29 April 2017

East Africa: Rwanda Has Region's Highest Inequality Rate

Photo: The New Times
The aerial view of a housing estate in Gaculiro, Kigali.

Despite heavy investments in quality housing, education, and health care, Rwanda still has the highest inequality rate in East Africa, according to a new report by Oxfam.

Oxfam Uganda, in the report titled Who is Growing, says that in Rwanda, the gross national income of the richest 10 per cent is 3.2 times more than that of the 40 per cent poorest in the country, compared with Kenya's 2.81, Uganda's 2.33, Tanzania's 1.65 and Burundi's 1.35.

But the report, which is about ending inequality in Uganda, shows that Rwanda's inequality is decreasing, even as it grows in the other East African countries.

In Uganda, for example, the report notes that income disparity has increased. In the 1999/2000 financial year, the richest 10 per cent collectively had 1.35 times more income than the 40 per cent poorest. The Gini coefficient has increased from 0.395 in 1999/2000 to 0.47 currently.

Income distributionThe Gini coefficient is a measurement of the income distribution of a country's residents. This number, which ranges between 0 and 1 and is based on residents' net income, helps define the gap between the rich and the poor, with the most equal societies having a Gini coefficient of zero, and the most unequal having one.

Irene Ovonji Odida, chairperson of ActionAid International, blames the growing inequality in Uganda on inadequate social investment in areas such as education and health care. She said that Uganda spends resources on politically connected people while the poor, who most need a helping hand, are either left to their own devices or to use substandard government services.

The report highlights widespread disparities in remuneration as one of the factors that fuel inequality. For instance, the lowest paid civil servant in a government ministry earns Ush129,217 ($35.5) per month while an employee of the Bank of Uganda on the same level earns Ush2.1 million ($586.9).

The report points out such schemes as workers in elite government institutions deciding their rewards and allowances, citing a recent discovery that top workers of the Uganda Revenue Authority, the Ministries of Finance, Energy and Mineral Development and the Attorney-General's Chambers shared Ush6 billion ($1.6 million) as a reward for collecting capital gains tax from an oil company.

The matter is now the subject of an inquiry by a parliamentary committee.

According to experts, the problem with inequality is that it fuels conflict and crime.

Prof Augustus Nuwabaga, a lecturer at Makerere University and one of the Oxfam report's authors, cites the case of South Africa, where the incomes of the 10 per cent richest are seven times more than those of the poorest 40 per cent.

The fact that South African cities are also ranked as some of the most dangerous in the world, with high robbery and murder rates, speaks to the effect of this inequality, he said.

Peter Kamalingin, Oxfam Uganda country director concurs.

"Inequality leads to national insecurity," he said. "It also stunts economies."

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