This paper seeks to provide a political explanation for the unexpectedly high levels of inequality found in the African region today. There is much variation within the region, however the common history and structural factors suggests a distinctly African kind of inequality. The paper describes the recent literature on African inequality and examines the limitations of traditional explanations for inequality in Africa. Instead, it is argued that natural endowments in the region shaped the nature of colonial institutions, which in turn created the conditions for high levels of inequality. The author concludes that the surprisingly high levels of inequality in Africa can be understood as part and parcel of a process of class formation linked to processes of state building that have their origins in the economic institutions of the early colonial state. Colonialism favored, in relative terms, certain indigenous groups, which often inherited the state at independence. Insofar as political power has often been used to gain economic advantages during the postcolonial era, inequality has changed little over the course of the last forty years, despite the official focus on development and poverty alleviation by donors and governments alike.