Eliminating extreme poverty in Africa: Trends, policies and the role of international organizations

Zorobabel Bicaba, Zuzana Brixiová, Mthuli Ncube
2015

Summary

This paper focuses on: (i) poverty paths in Sub-Saharan Africa (SSA) under different assumptions on key macroeconomic variables, that is (consumption) growth, population growth and income distribution; and (ii) national, regional and global policies that can be adopted to improve upon poverty outcomes.

It explores how policies of global institutions such as the G20 can contribute to reaching inclusive and green growth in Africa in the post-2015 era. The paper suggests that, to effectively support developing countries, the work of the G20 would benefit from more coherence and coordination among various working groups and topics. Further, while inclusive growth is well covered in the G20 work, more consistent attention could be paid to green growth. Finally, African and other low income developing countries will need a greater space to articulate their views on key global issues that impact sustainable development on the continent.

The paper shows various growth and redistribution scenarios and their impact on SSA’s poverty paths and outcomes, as well as examines differences among groups and countries. It concludes with discussion of poverty reduction goals for the SSA region.

Key findings:

 

  • Eradicating extreme poverty is a key challenge for SSA, given its high poverty rates, despite the recent decline. According to the PovcalNet data, the number of people living below $1.25 has not been falling in SSA, in contrast to other regions. Progress going forward will also depend on the poverty depth, which at $0.71 average income for the extremely poor is substantial and again below that of any other developing region. Moreover, the poverty line of $1.25 computed with ppp reflecting prices of all goods in consumer basket may not be appropriate for the poorest. One reason is that food prices often rise faster than the general price level while food takes up a disproportionate share of the poor’s budget. Among the extremely poor, poverty is clustered in the rural areas. Further, almost 60 percent of SSA’s jobs and 78 percent of its poor workers obtain their livelihoods from agriculture, the least productive sector. This underscores the importance of its transformation as well as creation of alternative sources of livelihoods.
  • To achieve substantial and lasting poverty reduction, national and regional policies in SSA will need to aim for growth that is not only strong and resilient to shocks, but also of better quality – inclusive and ‘green’. Efforts to reduce poverty in SSA to very low levels cannot overlook large low income countries such as Nigeria. However, that does not imply that small middle income countries with high prevalence of poverty such as Swaziland should be marginalized.
  • Poverty in SSA will be increasingly concentrated in today’s fragile states and in particular in the Democratic Republic of Congo, which also has high population growth. Policymakers cannot neglect safeguarding stability and peacebuilding in the DRC and other fragile countries with high poverty rates, such as Liberia. The Strategy for Fragile States of the African Development Bank outlines ways to reduce poverty and safeguard stability in these countries.
  • Factors impacting the global economy and Africa point to some negative pressures on the region’s trend growth, underscoring the challenges in trying to raise growth from the current 5 to 7 percent a year. Policymakers will need to take these long-term trends and factors into account when designing poverty-reducing policies. African countries will need a greater scope for articulating their views in global forums such as the G20 on key issues impacting sustainable development on the continent.

 

Source

Bicaba, Z., Brixiová, Z. & Ncube, M. (2015). Eliminating extreme poverty in Africa: Trends, policies and the role of international organizations. Working Paper Series No. 223. Abidjan: African Development Bank.