In 2021, South Africa was once again listed as the most unequal country in the world based upon the significant disparities in income amongst the population. The richest 10% of the South African population holds more than 70% of the nation’s wealth, and with our lack of economic growth, these statistics are not likely to change unless the nation experiences a drastic intervention from the public and private sectors.
Inequality is not just a South African issue; according to this report, seven of the ten most unequal countries of the world are in Africa. There are several causes for inequality in Africa, and there is no silver bullet to address these issues. This publication details why many African countries face such severe levels of inequality, including a troubled colonial past, insufficient government spending, poor infrastructure, inadequate access to education, and little focus on economic and land reform.
The most efficient way to address inequality in any African country is for the public and private sectors to work together to tackle the most prominent issues at hand.
What can the private sector do?
Equality makes for good business. When the private sector gets involved in tackling equality in the marketplace, the effects will show within all sectors. Economic empowerment serves as a focal point for sustainable wealth distribution, and it aligns directly with the goals of the public sector. This article by The World Bank highlights the benefits of privately funded skills-development programmes where businesses invest in the previously disadvantaged people of their community. These programmes drive local and foreign investment and increase the employability and productivity of the workforce.
Businesses also suffer the consequences of inequality due to the shortage of skilled professionals. By partnering with socio-economic development programmes, businesses could offer work-back bursaries and loans to the disadvantaged communities of Africa. The private sector uplifts these communities and ensures social justice in education in South Africa.
There are various benefits to the investment of the private sector in public infrastructure. Creating jobs and partnering with the public sector ensures economic growth and strengthens the position of businesses. By freeing up public sector spend, the private sector could ensure more public investment occurs within the disadvantaged communities. This article highlights how the private sector could help build public infrastructure by injecting much-needed technical skills into projects, investing in machinery, mining, information and communication technology, and the increased use of public-private partnerships.
What can the public sector do?
The way governments spend their money directly influences the level of social justice within a community. Increased investment in education, healthcare, and public transport offers long-term solutions to socio-economic inequality.
The public sector has the responsibility to create education programmes that seek funding for students who wish to enrol in tertiary education or skill-development institutions. This requires the public sector to partner closely with the private sector and for both sectors to seek mutual benefits in economic development.
According to this article, poor economic infrastructure has a significant impact on impoverished communities. The deteriorating quality of life within poor communities will continue if the people do not gain access to higher quality education, adequate healthcare, and functional public transport.
As a development finance institution, we have a responsibility towards the people of Africa to drive inclusive growth and secure innovative solutions to mobilise socio-economic development in African economies. Through the development of social infrastructure and the investment in economic infrastructure, we aim to expand access to development finance. Our socio-economic development projects are aligned with our corporate social investment principles and are aimed at improving the standard of living within poor communities through the promotion of quality education and enabling funding to increase opportunities for the youth of our continent. With a clear focus on healthcare and education, we aim to alleviate poverty and encourage sustainable socio-economic growth.
The reasons for inequality across Africa differ depending on each country’s history and current socio-economic situation. The fastest and most efficient way forward is for every country’s private and public sector to form a partnership to solve the most pressing dilemmas their impoverished communities face. The economic empowerment and infrastructure development of each country play a vital role in addressing inequality. As the DBSA, we are committed to minimising the gap between the impoverished and the wealthy and building towards equal opportunities for all of Africa.