SDG 10 – Reduce inequality within and among countries

More justice

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.

For example, the Human Development Index (HDI) measures a country's average scores in basic areas of human development. The index takes into account life expectancy, education and average income. While the global average is 0.7, countries such as Chad, Niger and the Central African Republic have the lowest indices of 0.39 and 0.4 respectively.

There are also large inequalities within countries, i.e. between individuals. The internationally accepted Gini coefficient measures income inequality in an area, whereby 0% represents absolute equality and 100% total inequality. According to this, income inequality is particularly high in South Africa, Namibia, Suriname and Zambia. South Africa had a Gini index of 63% in 2014 (last survey), while the global average is 38%.

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 latest Oxfam report on global inequality, the wealth of the world's five richest billionaires has more than doubled since the beginning of this decade, while 60% of humanity has become poorer. The coronavirus pandemic will play a decisive role in increasing income inequality, as will the Russian war of aggression against Ukraine, but also external shocks such as natural disasters, economic crises or armed conflicts.

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 2023, growing inequality is therefore also one of the greatest challenges for sustainable development.

SDG 10 aims to reduce inequality within and between countries – both in terms of income and opportunities, political rights and economic participation. KfW supports this goal through various approaches.

Financial inclusion is one of the core issues of Financial Cooperation. A bank account provides access to credit, insurance and secure savings. Access to financial services improves living conditions, increases economic activity and reduces vulnerability to crises. KfW therefore supports the establishment and expansion of sound financial systems.

In addition, KfW offers hedging instruments, e.g. via regional risk pools and funds for financing innovative insurance products, e.g. against climate risks, to protect beneficiaries and thus make them more resilient in crises. One of these is the Insuresilience Solutions Fund (ISF). It promotes the development of needs-based and financially sustainable insurance products to strengthen the resilience of poor and vulnerable populations to extreme weather events and natural disasters.

The number of refugees around the world continues to rise. Climate change is displacing people from areas that are becoming increasingly unsuitable for farming. Conflicts over resources are increasing and escalating into violence – another cause of displacement. The host communities are often overwhelmed. Refugees are therefore among the most vulnerable groups in the world. KfW’s projects support both refugees and host communities, for example in Lebanon and Turkey. It finances infrastructure projects and creates opportunities for income using measures such as cash-for-work programmes.

Indigenous people are another group that is often structurally disadvantaged. They are more likely to be affected by poverty in many contexts compared to the general population and often have fewer opportunities to participate in society. Moreover, their cultural identity, their way of life and their right to land are under threat in many places. In projects such as the one to improve school infrastructure in Honduras, regions with indigenous populations are therefore specifically targeted for support to give people there better access to education.

KfW also supports social security systems, e.g. cash transfers for food security in Zambia. Particularly needy families, especially single mothers, receive regular direct payments and can thus feed their families and secure their basic needs.

Women around the world are particularly exposed to structural disadvantages on the basis of their gender. This ranges from limited access to financial and health services, education or work, to traditional roles that limit their participation in community decisions. This is why all KfW projects are assessed to determine whether they contribute to gender equality or at least do not exacerbate gender inequality.

Some projects are specifically geared towards promoting women and girls or include components of this kind. In the “Wings to Fly” scholarship programme for secondary education in Kenya, for example, 60% of KfW-funded scholarships are reserved for women and girls. In line with the BMZ's feminist development policy, KfW also supports funds in the area of gender lens investing. The funds of the non-profit organisation Women's World Banking (WWB), for example, improve access to financial services for women and at the same time increase their share of employment in financial institutions.

Reducing inequalities worldwide and improving the living conditions of all, especially the poor, remains a key priority for KfW. It therefore 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, people with disabilities or women and children. The investments promoted by KfW are not intended to intensify inequality, but to alleviate and mitigate it as far as possible.

Many 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 2023, its new commitments contributing to the achievement of SDG 10 were a good EUR 1.5 billion.

Portrait of Steffen Beitz, Director of KfW in Mozambique since August 2023

“Mozambique has difficult overall conditions, but potential”

Interview with Steffen Beitz, Director of KfW in Maputo, on poverty, inequality, economic prospects and the role history has played in the country’s development.

Inclusive working

Inclusion is not only playing an increasingly important role in the funded projects of financial cooperation - KfW Development Bank itself supports inclusive work and diversity in an exciting working environment.