NAIROBI – Kenya on Thursday called for deploying prudent fiscal policy in order to tackle income inequality in Africa. Henry Rotich, cabinet secretary of the National Treasury, told at a forum in Nairobi that while advanced economies have had a long history of using fiscal policy for re-distribution of wealth, sub-Saharan Africa's experience in this area is still limited.
"However, if sub-Saharan Africa uses fiscal policy to support inclusive growth, it must do so without compromising economic growth," Rotich said during the Seventh African Fiscal Forum.
Rotich noted that the African Fiscal Forum has evolved over time to become a key platform for African nations to engage each other on topical fiscal policy issues as well as to identify practical solutions.
He revealed that while sub-Saharan Africa countries have in the recent past managed to sustain rapid economic growth which has helped lift the general living standards of its people across the region, more recently the region has witnessed below-average growth rates which is threatening to reverse the progress made in poverty reduction.
He observed that the current lackluster economic growth in the midst of numerous external shocks does not bode well for Africa, which still has a long way to go in achieving full inclusive growth that benefits the entire population.
"The fear for the region is to see inequality worsen when economic progress had been achieved before," he noted. He noted that evidence from Asia indicates that public spending on education, health care, and direct transfers reduces inequality.
According to the National Treasury, many sub-Saharan African countries have used fiscal policy to facilitate economic growth by providing basic infrastructure while safeguarding macroeconomic stability.