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International remittances and income inequality in Africa
Published by: AfDB
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General Information
SDGs | ![]() |
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Published | 2011 |
Thematic Area | Inclusive economic growth for poverty eradication |
Reduce inequality within and among countries
It is well documented that income inequality is on the rise, with the richest 10 percent earning up to 40 percent of total global income. The poorest 10 percent earn only between 2 and 7 percent of total global income. In developing countries, inequality has increased by 11 percent if we take into account the growth of population.
These widening disparities are a call for action that require the adoption of sound policies to empower the bottom percentile of income earners and promote economic inclusion of all regardless of sex, race or ethnicity.
Income inequality is a global problem that requires global solutions. This involves improving the regulation and monitoring of financial markets and institutions, encouraging development assistance and foreign direct investment to regions where the need is greatest. Facilitating the safe migration and mobility of people is also key to bridging the widening divide.
Reducing inequalities is one of 17 Global Goals that make up the 2030 Agenda for Sustainable Development. An integrated approach is crucial for progress across the multiple goals.
Learn more about the targets for Goal 10.
Reduce inequality within and among countries
It is well documented that income inequality is on the rise, with the richest 10 percent earning up to 40 percent of total global income. The poorest 10 percent earn only between 2 and 7 percent of total global income. In developing countries, inequality has increased by 11 percent if we take into account the growth of population.
These widening disparities are a call for action that require the adoption of sound policies to empower the bottom percentile of income earners and promote economic inclusion of all regardless of sex, race or ethnicity.
Income inequality is a global problem that requires global solutions. This involves improving the regulation and monitoring of financial markets and institutions, encouraging development assistance and foreign direct investment to regions where the need is greatest. Facilitating the safe migration and mobility of people is also key to bridging the widening divide.
Reducing inequalities is one of 17 Global Goals that make up the 2030 Agenda for Sustainable Development. An integrated approach is crucial for progress across the multiple goals.
Learn more about the targets for Goal 10.
The SDG Fund response
The SDG Fund programmes undertake situation analysis to understand what inequalities underpin the challenges in the communities and countries where we work. By doing this, the programmes pay special attention to inequalities suffered by women, girls, indigenous people, older people, youth, and those living in geographical isolated communities. Our initiatives take inequalities into account and put into practice solutions to address them, responding to the 2030 Agenda’s mandate of leaving no one behind.
For example,
- In Tanzania, the SDG Fund is working with the national government to scale-up one of its existing national programmes to reach all the extreme poor living below the food poverty line. In particular, it’s targeting women, children, youth, elderly, people living with disabilities and people living with HIV and AIDS. The programme employs conditional cash transfers, promoting employment through public works programmes, family planning awareness and primary and secondary school education.
- In Bangladesh, the SDG Fund is working with ultra-poor women, particularly with those who are widowed, divorced or abandoned. The programme is supporting the most vulnerable households to move out of poverty through public works jobs, education and financial literacy.
- In Paraguay, the SDG Fund is supporting the government’s efforts to find integrated solutions to undernutrition and to address other health problems faced by indigenous and vulnerable rural households, particularly female-headed ones, to produce nutritious and diversified food production.
The SDG Fund response
The SDG Fund programmes undertake situation analysis to understand what inequalities underpin the challenges in the communities and countries where we work. By doing this, the programmes pay special attention to inequalities suffered by women, girls, indigenous people, older people, youth, and those living in geographical isolated communities. Our initiatives take inequalities into account and put into practice solutions to address them, responding to the 2030 Agenda’s mandate of leaving no one behind.
For example,
- In Tanzania, the SDG Fund is working with the national government to scale-up one of its existing national programmes to reach all the extreme poor living below the food poverty line. In particular, it’s targeting women, children, youth, elderly, people living with disabilities and people living with HIV and AIDS. The programme employs conditional cash transfers, promoting employment through public works programmes, family planning awareness and primary and secondary school education.
- In Bangladesh, the SDG Fund is working with ultra-poor women, particularly with those who are widowed, divorced or abandoned. The programme is supporting the most vulnerable households to move out of poverty through public works jobs, education and financial literacy.
- In Paraguay, the SDG Fund is supporting the government’s efforts to find integrated solutions to undernutrition and to address other health problems faced by indigenous and vulnerable rural households, particularly female-headed ones, to produce nutritious and diversified food production.
- By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
- By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
- Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard
- Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality
- Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations
- Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions
- Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies
- Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements
- Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular least developed countries, African countries, small island developing States and landlocked developing countries, in accordance with their national plans and programmes
- By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent
- By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
- By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
- Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard
- Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality
- Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations
- Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions
- Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies
- Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements
- Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular least developed countries, African countries, small island developing States and landlocked developing countries, in accordance with their national plans and programmes
- By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent
Economic growth has to be inclusive to ensure the wellbeing of the entire population. Inclusive growth requires full respect for human rights.
