INCOME INEQUALITY AND ECONOMIC GROWTH IN AFRICA
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INCOME INEQUALITY AND ECONOMIC GROWTH IN AFRICA
Chapter one
INTRODUCTION
Background for the Study
Globally, income disparity has been a persistent issue, particularly in developing nations such as Africa (Gould, Moav, & Weinberg, 2021). Nigeria, Cameroon, Sierra Leone, and Togo are among the countries experiencing significant income disparities.
These challenges have a significant impact on the countries’ economic future (Conciaçao et al., 2021). Nigeria’s economy has been volatile in recent years, with widening income disparities impeding the country’s economic progress (Oyekale et al., 2021).
Cameroon, Sierra Leone, and Togo have similar challenges, but the extent and kind of income disparities vary each nation (Fambon, 2020). While Cameroon has sought to address income disparities through a number of policies and programmes (Baye & Epo, 2019), Sierra Leone suffers widespread inequality, exacerbated by factors such as limited access to healthcare and education (Chameni Nembua & Miamo Wendji, 2022).
Furthermore, Togo faces challenges with income distribution, particularly in rural areas where poverty is prominent (Baye & Fambon, 2020).
Regardless of the differences in their economic systems and policy approaches, all four of these countries are concerned about how income gaps may impact their possibilities for economic growth (Ferrall, 2021).
Wealth disparities can stifle human capital development, limit access to healthcare and education, and exacerbate social unrest, all of which can stymie overall economic progress (Galor & Moav, 2020).
Furthermore, unequal wealth distribution may lead to wasteful resource usage and reduced productivity, stifling economic growth (Forbes, 2020).
Addressing income disparity requires a complex strategy that incorporates both structural improvements and legislative interventions (Fountas, 2020).
To promote inclusive growth and reduce wealth gaps, governments should implement progressive taxation policies, strengthen social safety nets, and invest in education and skill development (Haunshek & Woessmann, 2018).
Furthermore, actions that promote financial services accessibility and equal opportunity can empower marginalised populations and result in more equitable economic outcomes (Hansen, 2021).
Furthermore, enhancing the business climate and fostering entrepreneurship can help redistribute income and create job opportunities (Halper, Oechslin & Zweimüller, 2021).
Governments may foster a more dynamic and inclusive economy that benefits all sectors of society by assisting small and medium-sized businesses (SMEs), fostering innovation, and encouraging the adoption of new technology (Goldin & Katz, 2019).
Furthermore, ensuring that economic gains are distributed equitably and that all citizens have equal access to opportunity necessitates combating corruption and improving institutions.
Policymakers, economists, and stakeholders seeking sustainable development solutions must understand the dynamics of income inequality and how it influences economic growth (Haunshek & Woessmann, 2018).
We may draw crucial conclusions about the relationship between income disparity and economic growth by analysing current economic conditions in Nigeria, Cameroon, Sierra Leone, and Togo, as well as making recommendations for correcting these difficulties (Galor & Moav, 2020).
Despite economic improvement, Nigeria, Africa’s largest country, nevertheless faces considerable social disparity (Oyekale et al., 2021). Because it relied on oil revenues, the country has seen rising elite capture and corruption, exacerbating economic inequality and impeding inclusive growth (Fambon, 2021).
Furthermore, structural constraints such as poor infrastructure and weak institutions intensify inequality and limit the country’s economic potential (Galor and Zeira, 2021).
Cameroon, for example, is dealing with income distribution concerns as the divide between the country’s urban and rural parts widens (Baye & Epo, 2021).
While the government has implemented various poverty-reduction projects, inefficiencies and governance issues have limited their effectiveness (Chameni Nembua & Miamo Wendji, 2022).
Furthermore, efforts to eradicate inequality have been hampered by political instability and ethnic conflict, which has slowed economic progress (Aisen & Veiga, 2023).
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