What do we know about growth and poverty in Africa?

The literature on Africa’s development abounds in big theories — structural transformation, pro-poor growth, inclusive growth, among others. ‘Growth miracles’ (with or without a question mark) are sought and often proclaimed. The World Bank has even pondered whether Africa can overcome its ongoing challenges to claim the 21st century

All well and good but, given the very different economics of sub-Saharan Africa, what kind of evidence exists at the country level? What evidence do we have on their growth, poverty reduction, and prospects for the future? Some countries, such as Mali, Sudan, Somalia and Zimbabwe, lack the adequate data and security required to conduct in-depth research — in others the research climate is better, but the UN is right to call for a data revolution. 

Growth and poverty in Africa

A recent UNU-WIDER book, Growth and Poverty in Sub-Saharan Africa, offers two cheers for growth and poverty reduction in the region. But why only two cheers, not three? 

One reason is that some of the largest economies — which would have to function well for the continent to thrive as a whole — are providing disappointing results. Furthermore, Nigeria, South Africa and Kenya — regional powers in West, South, and East Africa — house 29% of the continent’s population, but none are experiencing quick economic growth or living up to their full potential. This is cause for concern, especially since Nigeria is projected to have the world’s third largest population by 2050

Problems with economic growth go back half a century and beyond; the years 1970-90 are often referred to in SSA as ‘lost decades’. Results for the two most recent decades are better, which at least shows some movement in a positive direction. 

The book — stemming from UNU-WIDER’s GAPP project — consists of 16 national case studies which can be split into these performance categories: 

  • Countries with rapid economic growth and poverty reduction: Ethiopia, Ghana, Malawi, Rwanda, Uganda
  • Countries with rapid economic growth and limited poverty reduction: Burkina Faso, Mozambique, Nigeria, Tanzania, Zambia
  • Uninspiring growth and limited poverty reduction: Cameroon, Cote d’Ivoire, Kenya, Madagascar, South Africa
  • Low-information economies: Democratic Republic of the Congo

It is hard to contradict the editors’ conclusion that ‘the development process is, almost always, a long hard slog involving a challenging process of structural transformation’.

Growth and Poverty in Sub-Saharan Africa – what the book does

As I see it, some of the achievements of the book are as follows: 

  1. It uses statistics critically. Existing statistics are used in a sophisticated way instead of uncritically applying the World Development Indicators (WDI) or giving up on official statistics. The methodological notes of the experienced team of editors are themselves of great interest. 
  2. It employs a similar methodology for most of the case studies. The approach is, however, adapted depending on the circumstances of the country studied and remains flexible. 
  3. It builds on a case study approach but also draws conclusions of relevance for the continent. The book highlights the specificities of each economy. For example, the development challenges of Nigeria, an oil exporter, are quite different from those of Ethiopia, an oil importer. A team of over 40 specialists is drawn upon to ensure that country experts examine the particularities of each case. 
  4. It keeps to a manageable size of 16 case studies. Together these cover almost 75% of Africa’s population, including nine of the top ten countries by size of population. 
  5. It employs both monetary and non-monetary evidence skilfully. The development and application of regional poverty lines (within countries) is more precise than the use of one national poverty line, which is often out of date.

Some of the non-monetary gains are indeed impressive. The under-5 mortality rate was 60% less (for SSA) in 2013 as compared to 1965. Maternal mortality rates were halved between 1990 and 2013. Many of these improvements have, to a significant degree, been delivered largely by the states — itself indicative of improved stability. 

Serious obstacles, however, continue to plague the region. SSA still lags behind other world regions in water and sanitation. Primary education has been significantly expanded, but secondary education levels are still low. The rapidly expanding population remains a challenge. 

The importance of structural transformation

The country case study evidence in the book provides nuanced confirmation of the need for structural transformation. Given the dominance of agriculture in African economies, an emphasis is placed on raising productivity. Ethiopia — with its agricultural development-led industrialization and huge investment in agricultural extension workers — shows the productivity gains which sound policy can generate. Here, as elsewhere, appropriate infrastructure investment for the stage of development can help both agricultural and manufacturing sectors. The careful chapter assessing the impact of fertilizer subsidies on smallholder production in Malawi deserves close reading. 

The overall story is complex but the editors draw out some over-arching conclusions of the comparative material. These conditions are needed to achieve structural transformation: 

  • political stability, as the avoidance of war and major civil conflict is particularly important;
  • economic growth, because most studies argue that South Africa needs growth to stand any chance of making sustained progress on poverty reduction;
  • improve non-monetary poverty indicators according to MDGs; and 
  • reductions in monetary poverty, as measured by household consumption.

Future progress will require better performance by the major economies of the region, namely, Kenya, Nigeria, South Africa. Well-functioning agriculture and sound policies are also needed to enable movement up the value chain as well as, where possible, manufacturing. There are additional challenges as the commodities boom has ended. This was stressed by South Africa’s Minister for Trade and Industry, Rob Davies, in an interview with UNU-WIDER last year. If Nigeria, from 2000, could not take advantage of a high oil price to address poverty and inequality, what chance does it have when the oil price is low?