Times Of Swaziland: ESWATINI RATED SIXTH IN INCOME INEQUALITY

ESWATINI RATED SIXTH IN INCOME INEQUALITY
================================================================================
BY NTOMBI MHLONGO on 16/07/2018 08:31:00


MBABANE – The country’s rate of income inequality is one of the highest in
Africa.
The Kingdom of Eswatini has been rated as the sixth country with the highest
Gini coefficient. Gini coefficient refers to the ratio between the income shares
held by the richest 10 per cent to the income held by the poorest 10 per cent in
the national income distribution. According to the Africa’s Development
Dynamics 2018 report released by the African Union (AU) last week, income
inequality remained high in Southern Africa despite a marginal reduction,
Southern Africa was one of the most unequal regions in the world. The report
revealed that of the 10 countries with the highest income inequality, six were
found in Southern Africa. The statistics showed that South Africa had the
world’s highest Gini coefficient (63), followed by Namibia (61), Botswana
(61), Zambia (57), Lesotho (54) while Eswatini sat on the sixth position (52).
It was explained that addressing inequality could boost long-term growth through
several channels. First, the report said, it enabled the poor to accumulate
productive assets and invest in human capital. “Secondly, it increases their
purchasing power and thus changes the structure of domestic demand for
higher-quality goods and services. Thirdly, it helps ensure social cohesion and
political stability,” highlighted the report. The report stated that South
Africa, Botswana and Lesotho, in that order, had the highest gaps between the
top and bottom income deciles, implying that such countries had the greatest
inequality in the region. Angola and Mozambique had the lowest gaps, as well as
the lowest Gini coefficients, hence the lowest inequality in the region. It was
highlighted that in some countries, the fiscal system had been able to reduce
inequality. In particular, South Africa’s taxes and social spending system had
achieved the largest reductions in income inequality among a sample of 29
developing countries.
“The combination of slightly progressive taxes (personal income taxes,
value-added taxes, excise taxes and the fuel levy) and highly progressive
spending (cash transfers, free basic services, and spending on health and
education) reduced the country’s Gini coefficient from 77.1 to 59.6,”
highlighted the report. Similarly, according to the report, fiscal policy in
Zambia reduced the Gini coefficient from 59 to 48 after accounting for
redistribution and tax burdens, especially through public  expenditures on
education. However, there are positives in the report for the Kingdom of
Eswatini as it was listed as one of the countries where poverty rates and
severity had decreased significantly.
reduced
The analysis on poverty reduction revealed that in most of the countries,
especially in Botswana, increasing agricultural incomes and demographic changes
had reduced extreme poverty by 11.6 percentage points. “Other factors, such as
increased wages in non-agricultural sectors and improved households’ access to
finance, also helped alleviate poverty.