Africa needs a quantum leap to arrest poverty

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Jeff Kapembwa

Lusaka – African governments need to adopt adequate fiscal and structural policies that involve the private sector and improve infrastructure if the Sustainable Development Goals (SDGs) target of eliminating poverty by 2030 is to be achieved.

A recent report released by the Economic Commission for Africa (ECA) reveals that globally, extreme poverty is estimated to drop to 8% next year, however, Africa’s poorest people is forecast to rise more than fivefold the global share in the next four years.

By 2023, Africa’s poor will increase to over 80% of the global share, implying that Africa’s ratio of poor people will rise, ostensibly adding more poor people to the world.

In a report dubbed: “Unveiling an African Poverty Clock: Leaving no one behind” accessed by The Southern Times in Lusaka on Wednesday, ECA stated that as 2019 lingers on the horizon, estimates by World Data Lab indicate a glimmer of hope with the world opening the year with the lowest level of extreme poverty.

Despite the reflection, single digit numbers hide underlying differences, especially for African countries, with 600 million people globally feared to start the New Year living in extreme poverty with only 20 million expected to come out of the “hopeless” situation by the end of the year.

Africa still has much of its population living in poverty or vulnerable. Projections from the ECA’s report estimated that, in 2019, 70% of the world’s poor will live in Africa, up from 50% in 2015.

“By 2023, the share of Africa’s poor will increase to over 80% of the global share. In other words, Africa will be adding more poor people to the world.

“The African Poverty Clock provides real-time poverty estimates for every country on the continent, with forecasts until 2030. Current projections indicate that almost all of Africa is off track for ending extreme poverty by 2030,” the report added.

Accordingly, 13 countries are projected to see an increase in absolute numbers. Seven out of the top 10 countries in the world with the poorest people are in Africa.

This, the report added, is expected to rise to nine out of 10 by 2030. Four main factors drive Africa’s diverging progress with the rest of the world.

“The poor in Africa start further below the poverty line than those in other global regions. So even if incomes rise, it is rarely enough to push a significant proportion out of poverty.”

Africa’s poverty gap index, a measure of the intensity or depth of poverty, is nearly double the global average at 15.2% in 2013 (global averages is 8.8%).

The average consumption of the poor across the East, Southern, West and Central regions is US$1.16 a day, which is US$0.74 below the international poverty line, thus posing a challenge to achieving the SDGs target of eliminating poverty by 2030.

Poverty reduction is further impacted by high inequality levels. When inequality levels are high, economic growth delivers less impact for poverty. Across many countries in Africa, the richest 20% controls up to 60% of the wealth, as a consequence, growth has not been inclusive.

Africa’s inequality landscape is also characterised by high average inequality, extreme inequality (South Africa, Namibia, and Botswana) and a bifurcation of inequality trends that sees substantial variations in ‘within-country’ trends. ECA states.

The mismatch between sectors of growth and employment remains a challenge. Agriculture continues to be an important contributor to economic growth and the transition to industry remains slow.

The report cited Burundi, Burkina Faso, and Madagascar as having more than 80% of the labour force working in agriculture. Africa’s manufacturing sector employs only 9% of women and 16% of men on average over the decade.

However, most of Africa’s working poor are predominantly found in the informal sector characterised by low productivity and low incomes.

Despite the increase in employment within the services sector, the reality is that people are moving from low productivity agriculture to similar low productivity urban informal activities thus there is little impact on rising incomes.

The economic growth recorded for the last 20 years has made a minimal impact due to rapid population growth. With a 2.6% population growth rate, on average, annual per capita growth in the last quarter century comes in at just 1.1%, which is insufficient to reduce poverty quickly.

However, the report noted that the rate of population growth witnessed over the last two decades is unlikely to repeat itself in the coming decades, thus presenting unique opportunities for countries to make a significant impact on poverty reduction.

Nonetheless, 2019 may prove a significant turning point in Africa’s progress towards the elimination of extreme poverty by 2030. The impact of poverty that might hit Africa is likely to derail most of the continental gains over the recent years, the report said.

“For the first time, in 2019, the absolute number of people living in extreme poverty in Africa will be reduced. But there is no guarantee that this pace will continue in the absence of the right public policies and actions.”

Sustained economic growth of the magnitude of at least 8-10% is necessary for the quantum leap needed for faster poverty reduction and to achieve the SDGs.

It, however, banks its hopes on the impending adoption and subsequent implementation of the much espoused Continental Free Trade Area (CFTA), which will help rekindle a new ray of hope for Africa’s growth.

Adding to the growth impetus under the CFTA is the digital economy and the scaled-up push for gender inclusion bode well for inclusive growth over the next decade.

It is, however, dependent on whether African governments adopt adequate fiscal and structural policies that involve the private sector and improve infrastructure. 

 

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