{"id":1114,"date":"2015-05-13T12:00:09","date_gmt":"2015-05-13T11:00:09","guid":{"rendered":"https:\/\/blog.iese.edu\/africa\/?p=1114"},"modified":"2016-10-28T13:15:42","modified_gmt":"2016-10-28T12:15:42","slug":"the-rich-poor-divide-in-sub-saharan-africa","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/africa\/2015\/05\/13\/the-rich-poor-divide-in-sub-saharan-africa\/","title":{"rendered":"The Rich Poor Divide in sub-Saharan Africa"},"content":{"rendered":"<p><strong>One thing that struck me in Nairobi was the income gap<\/strong>. <a class=\"inline-twitter-link inline-tweet-click\" href=\"#\" onclick=\"inline_tweet_sharer_open_win('https:\\\/\\\/twitter.com\\\/intent\\\/tweet?url=https%3A%2F%2Fblog.iese.edu%2Fafrica%2Fwp-json%2Fwp%2Fv2%2Fposts%2F1114%2F&text=Depending+on+where+you+go%2C+you+may+think+that+everybody+in+Kenya+is+poor%2C+or+that+everybody+is+rich.+');\" title=\"Tweet This!\">Depending on where you go, you may think that everybody in Kenya is poor, or that everybody is rich. <span class=\"non-dashicons\"> <\/span><\/a> Neither picture is truthful. The same misconception can come from looking at country-level economic statistics unwisely.<\/p>\n<figure id=\"attachment_1116\" aria-describedby=\"caption-attachment-1116\" style=\"width: 640px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-11.48.24.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1116 size-large\" src=\"https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-11.48.24-1024x768.jpg\" alt=\"You may think all Kenyans are poor...\" width=\"640\" height=\"480\" srcset=\"https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-11.48.24-1024x768.jpg 1024w, https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-11.48.24-300x225.jpg 300w, https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-11.48.24-500x375.jpg 500w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/a><figcaption id=\"caption-attachment-1116\" class=\"wp-caption-text\">You may think all Kenyans are poor&#8230;<\/figcaption><\/figure>\n<figure id=\"attachment_1117\" aria-describedby=\"caption-attachment-1117\" style=\"width: 640px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-14.14.25.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1117 size-large\" src=\"https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-14.14.25-1024x768.jpg\" alt=\"...or all Kenyans are rich\" width=\"640\" height=\"480\" srcset=\"https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-14.14.25-1024x768.jpg 1024w, https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-14.14.25-300x225.jpg 300w, https:\/\/blog.iese.edu\/africa\/files\/2015\/05\/2014-07-12-14.14.25-500x375.jpg 500w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/a><figcaption id=\"caption-attachment-1117\" class=\"wp-caption-text\">&#8230;or all Kenyans are rich<\/figcaption><\/figure>\n<p>&#8220;<strong>Consumer income is one of the most important economic factors creating distance between countries<\/strong>,&#8221; according to my colleague Ghemawat. Simple as this may seem, it gets complicated when evaluating the income gap and economic divides among sub-Saharan Africa countries. For instance:<\/p>\n<ul>\n<li><strong>The clearest measure of consumer income is GDP per capita.<\/strong> <a class=\"inline-twitter-link inline-tweet-click\" href=\"#\" onclick=\"inline_tweet_sharer_open_win('https:\\\/\\\/twitter.com\\\/intent\\\/tweet?url=https%3A%2F%2Fblog.iese.edu%2Fafrica%2Fwp-json%2Fwp%2Fv2%2Fposts%2F1114%2F&text=A+huge+obstacle+for+finding+GDP+per+capita+income+is+that+official+statistics+do+not+capture+the+informal+economy+');\" title=\"Tweet This!\">A huge obstacle for finding GDP per capita income is that official statistics do not capture the informal economy <span class=\"non-dashicons\"> <\/span><\/a>. For example, about a year ago<strong><a href=\"https:\/\/blog.iese.edu\/africa\/2014\/04\/16\/from-nigeria-to-kenya\" target=\"_blank\"> Nigeria was classified the largest economy in Africa<\/a>. <\/strong>This meant that officially, GDP per capita increased from $2,742 in 2012 to $3,005 in 2013 \u2013 a 9.6% growth rate. However, this just reflected that some informal sectors had been &#8220;formalized&#8221; and included in the statistics for the first time. This was the case of <strong>Nollywood, the Nigerian movie industry \u2013 third after Bollywood and Hollywood in terms of revenue generation.