ENTREPRENEURIAL DEVELOPMENT IN AFRICA: A BOON TO INCOME EQUALITY

Abstract

The interconnection between income inequality and entrepreneurship in African economies is examined. The study provides answers to two critical questions: (1) Does income inequality affect entrepreneurship? and (2) What is the implication of entrepreneurship for income disparity in Africa? With the Gini coefficient used as a proxy for income inequality, data from 23 selected African countries over the period 2006-2018 are analyzed. The analysis is based on panel data econometrics, and reveals that income inequality increases entrepreneurship in Africa. It is also discovered that entrepreneurship reduces income inequality. These findings persist after utilizing the Palma ratio as an alternative proxy for income disparity in African economies. In terms of policy implications, the study shows that income disparities serve as a push factor toward entrepreneurial activities. Entrepreneurship may serve as a veritable tool for policies aiming at reducing income inequality in Africa.