In the first phase of the project, Morocco, South Africa, Cameroon and Kenya were selected to participate in the research, analysis, and policy recommendations program, which significantly enhanced the evidence base for efficient and thoughtful redistributive fiscal policy that protects poor and vulnerable households from further impoverishment.  Each of these countries learned from, and in some cases incorporated, the successful programmatic experiences from the others. The work program that the AFD-CEQ partnership encompasses also promoted skills sharing and capacity building between countries.

Part of the second phase of this project focuses on Senegal, which is facing a number of important, sometimes contradictory challenges, likely to bring about lasting changes to the social contract and the redistribution of national income, such as: 

• the development of gas and oil deposits (and the collection of the associated tax revenues),
• the implementation of a just energy transition partnership (JETP), which at the same time calls for the decarbonisation of growth,
• the desired extension of social protection schemes (health, retirement) to accompany a demographic transition that is still underway,
• the dismantling of energy subsidies to finance more infrastructure and develop better-targeted subsidies for poor households. 

There is strong social demand for policies to reduce inequality, but this is taking place against a backdrop of regional instability, increased conflict, global inflation and global warming.

This analysis will be conducted in partnership with the Directorate General of Planning and Economic Policies of the Senegalese Ministry of Planning and the World Bank.
 

The development of the CEQ Assessments, which are the centerpiece of the AFD-CEQ Institute partnership, accomplish two major objectives simultaneously:

1. The implementation of CEQ Assessments builds an empirical evidence base (country by country) of the redistributive and poverty-reduction impact of fiscal policy broadly, as well as of individual fiscal elements (revenues or expenditures).
2. The implementation of CEQ Assessments together with local research teams completes a knowledge and skill transfer to researchers and policy officers who will remain close to the ongoing policy debate and policy-making bodies who benefit from having this information at their disposal.  

The AFD-CEQ Institute partnership therefore leaves in place the basic human infrastructure necessary for additional fiscal incidence analysis, including forward-looking policy simulation.

As part of the second phase of the project, the aim is for Senegal to master the CEQ tax incidence analysis tool and study a series of pro-poor reforms to reduce social and/or regional inequalities. 

The expected deliverable is a report quantifying the impact of 5 areas of reform (cost, effects, financing).

The CEQ Assessment is a comprehensive and rigorous tax and benefit incidence analysis which enables to have an active engagement with the policy community.It is designed to address the following four questions: 

1. How much income redistribution and poverty reduction are being accomplished through fiscal policy?
2. How equalizing and pro-poor are specifics taxes and government spending?
3. How effective are taxes and government spending in reducing inequality and poverty?
4. What is the impact of fiscal reforms that change the size and/or progressivity of a particular tax or benefit?

In order to address these questions, experts from the CEQ working along with AFD researchers and local researchers teams implemented the CEQ methodology in Morocco, South Africa, Cameroon and Kenya, and will do so in Senegal.

Once done, the objective is to mainstream the use of CEQ Assessments:

• By reaching out to the policy community through partnerships and policy forums;
• By disseminating findings through an active communication and advocacy program, undertaken in conjunction with key partners in the research, philanthropic and social activist communities.

You can find below the various publications related to this research project.

The picture within Africa is more complex, and often obscured by problems with unreliable and non-comparable data, both over time and across countries. The most careful African data analysis suggests that, measured in monetary terms, African inequality is very high, Africa being the most unequal continent. There is, however, huge variation in the magnitude, changes and texture of this inequality across the continent.

This implies a double danger. Africa first needs to ensure that it is included in the international measurements. At least as importantly, the continent must also ensure that the particular contexts of its societies are considered in the analysis both of the factors causing inequality and the consequences of inequality. This analysis is absolutely crucial because it is the basis for policy interventions and civil society action, which are necessary to reverse the trend. 

Given this context, a research project focusing on the development of diagnostic tools and capacity building was launched in partnership with the African Center of Excellence on Inequality Research (ACEIR) in the framework of the first phase of the Research Facility on Inequalities. The initial study (2018-2020) led to an in-depth analysis of inequalities in four countries: South Africa, Ghana, Kenya and Cote d’Ivoire. A Handbook on Inequality Measurement, which serves as a foundational guide for multidimensional inequality analysis, was also developed by ACEIR. The Handbook outlines key dimensions and indicators of inequality and provides guildelines for measuring income and beyond income inequalities.

Following the success of this research project:

• A fifth analysis was launched in Mozambique over the 2022-2024 period;
• A research project aming to expand and update the Handbook by incorporating methodologies for assessing vulnerabilities related to climate change and ecological transitions has also been launched over the 2024-2025 period.

The main objective of this research project was to advance the analysis of African inequality and the policy discussion on strategies to overcome inequality in Africa through a series of country-level engagements. The project was given structure and impetus through the development of a diagnostic tool that was implemented in a limited number of pilot countries. This diagnostic tool consists of a thorough analysis of the various inequalities in a given country which enables the government to identify the priorities and policy options in order to reduce them.

In order to build the diagnostic tool, a Handbook was also developed to set up a common base which enabled country comparisons. To extend its use and improve accountability, it was backed with a central data hub and strong data centres in each partner country that allowed and facilitated further inequality analysis.

Existing multidimensional inequality analyses primarily concentrate on examining inequalities within the social and economic domains. While many low-income countries are severely impacted by climate change, there is a notable research gap in the analysis of inequalities related to climate vulnerabilities and their interactions with other socio-economic and environmental factors. The extension and updating of the Handbook, carried out over the period 2024-2025, aims to address this gap and provide the guidelines for integrating the analysis of climate-related inequalities in future diagnostics.

The diagnostic tool is based on three pillars :

1. a conceptual and empirical review of the studies on inequality in Africa, allowing us to have a baseline for the development of future projects, as well as a better comprehension of the specificities of inequalities in Africa and of their measurement;
2. a Handbook which contains the framework proposed for the country inequality diagnostics, the methodological issues around the measurement of inequalities and their analysis and the important issues linked to policies;
3. the support to the implementation of the country diagnostic, in collaboration with the pilot countries’ local research teams and the creation of the data hub.

In order to expand and update the Handbook, researchers will thoroughly examine and synthesise existing literature that addresses the measurement and analysis of climate-related vulnerabilities. This approach will help identify gaps in current research and propose a minimal set of indicators for measuring vulnerabilities linked to climate change and the imperatives of the ecological transition and detail appropriate data and measurement methods to enable their inclusion as part of an inequality diagnostic report.  

In practical terms, the country diagnostic takes the form of a report which overviews the inequality within a country, across all relevant dimensions, for a given time and over time. Alongside this, it summarises the main policies passed, or in place, expected to have an impact on inequalities. Each country will use their diagnostic as a platform:

• for policy engagements on strategies to overcome inequality,
• for the stimulation of national dialogue and a national research focus on inequality,
• to lead the national discussion through further, high impact research papers from the country node on inequality.

• Anda David, Research Officer, AFD
• Rawane Yasser, Junior Research Officer, AFD