Is Tanzania more unequal than Kenya?

In the 1970s, prominent critics of Kenya’s capitalist economy often characterized the country as a land of 10 millionaires and 10 million beggars. Many also (implicitly) compared Kenya to Tanzania. Back then, Tanzania was in the midst of implementing Ujamaa under President Julius Nyerere. The trope of Kenya being a highly unequal “dog-eat-dog society,” and Tanzania being less unequal stuck, and persists to this day.

But the data tell a different story. According to the Knight Frank Wealth Report, Tanzania has the fifth largest number of high networth individuals in Africa ($30m and more), ahead of Kenya:

South Africa led the pack with 1,033 ultra-rich persons followed by Egypt (764) Nigeria (724) Morocco (215) and Tanzania (114)

Kenya is 6th, with only 42 individuals worth more than $30m.

Kenya has a Gini index of 40.8 (2015) and Tanzania 40.5 (2017).

We need to pay more attention to subnational variation

This is from Marshall Burke and Apoorva Lal:

Using these data across all African countries, we calculate that 43% of the overall variation in asset wealth is  countries, and nearly a quarter is  states within countries. This number is even higher if we focus on just sub-Saharan Africa — 65%. Similar numbers have been found for other outcomes, including child health. These within-country differences are starkly apparent in the corresponding map, which shows how wealth estimates change when country-level averages are disaggregated down to the state and then district level.subnational


The Economics of Weddings in Nigeria

This piece highlights some interesting facts about the wedding industry in Nigeria.

How much do weddings cost?

When an upper-class Nigerian couple throws a wedding, at least 1,000 guests are invited. This equates to about ₦20 – ₦100 million [$55k-$275k], indicating that our celebration culture is nothing short of extravagant.

For perspective:

In India, with 3-5 days set aside to mark the union of two people, a single wedding can earn the economy about as much as $300,000.

Here’s more:

There is evidence that Nigerians’ desire to “flex” has provided a boost to the economy. For example, during the country’s last recession, the entertainment industry continued to expand even as other sectors shrunk. This similar pattern is observed with big-budget weddings. The cost of living has risen, but it hasn’t deterred the big wedding spenders.

And this has had a rippling effect on the rest of the economy.

Today, weddings are major employers of catering services, makeup artists, photographers and so on, directly supporting key growth drivers for any economy- small businesses. For example, a mobile toilets startup estimates that marriage celebrations account for 40% of its revenue. Trickle down economists might have a point. Our booming wedding culture is now supporting so many businesses today that would have struggled to survive in the past.

… Even though Nigerians are still famous for being net importers of many products, the wedding industry appears to be directing more spending within the country’s borders. Designers like Deola Sagoe and Mai Atafo have become favourites among brides for their bridal train outfits, instead of foreign designers like Vera Wang.

Lately I have been thinking a lot about socially-embedded economic sectors on the Continent, and their potential for mass job creation — think housing, agriculture, textiles, logistics, carpentry, funerals, weddings. These sectors provide low hanging fruits for policymakers for value addition and productivity gains. And their social embeddedness ensures that the surpluses are shared across the entire SES spectrum.

Unfortunately, most African governments spend all their energies on attracting FDI that ends up in enclave economies that create very few jobs. And to make matters worse, these sectors also get a ton of subsidies:

For example, multinational companies [in Nigeria] are entitled to tax incentives worth an estimated $2.9 billion a yearthree times more than our entire health budget. By comparison, small and medium-sized businesses and workers in the informal sector face multiple taxes. Regressive tax policies like this work to keep wealth concentrated amongst a few.

FDI is great for capital intensive sectors. But governments should also be thinking creatively about how to promote local (micro) SMEs that touch a wider base of households.

Perhaps its time for the World Bank to consider issuing “An Ease of Doing Business for Local Firms” index.

Intrahousehold Inequality Across Income Levels: Evidence From Nutrition Data

Antipoverty policies in developing countries often assume that targeting poor households will be reasonably effective in reaching poor individuals. This paper questions this assumption, using nutritional status as a proxy for individual poverty. The comprehensive assessment for Sub-Saharan Africa reveals that undernourished women and children are spread widely across the distribution of household wealth and consumption. Roughly three-quarters of underweight women and undernourished children are not found in the poorest 20 percent of households, and around half are not found in the poorest 40 percent. The mean joint probability of being an underweight woman and living in the poorest wealth quintile is only 0.03. Countries with higher overall rates of undernutrition tend to have a higher share of undernourished individuals in nonpoor households. The results are consistent with evidence of substantial intrahousehold inequality.

