This report investigates the issue of income inequality in eight sub-Saharan African countries (Ghana, Kenya, Malawi, Nigeria, Sierra Leone, South Africa, Zambia and Zimbabwe). While there is growing public recognition that inequality is the issue for our time – both globally and in sub-Saharan Africa – there is little definitive analysis of income inequality trends on the continent. This report seeks to contribute in this area, looking at whether income inequality is, in fact, rising and in what context this is occurring. In particular, this report seeks to locate an analysis of tax systems in sub-Saharan Africa in the context of these economic inequalities, given the primary importance of national tax systems in redistributing wealth.
The report looks at national taxation systems and international taxation issues – and, critically, the relationship between them. In this way it reveals how the enabling environment for tax dodging impacts on national tax systems in sub-Saharan Africa. It also dissects the trends in revenue generation, tax equity and tax reforms across the eight countries. It has a special focus on the experiences of two countries – Kenya and South Africa – which have two of the stronger tax systems in sub-Saharan Africa but which also have extensive shortcomings in the area of tax equity.
The evidence gathered in this report shows that increasing income inequality should be of huge concern to governments in at least six out of the eight countries – Ghana, Nigeria, South Africa, Zambia, Kenya and Malawi. In Ghana and Nigeria, income inequality is rising strongly. In Nigeria, between 1986 and 2010, there has been a 75% increase in the concentration of income in the country. In Ghana there has been a 50% increase in the concentration of income over an 18-year period. In Zambia income inequality is now at its highest levels since data was collected. South Africa has one of the highest levels of inequality in the world and one which keeps increasing. The sharp rise in the incomes of the richest 5% is driving the increase at the top end. Yet there is no evidence of progress in tackling this inequality, or even much preoccupation with it, in South Africa’s new National Development Plan.