Inclusive growth generates decent jobs, gives opportunities for all segments of society, especially the most disadvantaged, and distributes the gains from prosperity more equally.
The first priority is to create opportunities for good and decent jobs and secure livelihoods for all. This will make growth inclusive and ensure that it reduces poverty and inequality. Better government policies, fair and accountable public institutions, and inclusive and sustainable business practices are essential parts of a Post-2015 agenda.
A second priority is to strive constantly to add value and raise productivity. Some fundamentals will accelerate growth everywhere:
- Skills development
- Supportive policies towards micro, small, and medium enterprises
- The capacity to innovate and absorb new technologies
- The ability to produce a higher quality and greater range of products
- Infrastructure and other investments
Third, countries must establish a stable environment that enables business to flourish. Business wants a level playing field and to be connected to major markets. It also wants a simple regulatory framework that makes it easy to start, operate, and close a business. Small and medium firms that employ the most people are especially restricted by complicated regulations that can breed corruption.
Fourth, in order to bring new prosperity and new opportunities, growth must also usher in new ways to support sustainable consumption and production. It must also enable sustainable development.
The SDG Fund response
The SDG Fund supports initiatives that tackle inclusive growth from a multisectoral perspective and address the following dimensions:
- Create opportunities for good and decent jobs and secure livelihoods
- Support inclusive and sustainable business practices
- Promote better government policies and fair and accountable public institutions
For example:
- In Mozambique, Sierra Leone and Ivory Coast, the SDG Fund will work with mineral extractive industries to generate economic growth and opportunities for the whole population. For example, in Mozambique, analysis indicates that the 5 largest projects in the country with an invesment of USD $3.4 billion, will generate only 33,000 direct jobs.
- In Bangladesh and in Tanzania, the SDG Fund will contribute to the construction of the social protection systems and universal social safety nets, with special attention to the poorest women.
- In Honduras the SDG-F will support the generation of income through the revitalization of the Lenca culture and the development of sustainable tourism micro businesses in the area, led by youth and women.
- The armed conflict in Colombia has damaged production, institutions, food security, and social trust. Through the sustainable agricultural production of indigenous crops and their international commercialization, the SDG-F will create employment, ways of life, better nutrition, and, most importantly, peace in Cauca - one of the zones most affected by the long lasting conflict.
- In Peru the SDG Fund will contribute to establishing an inclusive value chain in the production of quinoa and other Andean grains, so that the increase of demand in the international market can convert into economic and social improvements of currently vulnerable producers.
Current SDG Fund inclusive economic growth for poverty eradication programmes:
Previous programmes:
Two of the MDG-F thematic windows encouraged practices related with inclusive growth, especially providing opportunities for the most vulnerable: youth, employment and migration and private sector and development. Some programmes on culture and development also tried to boost the economic potential of cultural industries to create livelihoods. Lessons learned from these programmes have been translated into a broader perspective on inclusive growth as a means of poverty reduction.
[summary] => [format] => full_html [safe_value] =>Economic growth has to be inclusive to ensure the wellbeing of the entire population. Inclusive growth requires full respect for human rights.
Inclusive growth generates decent jobs, gives opportunities for all segments of society, especially the most disadvantaged, and distributes the gains from prosperity more equally.
The first priority is to create opportunities for good and decent jobs and secure livelihoods for all. This will make growth inclusive and ensure that it reduces poverty and inequality. Better government policies, fair and accountable public institutions, and inclusive and sustainable business practices are essential parts of a Post-2015 agenda.
A second priority is to strive constantly to add value and raise productivity. Some fundamentals will accelerate growth everywhere:
- Skills development
- Supportive policies towards micro, small, and medium enterprises
- The capacity to innovate and absorb new technologies
- The ability to produce a higher quality and greater range of products
- Infrastructure and other investments
Third, countries must establish a stable environment that enables business to flourish. Business wants a level playing field and to be connected to major markets. It also wants a simple regulatory framework that makes it easy to start, operate, and close a business. Small and medium firms that employ the most people are especially restricted by complicated regulations that can breed corruption.
Fourth, in order to bring new prosperity and new opportunities, growth must also usher in new ways to support sustainable consumption and production. It must also enable sustainable development.
The SDG Fund response
The SDG Fund supports initiatives that tackle inclusive growth from a multisectoral perspective and address the following dimensions:
- Create opportunities for good and decent jobs and secure livelihoods
- Support inclusive and sustainable business practices
- Promote better government policies and fair and accountable public institutions
For example:
- In Mozambique, Sierra Leone and Ivory Coast, the SDG Fund will work with mineral extractive industries to generate economic growth and opportunities for the whole population. For example, in Mozambique, analysis indicates that the 5 largest projects in the country with an invesment of USD $3.4 billion, will generate only 33,000 direct jobs.