…. the paper has provided a comprehensive study for 30 countries in Sub-Saharan Africa. We find a reasonably robust householdwealth effect on individual undernutrition indicators for women and children. Nonetheless, on aggregating across the 30 countries studied here, about three-quarters of underweight women and undernourished children are not found in the poorest 20% of households when judged by the household wealth index in the Demographic and Health Surveys.

That’s Caitlin Brown, Martin Ravallion, and Dominique van de Walle in a new World Bank working paper. 


Scottish Land Ownership Fact of the Day

As far as land ownership goes, Scotland is still in the 16th century (I am not making any normative judgment here).

This is from a briefing paper for the House of Commons:

Scotland has the most concentrated pattern of private land ownership in the developed world. The degree of concentration is evident from the fact that a mere 432 landowners account for half of all Scotland’s privately owned land – such land (since not much more than 10 per cent of Scotland is in public ownership) accounting, in turn, for the bulk of the country.


Why is Mugabe Still in Power?

Zoe Samudzi provides some excellent answers to the question of why President Robert Mugabe has had such staying power despite the many political and economic upheavals that have beset Zimbawe since the late 1990s.

Here is an excerpt:

Throughout the course of his thirty-six years in office, President Robert Mugabe has used coercion and violence to clear the Zimbabwean political arena of opposition and dissent and consolidate his political power. He has singularly blamed the deteriorating economy on western sanctions rather than responsibly attributing it also to his own inadequate planning, mismanagement of both capital and resources, his allowance of economic liberalisation and structural adjustment, and political corruption. Yet, contrary to the singularly critical narratives that tend to dominate, he enjoys some earnest support beyond what western reports about stolen elections indicate.


Most critically, the land issue – an issue of indigenous sovereignty, and perhaps the most unifying politic of Black resistance to colonial rule – went unaddressed. President Mugabe’s refusal to resign or allow regime change is justified, in part, by an idea that the revolution was stalled, and there must be consistent leadership in its continuity. It is no mistake that the ongoing process of land repossession and reform is characterised as the Third Chimurenga, and it is no accident that such vehement western critique has been levelled at state policy (genuine or otherwise) seeking to regain land sovereignty.

Remember that around independence in 1980 some 6,000 European immigrants, nearly all of whom defended the apartheid-lite (Southern) Rhodesian regime, owned 42% of Zimbabwe. Given the importance of land in an agrarian economy such as Zimbabwe’s, this was always going to be a politically untenable situation — regardless of the race of the landowners. Zimbabwe was on a path to significant land redistribution, one way or another.

So why didn’t Zimbabwe deal with the land question before independence in 1980?

Screen Shot 2017-02-10 at 7.45.33 AM.pngThe answer has to do with the the relative political power of the European settler community, especially after UDI. Since 1923 the group had enjoyed effective self-government with significant autonomy from London. And it is precisely because of their political power that Zimbabwe never had a “Swynnerton Plan” akin to what happened in Kenya in response to the Mau Mau anti-colonial insurgency.

Zimbabwe’s landowners failed to appreciate the need to make deals when they had the (political) upper hand. And by so doing set themselves up for very costly reforms/expropriations thirty years hence.

Why they made this choice is an interesting and open question.

Perhaps they trusted that Zimbabwe would continue to rely on Western aid in a manner that would have incentivized property rights protection by the government (under the threat of aid cuts and sanctions). They may have also thought that the government would not be crazy enough to jeopardize its commercial farming sector and risk total economic collapse. Another reason might have been the comfort of knowing that any land reform efforts in Zimbabwe would elicit reaction from South Africa (then under apartheid) in defense of property rights.

Apartheid, of course, ended in 1994. And the first two considerations did not stop President Robert Mugabe, at great cost to Zimbabweans of all stripes.

Given the complicated history of Zimbabwe and the wider anti-colonial struggle in eastern and southern Africa, I expect Mugabe’s legacy to be sanitized as soon as he passes on, especially outside of Zimbabwe.