The opportunities for a good life are different for each person, depending in part on where they were born. Living conditions vary between countries and within a country. Inequality can be described in many different ways and there are several statistical methods to measure inequality.
The Human Development Index (HDI) ranked Norway at the top in 2019 and Niger at the bottom in 189th place. The index takes into account life expectancy, education and average income. This means that, on average, a person in Niger has fewer opportunities for education, high income and a long life than people in 188 other countries.
There are also large inequalities within countries. According to the World Bank, income inequality is particularly high in South Africa, Namibia and Botswana. South Africa had a Gini index of 63% in 2014 (last survey). The internationally accepted Gini coefficient measures income inequality in an area, where 0% represents absolute equality and 100% total inequality (a GINI value of 100 would mean that a single person had all the income in the region in question).
Trends always depend on the particular indicators and data that are used. But one thing can be said for certain: the world continues to have high levels of inequality. According to the UN’s 2020 World Social Report, inequality within countries is very high, but is not growing everywhere. However, it has increased in most developing countries since 1990.
According to the World Inequality Database, inequality is highest in Latin America and the Middle East compared to the rest of the world. In Latin America, for example, the top 10% of income earners holds 54% of the average income; in the Middle East, the figure is as high as 56%. The impact of the coronavirus pandemic on income inequality around the world is still unknown, but it is likely that poor people will be particularly hard hit and the gap between rich and poor will widen.
Inequality – like poverty – has many dimensions and is not measured solely in terms of income. However, access to education and health services, for example, as well as opportunities for personal development and influence on society, often depend heavily on income. Furthermore, a high level of inequality in the distribution of opportunities and income can lead to social upheaval and ultimately conflict. According to the United Nations Global Sustainable Development Report 2019, growing income inequality is therefore also one of the greatest challenges for sustainable development.
UN Sustainable Development Goal 10 aims to reduce inequality – globally and within countries – in terms of income, opportunities, political rights and economic participation.
KfW accounts for the impact on disadvantaged groups in all projects. When planning a new project, consideration is always given to the implications it will have for indigenous peoples and for women and children. The aim is to ensure that the projects promoted by KfW do not intensify inequality, but rather alleviate and mitigate it as far as possible.
Many of its projects also directly target disadvantaged groups, for example in the health or education sector, in climate change adaptation or in terms of financial inclusion. In 2021, its new commitments contributing to the achievement of SDG 10 were a good EUR 1.7 billion. Reducing inequalities worldwide and improving the living conditions of all, especially the poor, remains a key priority for KfW.