Why Africa’s economic growth is not reducing poverty

Sub-Saharan Africa’s strong economic growth over the past decade has failed to adequately address poverty. Reports of a growing middle class and luxury brands such as Hugo Boss and Porsche setting up shop in the region often mask the fact that half the population still barely manages to eke out a living.

A recent report by the Africa Progress Panel (APP) aims to explain why economic growth hasn’t made a significant dent in poverty.

An Africa Progress Panel report aims to explain why economic growth hasn’t made a significant dent in poverty.

While the proportion of people living in poverty has fallen from around 55% in 2002 to 48% in 2010, the total number of poor people has increased due to population growth. About 413m people in sub-Saharan Africa still live on less than US$1.25 per day. Poverty is declining too slowly.

However, poverty varies from country to country. Over half of Africa’s poor live in just four countries – the Democratic Republic of Congo, Ethiopia, Nigeria and Tanzania.

A recent report by the Africa Progress Panel (APP) aims to explain why economic growth hasn’t made a significant dent in poverty.

One of the problems is the depth of poverty in Africa. Poor people in Africa live further below the $1.25 extreme poverty threshold than their counterparts in other parts of the world. Average daily consumption for poor Africans is just $0.70 – far below the level in other regions. “At this level, daily life is a struggle for survival,” notes the report.

Many also live dangerously above the international poverty threshold. About 250m Africans get by on $1.25-$2.50 per day. “Just one episode of sickness or one drought could send them back into extreme poverty”.

Inequality in Africa is very high by global standards. “The combination of high initial inequality and the average distance of a poor person from the poverty line, explains why Africa’s growth has reduced poverty at relatively modest rates,” notes the report.

Neglected agriculture

The APP partly blames the neglect of agriculture for the current situation. The vast majority of Africa’s poor are dependent on small-scale farming.

“If the central aim of growth is to improve lives and eradicate poverty, then agricultural growth is a highly efficient vehicle,” says the APP.

The International Food Policy Research Institute estimates that agricultural growth reduces poverty about twice as much as growth in other sectors. Asian countries such as Bangladesh, Vietnam, Thailand and Malaysia have managed to lower poverty by boosting agricultural productivity. Ethiopia and Rwanda are two examples of African countries that have been successful in this regard.

“Unlocking the productive potential of agriculture would enable Africa’s farmers to strengthen their contribution to growth and to share more equitably in the benefits,” says the report.

Sub-Saharan Africa also needs to improve the quality of its data on poverty. According to the APP, current poverty figures are “at best a blurred and speculative picture of underlying trends, depriving policymakers of the information they need to design anti-poverty policies”.

Economic growth alone is unlikely to eradicate poverty any time soon. It is for this reason that it cannot simply be business as usual for African governments looking to deal with the issue.