The gap between the rich and the poor has reduced in many countries since the 90s, the World Bank has reported in a new study.

This, however, disputes several global charity organisations’ claims that inequality is on the rise across the globe.

The study, Poverty and Shared Prosperity, is based on 2013 data and shows that a fall in extreme poverty over the years has reduced inequality in some countries.

“Contrary to popular belief, inequality between all people in the world has declined consistently since 1990. And even within country inequality has been falling in many places since 2008,” the study reads.

It adds that fewer people — 767 million —live under the poverty line of $1.90 (Sh190) a day, compared to 1.85 billion in 1990, despite an increase in the world’s population.

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However, the study notes that global inequality is wider than it was in the 1820s.

Alarming levels

Early this year, global charity Oxfam warned that inequality had reached alarming levels, with the top 1 per cent owning more than 99 per cent of the world’s population combined.

Oxfam said the 62 richest people — whose wealth is equal to what 3.6 billion people (half the world’s population) own — have seen their wealth increase by 44 per cent in five years since 2010, an increase of Sh55.5 trillion.

The World Bank, however, says for every country that experiences an increase in the wealth gap, two countries witness a reduction.

“The income share of the richest 1 per cent in the United States has been rising steeply since the 1970s; in contrast, in France and Japan, (which had similar top income shares at the beginning of the 20th century) not only do the richest control a much smaller share of national income, but their share has also risen much less,” the study reads.

It also found that Tanzania was one of the countries that has reduced inequality significantly in recent years, alongside Brazil, Cambodia, Mali and Peru.

“For every country showing an increase in the Gini index (percentage of inequality) of more than one Gini point between 2008 and 2013, there are more than two other countries showing a reduction in the Gini by the same amount,” the World Bank found.

Tanzania’s Gini coefficient in 2012 (at 35.8) was lower than the 45.1 sub-Saharan African average and, among East African countries, it was below that of Burundi (46.0), Kenya (47.7), Uganda (44.3), and Rwanda (50.8). It was only slightly higher than Ethiopia’s 33.6.

Lowering poverty

The World Bank proposes universal heath care, early childhood development and nutrition programmes, and universal access to quality education as some of the ways to keep money in the pockets of the poor and give future generations a chance at closing the inequality gap.

The global bank also recommends cash transfers to the poorest, and the development of rural infrastructure and electrification to connect people in remote areas to markets and help increase trade and development.

Taxation is also seen as an effective means of wealth redistribution, creating a level playing field and transferring resources to the poorest, while progressively funding state policies.

In Kenya, the Treasury recently exempted individuals whose incomes are below Sh10,000 from tax on bonuses, overtime and retirement. It also made changes to Pay As You Earn, relieving those who earn below Sh134,000 a year.

The new finance law further increased the amount of personal relief from the current Sh13,944 per annum (Sh1,162 per month) to Sh15,360 (Sh1,280 per month).