Africa has the highest poverty rate in the world. Even though some countries are on track to meet the Millennium Development Goal (MDG) of halving poverty by 2015, most are likely to fall well short. Income inequality in Africa remains higher than in most other regions and gender, ethnic and regional inequalities persist.
Such injustices endure for a variety of reasons, including a poor or unstable economic growth — which has failed to generate productive employment — and the fragmentation and underfunding of social policies. Moreover, governments have been ineffective and their policies unresponsive to citizen needs, so the poor lack influence over public policies.
Following Africa’s economic contraction of the 1980s and 1990s, growth picked up in 2000-2007, thanks to a boom in commodity prices and improvements in the world economy. This helped countries such as Ethiopia, Ghana, Mali and Senegal to reduce poverty. But even for these countries, poverty remains high and growth has not transformed their economies or delivered decent jobs.
In the world’s high-income countries, economic growth fuelled a shift from agriculture to industry and from industry to services. But Africa has not been able to follow a similar development trajectory. There is widespread underemployment. Incomes in informal and agricultural activities remain low and even relatively diversified economies such as that of South Africa experience persistent and large-scale unemployment.
Growth with jobs has been elusive for two reasons. First, globalization has weakened the links between agriculture and industry. Urban people are largely fed by imported food, which undermines domestic agriculture. Second, free market ideas continue to dominate macroeconomic policies, emphasizing tight spending, privatization and liberalization. From that perspective, employment is seen as a byproduct of growth, and thus does not require specific policies.
Jobs and equity
To achieve growth that is equitable and creates jobs, African governments could pursue a number of deliberate policies. Among other objectives, these policies should connect agriculture more productively to industry and other sectors, and demand global reforms that reduce sharp fluctuations in commodity prices and interest rates.
Beyond jobs, social transfers can also drastically reduce poverty levels. In recent years, popular pressures and shifts in aid allocations towards basic services have led to increased social spending. Social assistance schemes such as free health care for children, pensions for the elderly and income transfers for the poor have proliferated. Yet Africa still spends only about 3.5 per cent of its gross domestic product on social protection, compared to 4.5 per cent in all low-income countries, 10.5 per cent in middle-income countries and 20.6 per cent in high-income countries.
Countries that have reduced poverty in relatively short periods had political systems that deliberately promoted growth and enhanced welfare. In Mauritius, one of Africa’s oldest democracies, small farmers collaborated with agricultural labourers and urban trade unionists to force the state to institutionalize social rights.
Africa’s experience so far suggests that anti-poverty measures that are not linked to production systems, broader social policies and politics will have limited results. Economic, social and political policies and institutions need to be consciously coordinated to achieve the maximum impact.