REGIONAL INCOME INEQUALITY IN SUB SAHARAN AFRICA: A PARAMETRIC APPROACH

A review of the existing literature indicates that there is relevant literature on the growing income inequality in developing countries. However, the empirical evidence that has been used in testing the dynamics is scant and ambiguous. Sub Sahara Africa is one of the regions particularly characterised by income inequality in the developing and underdeveloped economies. The study seeks to assess the trend in the income inequality, the factors that contribute to the same, the relationship between income inequality and lack of redistribution in the region, and recommended strategies that can help in alleviating the problem. The study uses a parametric approach that involves drawing comparisons and conducting a comparative analysis of the different sub-regions in the area. The study uses detailed data obtained on unemployment, income inequality, corruption, economic growth, population, life expectancy, and trade globalization in the context of Sub-Saharan Africa. The data used in the study is a panel of 28 nations within the Sub-Sahara African region; from 2000 to 2018. The choice to include the countries in the study was made due to the availability and easy access of their data. The findings obtained using the parametric approach can be summarized as follows: in the Sub Sahara Africa region and the sub-regions within it, the analyses performed showed that long-run growth in the economy helps in closing the widening gap and hence reducing the rate and prevalence of income inequality in the region. A reduction in the rate and prevalence of corruption was also established to help in promoting income equalization in the overall Sub Saharan Africa region and the various sub-regions within it. Although trade globalization was generally shown to contribute to the widening income gap in the better part of the Sub Sahara Africa region, the findings and impact of the same differ from one sub-region to the other. In the case of East Africa and Central Africa sub-regions, trade globalization was established to help in reducing the challenge of income inequality within the sub-regions. However, it was established to contribute to the widening of the income gap, and hence increase in income inequality in the case of West Africa and Southern Africa sub-regions. The study also provided empirical evidence that an increase in the rate of unemployment contributes to increased income inequality in Sub Sahara Africa and the sub-regions considered in this study. As such, these were established as some of the major drivers of income inequality in Sub Sahara Africa and its sub-regions