Africa Rising, but poverty not down
- By Erna van Wyk
Africa continues to grow robustly. The “Africa Rising”-trend shows two decades of sustained economic growth and sub-Saharan Africa it is now the third largest growth region in the world.
But, even with Africa’s GDP above 4.5% per year, and growth above 2% in capita terms, growth has been relatively ineffective in reducing poverty, according to the World Bank's Africa Region Chief Economist, Dr Francisco Ferreira.
He delivered a special seminar hosted by the Faculty of Commerce, Law and Management (CLM) on Wednesday, 19 November 2014.
Titled: Growth, Structural Transformation and Poverty in Africa Ferreira’s talk focussed on why Africa’s economic growth is not having a significant impact in reducing poverty on the continent. “Africa has had 29 years of sustained growth, but this prosperity is not translating in poverty reduction. Seven of the 10 most unequal countries in the world are in sub-Saharan Africa.”
Research undertaken by his team in the World Bank focussed on three areas: agriculture, manufacturing and the services sector – and how these industries impact, or not, on poverty reduction. “What we have found is that growth in the manufacturing industry is not poverty reducing, while the service sector has grown strongly and has a large effect on poverty,” he said.
The agricultural sector is a strong contender to tackle poverty. Ferreira said 60% of Africa’s labour force, and almost 80% of the working poor are in the agriculture sector. “While agriculture is effective in reducing poverty when there is growth, it unfortunately takes place very slowly. Promoting agricultural productivity and growth remains paramount,” he added.
Going forward, African governments should promote faster gains in agricultural productivity, a level playing field for African manufacturing, and should continue to support growth in the services sector where it has been shown to have a significant impact on poverty reduction.