Institute will equip future leaders to beat inequality

New programme will provide fellows with a network, writes ALAN HIRSCH

UNCHECKED, rising inequality is one of the most important risks to the sustainability of African growth. Africa is in much better shape than it was 30 years ago. Growth has risen, poverty has been reduced, violent conflicts are less prevalent, and democracy and other forms of accountability are found in many more countries.

The risk is that these gains are not consolidated and Africa slips into the same kind of stagnation that afflicted it in the 1980s and early 1990s.

The current slowdown is quite a serious challenge to sustainable African growth. Compounded with drought, humanitarian and financial crises are likely. Added to this, very few African countries are trying to compete globally in growing markets with new exports.

Growth has not led to greater competitiveness. While there are some productivity gains, especially in agriculture and mining, Africa is largely not catching up with global competitiveness trends.

Finally, Africa’s growth has not been equal. The income and wealth gaps between countries — as well as the gaps within many countries — are growing.

Southern Africa tends to have the most inequality within countries. SA, Namibia, and Botswana are among some of the most unequal countries in the world, and Angola and Zambia are not far off.

The average Gini coefficient for Africa is 0.43, which is significantly greater than the coefficient for the rest of the developing world at 0.39. On average, the top 20% of earners in Africa have an income that is more than 10 times that of the bottom 20%.

Gender inequality is a critical issue and it is not improving significantly. There has been some progress in equalising access to education for girls and boys at primary school level, but there has been no progress, on average, in achieving gender parity in secondary schooling, and there has been a widening of gender inequality in tertiary education enrolment.

With many African countries relatively unequal, poverty reduction in Africa has not been nearly as rapid as it might have been considering the rate of growth. In countries with high levels of inequality, even rapid economic growth often has a very small effect on reducing poverty.

High levels of inequality are ultimately a constraint on growth, and also undermine social cohesion. Growth economist Johannes Fedderke argues in a 2010 policy paper, Sustainable Growth in SA, that the main reason for relatively low levels of private investment in the country is the high level of uncertainty.

Uncertainty, he says, reflects a perception of political instability and has a marked effect on private sector investment. So the lack of social cohesion, largely an outcome of inequality and other social cleavages, contributes to low rates of growth.

There is strong evidence that developmental and institutional reforms can reduce inequality. As in Latin America, once the most unequal continent, levels of inequality have decreased in many countries.

BROADENING the distribution of education can have a positive effect by raising productivity and reducing the difference in income. In SA and in many other African countries, the skills differential remains extremely high.

Social assistance has counteracted inequality in SA, Ethiopia and several Latin American countries — the evidence is already very clear.

In many African countries tax collection is lower than it should be and a general improvement in taxation systems could have a significant effect on the ability of a country to address inequality.

The tax collection rate in Latin America increased by 3.5% of GDP in the 2000s — a huge step forward and one that has not since been reversed. This was in addition to an increased commitment to education and social assistance in recent decades.

Latin American countries reduced their external vulnerability to shocks by avoiding the accumulation of foreign debt or large deficits, by adopting flexible exchange rates and by accumulating large foreign reserves. All this reduced the effect of shocks, which damage the livelihoods of the poor much more than those of the rich.

Land redistribution, accompanied by measures to encourage agricultural productivity, was an important foundation for relatively equitable growth in Asian countries such as Japan, South Korea and Taiwan.

Policies to develop high-growth sectors — such as manufacturing, construction and labour-intensive services — could have a significant effect on decent employment.

Finally, strong institutions are critical to underpin reforms that support growth and redistribution. This might sound obvious today, but it was not obvious to the global policy makers of the 1980s and 1990s.

Africa needs smart, bold, well-informed leaders who understand what works and what is implementable. The Graduate School for the Development of Policy and Practice at the University of Cape Town (UCT) was established a few years ago to train public leaders in Africa. It forms part of the Poverty and Inequality Initiative at UCT.

Recently, the London School of Economics established the International Inequalities Institute to identify and support innovative interdisciplinary research and teaching that addresses inequalities, and to create a structure that was agile and flexible enough to accommodate this vision over generations.

WITH generous funding from Atlantic Philanthropies, the Atlantic Fellowship Programme has just been announced, based at the institute. UCT is a collaborating partner.

Over the next 20 years, 600 fellows will be enrolled from all over the world to tackle inequality. The programme is aimed at academics, activists, policy makers, journalists, lawyers, health professionals, cultural leaders, writers and creative artists.

International Inequalities Institute codirector Prof Mike Savage, the first academic director of the Atlantic Fellows Programme, says: “There is a need for future leaders to be informed by new research across a wide range of disciplines in order to address the challenge of escalating inequalities across the globe.”

The programme “will nurture a large network of fellows committed to tackling inequality who can draw on the best academic and practical experience in the world to enhance their skills, contacts, and confidence”.

Atlantic CEO Christopher Oechsli says it will “train and sustain diverse multidisciplinary leaders working on solutions to historical barriers and behaviours that obstruct opportunity and underpin inequalities”.