Eradicating poverty in Africa

A new World Bank reports points the way for poverty to be reduced in Africa
African farmer

The eradication of extreme poverty is an important challenge, and nowhere more so than in Africa. A recent World Bank study, Accelerating Poverty Reduction in Africa, offers a strategy blueprint for governments and NGOs that are trying to address this difficult problem.

Poverty in Africa has stayed high despite sustained economic growth over the past decades. Why is this? The report offers three reasons.

  • First, high existing poverty and limited access to public services are preventing individuals from taking advantage of the opportunities provided by economic growth.
  • Then there is Africa’s continued and increasing reliance on traditional agricultural methods rather than industrial investment.
  • And finally the continent experiences high population growth meaning that any extra economic resources are increasingly split between more and more people.

However despite these worrying trends, there are potential solutions and the report suggests four areas where attention should be focussed.

Slowing population growth

One obvious step is to slow population growth. This issue is often absent from discussions about poverty reduction. And yet experience shows that it is key. No country has successfully reduced poverty while maintaining population growth at level of sub-Saharan Africa.

Large populations mean that programmes to invest in people such as education and skill development have to focus on quantity rather than quality. In addition, rapid growth in the labour force growth seems to be associated with gender inequality with women being kept out of employment.

Solutions here include increased access to contraception, the discouraging of child marriage and female education.

Increasing agricultural efficiency

Another important step is to increase agricultural productivity. Surprisingly, agriculture is a neglected sector in Africa. This is partly because many interventions in rural areas have failed in the past for a variety of reasons.

There is therefore a need for holistic public sector interventions in research, infrastructure, and marketing. And this does need to be holistic. If interventions are designed solely to increase quality for instance, they will fail if parallel interventions to improve rural infrastructure are ignored.

What actions are needed? One solution is to encourage poorer farmers to move away from producing staple crops into producing higher value crops. But this can only happen in markets are assured and farmers receive a fair price for their goods.

An additional tactic is to reduce subsidies on things like energy and fertilisers and send the money saved directly to poorer farmers who will be likely to spend it more wisely than large corporations.

Reducing conflict

A major problem in much of Africa is risk and conflict. Civil war, common across the continent, represents a massive threat to agriculture. But there are other risks too including price volatility caused by badly integrated markets, unreliable water and sanitation systems, “health shocks”, and poorly manage responses to natural disasters.

Again there are solutions. Price volatility can be addressed through market management such as for instance the encouraging of cooperatives. Better sanitation and immunisation programmes (accompanied by education) will help to reduce health shocks. Better irrigation systems and improved seed stocks can help manage weather risks. Job creation and youth support programmes can reduce the risk of civil conflict.

Focussing on the poorest

All too often African governments are encouraged to “mobilise resources for the poor” by raising taxes. While raising taxes is a way forward it needs to be done in such a way as to avoid hurting the poorest in society.

Blanket rises in universal taxes such as VAT hit the poor far harder than the well-off unless direct cash transfers are made to the poor. In contrast, taxes on assets such as land and on income are less regressive.

Taking Africa forward

The report points out that there are major problems within many African states. Monopolies and a lack of competition, for instance in logistics, distort trading patterns and can mean that subsidies mainly benefit those who are already wealthy.

Trade barriers within Africa are another problem. And inbuilt prejudice among urban elites against investing in small-holder agriculture also reduces the progress that can be made. In addition, high levels of internal and external debt represent a risk should the wider world enter recession.

However there are bright points. Years of low inflation and flexible exchange rate regimes have strengthened economies. And African cities are increasingly becoming modernised, creating wealth that will eventually trickle out to rural areas.

But there is much still to be done. And Accelerating Poverty Reduction in Africa provides a welcome road-map for a better future where extreme poverty in Africa can be finally eradicated.