Widening Income Inequality Worry Economists

Pauline Dikuelo | Monday April 8, 2019 12:18

Speaking at the Barclays Bank of Botswana’s annual economic outlook review, the bank’s economist Naledi Madala noted that recent studies have detected growth in income inequality over the years. 

“Income inequality is currently a burning issue in the country where the lower bottom is the most affected and the gap between the rich and the poor keeps widening,” she said.

“Over the years, the pace of poverty has been slowing down while income inequality has been going up.”

Madala also observed that there has been a growing trend where people are now migrating from rural to urban areas.

Statistics Botswana’s multi-topic household survey has also revealed that over 70% of the people in the country earn less than P4, 000 per month.

According to the survey about 56% of the workers earn between P1, 000 and P2, 000 while over 60,000 workers are classified as working poor.

“The wages and their income are not sufficient to afford basic needs, so as to lift their households above the poverty line.” The same report shows that 16.4% of all households worry at least 10 times a month about not having food.

Madala added that income inequality mostly affect economies with less manufacturing appetite, suggesting that government should prioritise the sector.“Manufacturing can create lots of employment as the sector is broad. We need to have an appetite for diversification locally, and accept that some industries are stepping-stones and not good for diversification,” she said.

In addition she noted that the local business confidence has improved, as there has been reviewed optimism in the domestic market.

Madala noted that the softening of the global economic growth is a threat to Botswana’s adding that South Africa’s outlook has implications on the Southern African Customs Union revenues.

Economists have noted that South Africa’s economy has been struggling over the years with most of the businesses losing confidence.

Manufacturers in neighbouring countries have also cried of insufficient demand or their products while companies have also been complaining of policies and uncertainty.