Is Inequality Systematically Underestimated in Sub-Saharan Africa? A Proposal to Overcome the Problem

Abstract

In Africa, evidence regarding the interactions among poverty, growth, and income distribution presents a puzzle: While growth has been robust in recent decades, the growth elasticity of poverty has remained low. This suggests that inequality has dampened the pro-poor effects of growth. However, when using standard inequality measures, there is only scattered evidence of high and growing inequality in Africa outside of the extremely unequal southern cone. We argue that inequality mismeasurement could be the main culprit responsible for this paradox: consumption-based measures miss important information at the top end of the consumption distribution, leading to underestimation of inequality. In this paper, we propose distinct solutions arguing that, by reevaluating the importance of distributional issues in Africa, the need becomes apparent for refreshing the research agenda on African development in such a way that the interaction between poverty and inequality becomes a core concern.