Economic Dimensions of Inequalities in East Africa

The wages of informality

Informal workers are more likely to be paid above the poverty line in Uganda (which is a fairly low $37 per month), compared to those in Kenya (one in three chance) and Rwanda (one in four chance). There was no comparable analysis for Tanzania and Burundi.

Table 4. Probability of being paid above the minimum wage or poverty line

Country (threshold)

Informal workers

Formal workers

Uganda (poverty line)

62%

97%

Kenya (minimum wage)

35%

85%

Rwanda (poverty line)

26%

84%

Tanzania

No data

No data

Burundi

No data

No data

Source: Wageindicators.org, authors’ calculations

The Informal Wage In Burundi

The informal daily minimum wage in Bujumbura for unskilled labourers was 2,500 Burundian francs ($1.66). In the past the government set the minimum wage, but during the year, the minimum wage was set by market forces. In the interior of the country, the daily minimum wage was 1,000 Burundian francs ($0.65), with lunch provided.

The government estimated that 62 per cent of the population lived below the poverty line, which the World Bank defined as a daily wage of $0.50 in urban areas and $0.38 in rural areas.

More than 90 per cent of the population participated in the informal economy. Daily wages in the informal sector averaged between 2,500 and 3,000 Burundian francs ($1.63 to $1.95) in Bujumbura and between 1,000 and 1,500 Burundian francs ($0.65 to $0.98.) in the interior of the country. There were no reports of enforcement of minimum wage laws in recent years.

Source: Burundi: Human Rights Report via http://allafrica.com/stories/201304231120.html?viewall=1

East Africans’ wealth holdings grew modestly in the past decade

trends-in-wealth-per-adult-in-EA

East Africa’s wealth per adult is highest in Kenya where it increased from $1,020 in 2000 to $1,866 in 2012 and increase of 83 per cent. Tanzania’s wealth per adult grew by 68 per cent from $511 to $859. Burundi’s wealth per adult trended from $164 to $283, a growth of 73 per cent during the same period, while Rwanda doubled its wealth per adult from $360 to $721. Uganda’s wealth grew by 80 per cent from $376 to $677.

The structure of East Africans’ wealth portfolios is changing    

share-of-finanacial-assets-in-wealth-per-adult-in-EA

East African adults have reduced the share of financial assets in their wealth portfolios during the 2000 to 2012 period. Rwanda produced the largest reduction of twenty percentage points from
79 per cent in 2000 to 58 per cent in 2012. For adults in Uganda and Burundi the reduction was about thirteen percentage points from 66 per cent and 69 per cent to 53 per cent and 56 per cent respectively. However, Kenyan adults bucked this trend by increasing the share of financial assets in their wealth portfolios by 5 per cent.

share-of-non-financial-assets-in-wealth-per-adult-in-EA

Non-financial assets or ‘real assets’ are defined as housing and land. Again, it is interesting to note that all East African countries’ adults increased the share of real assets significantly during the past decade. The increase ranged from 22 per cent for Rwanda, 14 per cent for Uganda and Burundi and 4 per cent for Tanzania. Interestingly, Kenyan adults reduced the share of real assets in their wealth portfolios by 5 per cent.

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