The 2017 IMF Fiscal Monitor report addresses trends in income inequality, its impact on health and educational outcomes, and policy options to addresses those gaps. Unfortunately, sub-Saharan Africa faces tall obstacles when it comes to inequality of many kinds. As Figure 1 shows, the region had the second-highest average income inequality in 2015, which was only slightly lower than in 1985. To address this challenge, the report says that redistributive fiscal policies are often used to address disposable income inequalities through taxes and income-related transfers and market income inequalities through in-kind transfers such as spending on education and health care. In addition, based on country-specific conditions and with fiscal constraints in mind, the report highlights the possibility of a progressively implemented universal basic income program in developing countries that have large gaps in existing social safety net programs.
Figure 1. Average income inequality across regions and over time, 1985–2015
Inequality in Africa doesn’t just manifest in income: For example, as Figure 2 shows, globally, sub-Saharan Africa ranks last in equal access to education. According to the report, closing this educational gap as well as increasing quality for poorer students can reduce intergenerational income inequality. The report recommends focusing on expanding basic and secondary education along with a system of tertiary education that focuses on equalizing opportunity irrespective of financial ability to pay.
Figure 2. Inequality in access to education
Inequality in health coverage and outcomes are similar to those seen in education. The report shows that countries with greater inequities see worse health outcomes. For example, as seen in Figure 3, countries with the most health coverage inequality suffer from a lower average life expectancy. Notably, as also shown in Figure 3, sub-Saharan Africa in particular would accrue the largest gains by reducing disparities in health coverage. In addition, as the report highlights, there are several potential benefits from eliminating health coverage gaps, such as improvements in productivity, employment, and earnings. The report’s recommendations for decreasing health inequality include universal coverage of basic services and targeted subsidies for certain illnesses.
Figure 3. Basic health coverage inequality and health outcomes