Uganda has third highest level of income inequality in EAC

Uganda has third highest level of inequality in East Africa after South Sudan and Rwanda, according to a report by the African Development Bank (AfDB). 

In details contained in the East Africa Economic Outlook 2023, AfDB indicates that the East African Community has a relatively high Gini coefficients that other African regions, which mirror the high-income inequality and poverty on the continent. 

“Most of the East African countries … income is relatively concentrated in the hands of a few while the majority are struggling to meet their basic needs, such as food, energy, health care, housing, and education,” the report reads in part, noting that rising energy and food prices and prolonged droughts, compounded by adverse aftershocks of Covid-19 have been major headwinds to reducing extreme poverty in the region. 

AfDB further notes that with a Gini coefficient of 42.7, Uganda only ranks better than South Sudan and Rwanda but is relatively in a worse position than Tanzania, Burundi and Kenya. 

Income inequality continues to be a challenge in Uganda with just 1 percent of the country’s working population aged between 16 and 65 years earning more than Shs1m, according to a Bank of Uganda 2020 survey. 

The report further notes that South Sudan and Rwanda have a Gini coefficients – which the AfDB use as a measure of income inequality – of 44.1 and 43.7, which makes the two countries have the highest levels of inequality. 

Tanzania has a Gini coefficient of 40.5 while Burundi has 40.1, which are lower than that of Uganda. 

Kenya, with a coefficient of 38.9, has the lowest level of income inequality in East Africa, even as the report notes that the country, and the region at large, has faced a number of headwinds, among which include a surge in energy and food prices that have seen a number of people slide back into poverty. 

AfDB further notes that East Africa currently has at least 105.7 million people living in extreme poverty, which is 18.5 percent of the 283.7 million region’s population. 

However, the 105.7 million was an increase of 0.43 percent from the 105.53 million registered in the period ended 2022.

The report further indicates that out of the estimated 45 million Ugandans, 16.36 million live in extreme poverty, which is a 4.2 percent increase from the 15.61 million in 2022. 

AfDB cites a number of factors, among which include, rising food and energy prices, conflict, inflation, drought, grain shortages, and the impact of climate change as some of the drivers of increasing poverty and inequality. 

Others are higher global energy prices, global supply chain disruptions, and the strengthening of the dollar, which has subsequently contributed to high energy prices, across East Africa

The World Bank cites Slovenia with a Gini of 24.6 as one of the lowest in the world, whereas South Africa, with Gini of 63, is considered the highest. 

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