Before the pandemic, several sub-Saharan African economies saw record-breaking growth.

For instance, over the past 20 years, Ethiopia and Rwanda have experienced among of the fastest growth rates in the world, with annual growth rates averaging over 7.5%.

Due to a lack of income data at the sub-national level, it is less evident if the benefits of economic expansion have been distributed fairly throughout regions within nations.

We used satellite-recorded images of the earth's evening lights as a stand-in for economic activity to gauge the extent to which sub-Saharan Africa's excellent growth performance expanded across sub-national regions.

The information demonstrates that, at least up to 2010, African nations made great strides toward reducing regional income inequality (differences in output per capita across regions of a country).

When compared to other regions of the world, where inequality either increased or convergence was slower, this stands out sharply.

Taking a closer look at the factors that affect regional inequality, we found that progress was largely due to improvements in basic infrastructure, which helped lagging regions converge faster to national levels. Night lights per capita increased several-fold in the poorest regions, with the biggest gains in oil exporters and frontier markets such as Ghana and Kenya.

However, not all lagging regions saw improvement. Fragile and conflict-affected states made little-to-no progress in reducing regional inequality. And even in countries that experienced decades of growth, progress stalled after 2010, with regional inequalities having likely widened post-pandemic.

Access to clean water, electricity and cellphone services, for example, is two to four times lower in lagging regions compared to leading ones, in part because public expenditure per capita is so much lower. Similarly, the share of residents who have completed primary and secondary education is two to three times lower in lagging regions.

In countries where access to public services is generally low and distribution very unequal, the gap is even larger. In Burkina Faso, for instance, access to electricity is nearly 20 times higher in leading regions.

Key drivers

What are the key drivers that helped reduce regional inequality in the past few decades? We find that there are four major factors that supported this improvement:

• Macroeconomic stability: Inequality tends to increase in countries with high, persistent inflation by eroding the purchasing power of consumers, reducing government spending in real terms and disincentivising private investment.

• Trade openness: Easier access to global markets supports convergence by increasing the value of a country’s resources such as raw materials, which are more abundantly available in lagging regions. It also brings more workers into urban centres, which could in turn lead to a decline in income per capita of more urbanised regions if infrastructure development and the overall increase in economic activity in city centres are unable to keep up.

• Strong institutions and political stability: Weak institutions impede the capacity of governments to provide services and civil wars destroy public infrastructure, raising the likelihood that regions are left behind.

• Well-targeted investments: We used mineral discoveries as a proxy for analysing the impact of investments on regional inequality and found that progress depended on the location. Investments that occur outside of the capital cities are the most likely to have impact by creating jobs and promoting economic activity in lagging regions.

Way forward

What can policy makers do to address these inequalities? Sub-Saharan Africa countries would need to pursue a broad-based policy framework anchored around three main pillars:

• Well-designed redistributive fiscal policy with a clear investment strategy to assist underserved regions,

• Macroeconomic stability to foster inclusive growth, and

• Building institutions to ensure political stability and equitable public service delivery.

Governments also need to invest in building local administrative capacity to collect and analyse data. Only 12 sub-Saharan African countries publish their public budget allocations at the sub-national level. Having this data more readily available would provide a more accurate picture of disparities across regions, helping policy makers better target policies.