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FEATURE STORY

As Africa's New Wealth Grows, Poverty Must Come Down

April 15, 2013

STORY HIGHLIGHTS
  • New data on Africa shows Sub-Saharan African countries continue to grow at a strong pace
  • