Economic Disparities Won’t Allow East Africa to Eradicate Poverty by 2030

A new report by Oxfam and Development Finance International (DFI), has revealed that the richest 10 percent of the population in East Africa earns more than half the population of 415 million citizens.

Dubbed The inequality crisis in East Africa: Fighting austerity and the pandemic, the report reveals a grim reality in a region that remains among the most unequal places on the planet.

The huge economic inequalities have, for a long time, undermined growth in East Africa. Income is significantly concentrated in the hands of a few in countries such as Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, Somalia, Ethiopia, and the Democratic Republic of Congo.

However, over 200 million people are struggling to meet basic needs including access to education, food, and healthcare.

“South Sudan, Rwanda, and Uganda are the most unequal, ranking among the world’s 40 most unequal countries. Kenya, Tanzania, Burundi, and Somalia are in the most unequal third of countries. Only Ethiopia has below-average inequality,” the report states.

Given the stats, the region’s goal of eradicating poverty by the year 2030 is a long stretch. Inequality keeps these plans at bay.

Sadly, the pandemic worsened the situation as it brought about serious economic effects that sent people from vulnerable communities spiraling below the poverty line. Coupled with drought and locust infestations which were also experienced in the past two years, 22 million people sunk into poverty in East Africa.

The UN had estimated that the pandemic will result in 11 million more people living in poverty in the DRC, as well as six million in Tanzania and 2.4 million in Uganda.

The World Bank, on the other hand, had noted that 900,000 Rwandans (7 percent of the population) will have fallen into poverty in 2020–21.

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These stats aren’t far from the truth. According to Oxfam and DFI, the pandemic will send 52 million people into poverty across sub-Saharan Africa.

“With very few assets, lower education levels, precarious employment, and low skills, most of the new extremely poor people were already just a shock away from extreme poverty,” it noted.

Austerity Measures

Oxfam and DFI also showed a bleak picture of East Africa’s stretched health system and protracted school closures, before warning that the rate of poverty will continue to rise even this year.

“Lower growth will continue in 2022, though its severity will depend mainly on the rollout of Covid-19 vaccines, which has been shockingly slow in most East African countries. As of mid-January 2022, a dismal four percent of the population had been fully vaccinated in the region,” the report added.

The report observes the huge impact low spending on education, social protection, and health by governments in East Africa has had on the economic welfare of households, with at least 7 percent of people spending over 10 percent of their income on healthcare.

Why this spending is catastrophic is because its effect is sending many households into poverty. What is worse is that many people spend 7 percent of their income on social protection.

“In short, when Covid-19 hit, half of East Africa’s citizens had inadequate access to healthcare, 90 percent lacked social protection and 80 percent lacked labor rights to cope with the pandemic,” it stated.

“It is now clear that the economic impact of the pandemic will be felt well into the future in most low- and lower-middle-income countries. To allow maximum space for recovery, the DSSI should be extended into 2022, transformed from a suspension into a cancellation initiative and include all multilateral and commercial creditors,” the report added in relation to public debts, that on average are consuming 54 percent of the region’s revenues.

Oxfam and DFI added that only DR Congo and Burundi may not require comprehensive debt cancellation and reductions to ensure that their debts are sustainable going into the future, to free up resources to tackle inequality and prepare for economic shocks.