Income Inequality Trends in sub-Saharan Africa: Divergence, determinants and consequences: Building an Integrated Inequality Dataset and the ‘Seven Sins’ of Inequality Measurement in Sub-Saharan Africa

The favourable growth performance of SSA over the last 20 years (figure 15.1) has been accompanied by a modest decline in poverty, from 59 to 48 per cent over 1993-2010, i.e., much less than that recorded in South Asia (Ferreira, 2014). This aggregate trend, however, conceals substantial cross-country variations. The key question, then, is: How can such differences in poverty reduction rates be explained? The standard approach (Bourguignon, 2003) shows that a percentage change in poverty incidence can be decomposed into the percentage changes in the growth rate of GDP per capita and in the Gini coefficient, plus a small residual. In this regard, it must be noted that in SSA, the average GDP growth per capita oscillated in a narrow range, i.e., between 1.7 per cent in non-resource-rich countries and 2.6 per cent in resource-rich ones. The reason that poverty declined at different rates is, therefore, to be found in the divergence of inequality trends experienced by the SSA countries. Indeed, this chapter and Chapter 2 argue that over 1991-2011, income inequality rose in several countries but declined in a similar number.