities Persist Despite Decades of Growth in Sub-Saharan Africa

A Call for Policy Action
By Samkele Mchunu

Despite the remarkable economic growth experienced by many countries in sub-Saharan Africa over the past few decades, regional inequalities persist, hindering the region’s overall development. Recent research sheds light on the factors contributing to these disparities and underscores the urgent need for targeted policy interventions.

According to a comprehensive analysis, countries like Ethiopia and Rwanda have witnessed unprecedented economic expansions, with average annual growth rates exceeding 7.5 percent. However, the benefits of this growth have not been evenly distributed across regions within these countries. While progress in reducing regional income inequality was evident until 2010, the onset of the pandemic has likely exacerbated these disparities.

A closer examination reveals that improvements in basic infrastructure played a crucial role in narrowing the gap between lagging and leading regions. Investments in infrastructure such as electricity, clean water, and cellphone services have historically facilitated convergence, allowing disadvantaged regions to catch up with their more prosperous counterparts. However, fragile and conflict-affected states have struggled to make significant strides in reducing inequality, highlighting the complex interplay between economic development and political stability.

Key drivers of progress in reducing regional inequality include macroeconomic stability, trade openness, strong institutions, and targeted investments. Macroeconomic stability fosters inclusive growth by preserving the purchasing power of consumers and incentivizing private investment. Trade openness enhances convergence by providing easier access to global markets and increasing the value of a country’s resources, particularly in lagging regions abundant in raw materials. Strong institutions and political stability are essential for effective governance and equitable public service delivery, while well-targeted investments, particularly outside capital cities, stimulate job creation and economic activity in underserved areas.

David Seinker, The Business Exchange CEO, who largely believes in economic transformation and expansion in sub-Saharan Africa, emphasizes the importance of a broad-based policy framework to address regional inequalities. He highlights the need for well-designed redistributive fiscal policies, macroeconomic stability, and institution-building initiatives to ensure equitable development across all regions. Furthermore, Seinker emphasizes the significance of investing in local administrative capacity to collect and analyze data, enabling policymakers to better understand and target regional disparities.

Which addressing regional inequalities in sub-Saharan Africa requires a multifaceted approach anchored in sound economic policies, political stability, and strategic investments in infrastructure and human capital. By prioritizing inclusive growth and equitable development, policymakers can unlock the region’s vast potential and pave the way for sustainable prosperity for all its citizens.