Co-author of a new World Bank report Gabriela Inchauste has pointed out that by tackling structural inequalities, sub-Saharan Africa has the potential to unlock inclusive growth, reduce poverty, and create opportunities for millions of people.

Africa is the world’s second most unequal region after Latin America, and the only one where extreme poverty reduction has stalled in recent years.

According to the report, ‘Leveling the playing field: Addressing structural inequalities to accelerate poverty reduction in Africa’, unequal and limited access to jobs, finance, and public services such as education and healthcare have increased inequality and stalled poverty reduction in sub-Saharan Africa.

The report explained that structural inequalities, based on factors such as birthplace, ethnicity, gender, and parental background, as well as market and institutional distortions, create advantages for a few and disadvantages for many.

“While extreme poverty – defined as people who live on less than $2.15 a day – has rapidly declined globally to single digits, Africa’s extreme poverty rate stood at 38% in 2022, the highest among all regions. While the region today hosts 60% of the globe’s extremely poor population, this share could rise to 87% by 2030, without significant reforms,” said co-author of the report Nistha Sinha.

In addressing structural inequalities, the report suggested strengthening economic and institutional foundations to eliminate competition barriers and safeguard property rights.

It also suggested that investment must be made in education, health, and infrastructure to build productive capacity and that markets must be enabled to create jobs by improving access to capital, technology, and markets.

Using government resources fairly through progressive taxation and efficient public spending can address structural inequalities.

“These policy priorities should not be seen in isolation, but as overlapping and mutually reinforcing—creating a level playing field while at the same time enhancing the region’s productive capacity,” said Inchauste.

The report also suggests that poverty reduction strategies should focus on broadening opportunities.

“…for instance, beginning in the early 2000s, Ethiopia expanded land user rights, helping to promote investment in agriculture. Market-friendly financial products, such as mobile money in Kenya, helped to boost financial inclusion and households’ ability to cope with shocks. In Ghana, investments in primary education led to increases in completion rates, while partial market liberalization of the cocoa sector, along with investment in research, disease control, and credit programmes, led to increases in agricultural incomes,” she added.

She highlighted that there was nothing inevitable about structural inequalities, noting that as successful country examples showed, barriers to opportunities can be removed and replaced with well-designed policies that allow people to build their productive capacities and open access to jobs and markets.

The region overall has struggled to transform economic growth into poverty reduction, largely because of high structural inequality, she said.

The report highlighted that many people are born into circumstances that severely limit their future opportunities, with Sinha noting that the differences compounded by market and institutional distortions prevent people from reaching their productive potential, perpetuating cycles of poverty, with poor young people forced into low-paying, insecure jobs in the informal sector.

Full report attached.