Growth and poverty reduction in Africa in the last two decades

 
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In recent years, there has been a measure of optimism among policy makers and the media about the prospects for strong economic growth in Africa. For example, The Economist noted in a December 2011 article, “The Hopeful Continent: Africa Rising,” that the continent “has a real chance to follow in the footsteps of Asia.” There is significant evidence to support the case at the general level: Over the past decade, African countries have represented six of the ten fastest-growing economies in the world.

Despite this growth, 47% of the population of sub-Saharan Africa still lives below the $1.25-a-day poverty line, according to a 2012 World Bank study. Between 1981 and 2008, the percentage of that region’s poverty rate declined only 4 percentage points. By contrast, East Asia saw dramatic drops in poverty, from 77% of the population in 1981 to 14% in 2008; and South Asia saw the percentage of  its population in poverty decline from 61% to 36%.

A 2012 study from the University of Sussex published in the Journal of African Economies, “Growth and Poverty Reduction in Africa in the Last Two Decades: Evidence from an AERC Growth-Poverty Project and Beyond,” analyzes data from the 2008-2011 African Economic Research Consortium (AERC) Collaborative Growth-Poverty Nexus project. This data comes from a project in which African economists conducted economic case studies on 11 countries: Benin, Burkina Faso, Cameroon, Chad, Ethiopia, Ghana, Guinea, Kenya, Malawi, Nigeria and Senegal. The study supplements this data from the Demographic and Health Surveys to examine non-economic indicators of poverty, including: mother’s education, infant mortality, malnutrition, and vaccination rates for children.

Key findings include:

  • Between 1995 and 2010, each of the 11 countries in the AERC project experienced positive economic growth in terms of average annual GDP, with the growth rate being lowest in Kenya (0.8%) and highest in Ethiopia (4.5%). Most countries experienced only modest growth over this period, but other exceptions include Burkina Faso (3.0%), Ghana (2.8%) and Nigeria (2.8%).
  • All of the countries surveyed experienced a reduction in their incidence of poverty. The most successful were Ghana, which “almost halved its poverty incidence,” and Senegal, which appears on track to do the same. In other countries, poverty reduction was modest or fluctuated, with poverty sometimes increasing during intervals.
  • Among the five countries that provided information on severe poverty, Guinea experienced the greatest reduction in this indicator, with the rate falling from 18% in 1995 to 8% in 2007; Burkina Faso also experienced a significant decrease, from 12.2% to 7.5%, over this same period. The remaining countries all experienced a modest decrease in severe poverty: Cameroon experienced a 4% decrease; Senegal 2.8%; and Ghana 2.1%.
  • In the six countries that provided inequality-related information, Burkina Faso, Cameroon, Guinea, Kenya, and Senegal all experienced a reduction in inequality, while Ghana experienced an increase over this period.
  • In most countries, rural poverty decreased consistently over this period, while many countries experienced an increase in urban poverty at some point during the 1995-2007 period. However, “the general pattern that emerges … is of falling levels of poverty, though only at fast rates in some cases.”
  • In each of the countries examined, there was a rapid increase in the percentage of mothers who completed secondary education, “though from a very low base in Benin, Burkina Faso, Chad and Guinea.”
  • Most of these countries also experienced a decrease in infant mortality, with the exceptions of Cameroon, Chad, and Guinea. The most significant reductions in infant mortality were experienced in Ghana, Malawi, Senegal, Ethiopia and Benin.
  • Malnutrition fell consistently in Ghana, Senegal and “to a lesser extent Ethiopia,” all of which were “more successful countries in reducing monetary poverty.” Furthermore, “given the slow changing nature of these indicators, this represents impressive progress.” In the remaining countries, levels of malnutrition either worsened (Burkina Faso, Cameroon, and Guinea) or stayed roughly constant.
  • All countries experienced an improvement in the percentage of children fully vaccinated, with the exception of Benin and Chad. This indicator improved most dramatically in Ghana and Senegal, and “to a lesser extent in Ethiopia, and Guinea.”
  • The data show significant progress in terms of reductions of monetary and non-monetary poverty in Ghana and Senegal, and to a lesser extent in Ethiopia. These countries also share the characteristic of having good economic growth over the same period, but the author states that this cannot be used to infer causality, particularly “in relation to non economic indicators.”

The study found a generally positive relationship between poverty reduction and economic growth in the countries examined. However, the author states that while growth may be related to the reduction of monetary poverty, “its link to non-monetary indicators is likely to be much weaker; what is much more likely is that these countries represented good policy environments in terms of growth and delivery of health and education services.” The author concludes that “the story of this paper is of significant progress in poverty reduction in Africa over the last decade” and that the picture may be even brighter when more information is included and more countries are examined.

Tags: poverty

Last updated: January 11, 2013

 

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Citation: Andy McKay. "Growth and Poverty Reduction in Africa in the Last Two Decades: Evidence from an AERC Growth-Poverty Project and Beyond," Journal of African Economies, 2013, 22 (suppl 1): i49-i76. doi: 10.1093/jae/ejs029.