<\/strong><\/li>\n<li>Averages are averages, and don\u2019t reflect the whole picture. <a href=\"http:\/\/data.worldbank.org\/indicator\/SI.DST.10TH.10\/countries\" target=\"_blank\">Income distribution<\/a> should also be considered. Mauritius is the SSA country for which income distribution is available with the highest GDP per capita ($9,478): people with the highest 10% of the income share 28.9% of total income, while those with the lowest 10% income share 3.0% of total income.<\/li>\n<li><strong>Disposable income in SSA rural areas tends to be higher than in urban areas<\/strong>. A consultant from <a href=\"http:\/\/www.rolandberger.com\/\" target=\"_blank\">Roland Berger<\/a> shared this insight with me. Unfortunately, I haven&#8217;t been able to find hard data to back it up \u2013 still I wanted to bring this up as a consideration to make when thinking about cross-country economic distance. <strong>To illustrate, a <a href=\"https:\/\/www.kpmg.com\/Africa\/en\/IssuesAndInsights\/Articles-Publications\/General-Industries-Publications\/Documents\/Africa's%20Consumer%20Story.pdf\" target=\"_blank\">2013 report by KPMG Africa<\/a>, indicates that on average Nigerians spend more than 70% of their total earnings on food.<\/strong> This % is likely to be lower in rural areas where people grow their own food. If you add to this the fact that they don&#8217;t have to pay for rent or daily transportation to work \u2013 substantial expenses \u2013 you can easily figure that the consultant had a basis for his statement.<\/li>\n<\/ul>\n<p>This is the last of a series of posts on distance across SSA countries. The dimensions of distance considered are those in Ghemawat&#8217;s CAGE model: <a href=\"https:\/\/blog.iese.edu\/africa\/2015\/04\/15\/even-neighboring-countries-are-distant\/\" target=\"_blank\">Cultural<\/a>, <a href=\"https:\/\/blog.iese.edu\/africa\/2015\/04\/22\/ease-of-doing-business-rankings-in-sub-saharan-africa\" target=\"_blank\">Administrative<\/a>, <a href=\"https:\/\/blog.iese.edu\/africa\/2015\/05\/07\/transport-infrastructure-boosts-business\/\" target=\"_blank\">Geographic<\/a>, and Economic distance.<\/p>\n<p>Have you experienced these types of distances when doing business in Africa?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>One thing that struck me in Nairobi was the income gap. Neither picture is truthful. The same misconception can come from looking at country-level economic statistics unwisely. &#8220;Consumer income is one of the most important economic factors creating distance between countries,&#8221; according to my colleague Ghemawat. Simple as this may seem, it gets complicated when [&hellip;]<\/p>\n","protected":false},"author":1654,"featured_media":1116,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[99579,993],"tags":[80774,45538,38792,70269,100431,8010,951,955,1080,100434,1147],"class_list":["post-1114","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-african-economic-and-institutional-context","category-living-conditions","tag-african-economic-regions","tag-gdp","tag-income","tag-income-distribution","tag-income-gap","tag-inequality","tag-kenya","tag-kpmg","tag-nigeria","tag-nollywood","tag-poverty","megacategoria-mc-africa"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts\/1114","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/users\/1654"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/comments?post=1114"}],"version-history":[{"count":6,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts\/1114\/revisions"}],"predecessor-version":[{"id":1124,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts\/1114\/revisions\/1124"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/media\/1116"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/media?parent=1114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/categories?post=1114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/tags?post=1114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}