Plowing resources, sowing divides: agricultural aid and the puzzle of income inequality in Sub-Saharan Africa

Purpose Income inequality in Sub-Saharan Africa remains profoundly entrenched, characterized by extreme disparities where the top decile captures over half of national income. This study investigates whether agricultural development aid, a major policy tool for rural poverty reduction, can mitigate this inequality, or if its benefits are diluted by structural and institutional barriers. Design/methodology/approach To achieve this objective, the study employs a dynamic panel analysis using the Palma ratio and income shares for 39 Sub-Saharan African countries from 1996 to 2022, estimating models for both total and disaggregated agricultural aid across sectors including agriculture, forestry and fisheries. Findings The results reveal that while total agricultural aid exhibits a modest equalizing effect by slightly boosting the income share of the bottom 50%, this effect diminishes when aid is disaggregated into specific sectors, none of which shows a statistically significant individual impact. Furthermore, improved institutional quality is initially associated with higher inequality, suggesting elite capture of governance gains. Originality/value This study contributes new evidence by systematically disaggregating agricultural aid across sectors and employing the Palma ratio as a more sensitive measure of distributional change in the African context. The findings imply that aid's equitable impact depends not on aggregate volume but on intelligent design. The results suggest that policy must prioritize precise pro-poor targeting, integrated multi-sectoral programs that create synergistic rural livelihoods, and governance reforms explicitly coupled with equity safeguards to ensure aid reaches and empowers the poor.