‘African growth not enough to reduce poverty’

June 01, 2012, Friday/ 13:52:00

Africa may have enviable economic growth rates by global standards, but they are still not enough to pull its growing population out of poverty, the World Bank said on Thursday.

Addressing the media during a visit to Nigeria's commercial hub of Lagos, Marcelo Giugale, World Bank Director of Economic Policy and Poverty Reduction Programs for Africa, was asked if the continent was growing fast enough to fight dire poverty. "The short answer is 'No'. It's not enough to reduce poverty, not by enough," he said, adding that the reasons were complex and varied.

The IMF this month revised down its growth forecasts for Africa in 2012 to 5.4 percent, lower than previous forecasts. Africa's growth has remained above 5 percent in the last eight years, underpinned by strong prices for its natural resources, better governance and growing disposable incomes, but poverty is not falling anywhere near as fast. "We have specific targets that are in reach. Child mortality has fallen fast in many countries. But at the same time, poverty is going down very slowly," Giugale said.

The World Bank estimated on its website in March that the percentage of poor Africans fell from 58 percent in 1999 to 47.5 percent in 2008, a decline of about one percentage point a year. "You certainly need much more than the GDP numbers going up. The translation from growth to employment is complex: It depends on labor market, skills, infrastructure, the quality of the business environment. Growth can be very fast and you still don't see poverty reduction," Giugale said. He added that when high inflation accompanied growth - as it has in much of Africa - the impact on poverty was severe. While growth was not enough by itself for poverty to fall, high inflation was enough to guarantee it would rise because price rises hit the poor the hardest.

Many African countries were too dependent on commodities, so were also not able to deliver employment. "Not many countries have translated fast growth into fast employment creation," Giugale said. "One reason is: when you are growing out of a commodity, it is different to if you are growing out of a wider selection of sectors." 

He urged African countries to remove barriers to trade between themselves, just as rich-nation demand for raw materials had integrated them with world markets. "Africa has been very successful at integrating itself with the rest of the world, but it has been a failure at integrating itself with itself," he said. "This is where we estimate billions of dollars of GDP and millions of jobs are within reach." He gave the example of agriculture, on which millions of poor African smallholders depend, but in which cross-border trade because of bureaucratic barriers was hard, or often impossible, as it was between eastern Congo and Rwanda.

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