- In Bangladesh and in Tanzania, the SDG Fund will contribute to the construction of the social protection systems and universal social safety nets, with special attention to the poorest women.
- In Honduras the SDG-F will support the generation of income through the revitalization of the Lenca culture and the development of sustainable tourism micro businesses in the area, led by youth and women.
- The armed conflict in Colombia has damaged production, institutions, food security, and social trust. Through the sustainable agricultural production of indigenous crops and their international commercialization, the SDG-F will create employment, ways of life, better nutrition, and, most importantly, peace in Cauca - one of the zones most affected by the long lasting conflict.
- In Peru the SDG Fund will contribute to establishing an inclusive value chain in the production of quinoa and other Andean grains, so that the increase of demand in the international market can convert into economic and social improvements of currently vulnerable producers.
Current SDG Fund inclusive economic growth for poverty eradication programmes:
Previous programmes:
Two of the MDG-F thematic windows encouraged practices related with inclusive growth, especially providing opportunities for the most vulnerable: youth, employment and migration and private sector and development. Some programmes on culture and development also tried to boost the economic potential of cultural industries to create livelihoods. Lessons learned from these programmes have been translated into a broader perspective on inclusive growth as a means of poverty reduction.
[safe_summary] => ) ) ) [field_short_description] => Array ( [und] => Array ( [0] => Array ( [value] => Creating decent jobs, secure livelihoods and promoting inclusive sustainable practices. [format] => [safe_value] => Creating decent jobs, secure livelihoods and promoting inclusive sustainable practices. ) ) ) [field_icon_class] => Array ( [und] => Array ( [0] => Array ( [value] => fa fa-line-chart [format] => [safe_value] => fa fa-line-chart ) ) ) [field_subtitle] => Array ( [und] => Array ( [0] => Array ( [value] =>Economic growth is critical for poverty eradication.
Yet, an expanding economy does not mean that everyone benefits equally.
Economic growth is critical for poverty eradication. Yet, an expanding economy does not mean that everyone benefits equally.
) ) ) [field_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 5 [uid] => 1 [filename] => boosting-rural-incomes-in-vietnam.jpg [uri] => public://boosting-rural-incomes-in-vietnam.jpg [filemime] => image/jpeg [filesize] => 125480 [status] => 1 [timestamp] => 1449239930 [type] => image [field_file_image_alt_text] => Array ( ) [field_file_image_title_text] => Array ( ) [rdf_mapping] => Array ( ) [title] => [alt] => [metadata] => Array ( [height] => 1065 [width] => 1600 ) [height] => 1065 [width] => 1600 ) ) ) [field_type] => Array ( [und] => Array ( [0] => Array ( [value] => area_of_work ) ) ) [field_paragraphs] => Array ( ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [name] => sysadmin [picture] => 0 [data] => a:2:{s:7:"contact";i:0;s:7:"overlay";i:1;} ) [access] => 1 ) ) ) [field_downloads] => Array ( ) [field_delivering_as_one] => Array ( ) [field_country_entity] => Array ( ) [field_body] => Array ( [und] => Array ( [0] => Array ( [value] => This paper investigates the impact of migrant remittances on income inequality in African countries, using a panel of five eight-year non-overlapping windows for the period 1960-2006. The results suggest that, first, international migrant remittances have a significant positive impact on income inequality in African countries. After instrumenting for the possible endogeneity of remittances, a 10 percent increase in remittances as a percentage of GDP will lead, on average, to a 0.013 percent increase in income inequality in Africa. Second, initial per capita GDP strongly increases income inequality. Third, inflation rate appears to be the strongest factor fuelling income inequality in the Continent. Fourth, education significantly reduces income inequality. Fifth, the North African dummy and remittances inflows to North Africa largely reduce income inequality in the sub-region while doing the opposite in Sub-Saharan Africa. The policy implications of these results are discussed. [format] => [safe_value] => This paper investigates the impact of migrant remittances on income inequality in African countries, using a panel of five eight-year non-overlapping windows for the period 1960-2006. The results suggest that, first, international migrant remittances have a significant positive impact on income inequality in African countries. After instrumenting for the possible endogeneity of remittances, a 10 percent increase in remittances as a percentage of GDP will lead, on average, to a 0.013 percent increase in income inequality in Africa. Second, initial per capita GDP strongly increases income inequality. Third, inflation rate appears to be the strongest factor fuelling income inequality in the Continent. Fourth, education significantly reduces income inequality. Fifth, the North African dummy and remittances inflows to North Africa largely reduce income inequality in the sub-region while doing the opposite in Sub-Saharan Africa. 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