Economy & Business, Volume 16, 2022

Abstract: Income inequality in Africa is high and it is growing in recent years. There are various reasons behind this trend and they cannot be limited only to historical context and the changing economic environment. Inequality in Africa has a much more complex characteristics and it is due to a number of factors, including political instability, malfunctioning of institutions as well as climate change. This can be fur- ther observed as the most unequal regions in Africa are those of Central and Southern Africa, or the commonly referred to as the Sub-Saharan region. One of the main reasons for inequality in Africa is the presence of sectoral imbalances, i.e. the prevalence of the agricultural sector. Another main reason for inequality is the institutional weakness and the negative experience of malfunctioning and extractive institutions. In order to overcome these negative tendencies, the institutions should be reformed and particular attention should be paid to reforms in taxation, public spending and job regulation.