Why the number of poor is increasing despite growth in Africa

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antony mutunga

Economic growth without social progress lets the great majority of the people remain in poverty, while a privileged few reap the benefits of rising abundance. – John F. Kennedy

Africa has come a long way from the days that the continent was known as the hopeless continent because of its tragedies such as floods, famine, civil unrest and war, disease and deep poverty. However, ever since the start of the 21st century things have turned around for the continent as it has experienced a robust economic growth. For instance, according to McKinsey Global Institute (MGI), between 2000 and 2010 the African continent achieved an average real annual GDP growth of 5.4%, adding $78 billion (Shs7.8 trillion) annually to GDP.

However, despite the economy of the continent continuing to show promise as it grows, one factor seemed to remain unaffected, poverty reduction. One would have expected that with the economy rising that the level poverty within the continent will reduce. However, this was far from the reality, as the number of the poor in the continent has been on a rise. According to the World Bank, in 2013 the continent had 50million more poor people compared to the year 1990.

As a result, more and more Africans have ended up suffering despite the fact that the continent has been on an upward trend. This has brought up the question of whether the economic growth is really occurring and it is not trickling down to everyone or the fact that the actual growth is not as reported.

So far this phenomenon has been attributed to different factors however; one of the main reasons behind it has been the rapid population growth of the region. The rate at which the population increases in the continent has been seen as one of the reasons as to why the poverty levels have been getting worse.

For example, according to the World Bank the rate of population growth in the region between 2010 and 2015 stood at 2.55 percent annually. Even though the level of income is growing as the economy continues to grow, the increasing population growth has the income shared among the growing population. As a result, the rate at which poverty is being reduced is less than the rate at which the population is growing thus this causes the number of those living in poverty to continue growing. The number of those living in poverty has gone up, standing at 330 million people in 2012 as compared to 1990 when it stood at 280 million.

Apart from this, the common belief that all economies in the region have been growing because the growth of the continent has been on a rise is misleading. It is true that a large number of the countries in the continent have been on the rise however, not all of them have been enjoying a similar trend. For instance, countries like Rwanda and Ethiopia that were among the poorest countries in the region have been on a rising trend.

On the other hand, countries like the Democratic Republic of Congo have not experienced any growth in a number of years as a result of never ending conflicts. In such countries, the number of people living in poverty keeps rising as long as the country struggles to create and keep economic momentum. Therefore, even if the continent’s growth rate keeps rising and a number of economies still remain fragile, the number of those living in poverty will continue to grow faster.

In addition to the misleading belief, there is also the problem of the accuracy of the data collected when determining growth. In most cases the growth statistics only take into account the active participants in the economy leaving out those that are involved in the informal economy. This normally creates a difference between the actual results and the reported ones. With the continent having a majority of the population currently working in the informal sector, their omission from the calculation on determining the growth rate leads to inaccurate results. As a result, the growth statistics may not be accurately representing the real deal at the ground.

Inequality has been another major reason as to why the level of those living in poverty keeps growing despite the continent experiencing an upward trend in terms of growth. With inequality in the region already at high levels no wonder the growth of the continent does not deliver a reduction in the number of those living in poverty. This is because even after growth causes incomes to increase, it only ends up making the wealthy richer while making no significant impact on the rest of the population.

According to Francisco Ferreira, former Chief Economist for the Africa Region, Africa has grown faster in the last decade than most other regions, but the impact on poverty has been less than expected. “Africa’s growth has not been as powerful in reducing poverty as it could have been because of the high levels of inequality. Growth with equity is possible, but it requires a decline in inequality in both outcomes and opportunities,” he added.

The high levels of inequality have seen the African continent having among the most unequal countries in the world as the gap between rich and the rest of the population keeps rising. This is evident in the fact that while the continent has some people able to spend millions to construct apartments and malls easily, the same has people who survive on $1.25 (Shs126) a day or less.

“On one hand you hear glowing stories of growth and prosperity, shiny new buildings being built, big cars, nice homes, and lots of consumption. But Africa is producing bigger and bigger numbers of poor people, so poor so desperate.” said Ali Mufuruki, member of the International Monetary Fund’s Group on sub-Saharan Africa.

There is a need for African policymakers to deal with the dissonance between the continent’s growth performance and the poverty numbers. It is high time that the belief that a positive change in the growth of the continent is enough to reduce the number of those living in poverty. Governments need to come up with policies that ensure that the growing population has access to good education and that there are enough job opportunities for this lot.

The African governments also need to find a way to deal with high levels of inequality in the region as this will be helpful in reducing the gap between the rich and the rest of the population as well as bringing a large number of the population above the poverty lines. With the continent’s population expected to increase by 2.2billion people by 2050, if nothing changes the number of those living in poverty will reach unimaginable levels. The continent needs to keep its economic momentum going but to ensure no one is left behind they immediately need to focus on reducing poverty as well.  ^

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