ESWATINI RATED SIXTH IN INCOME INEQUALITY

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.

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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.

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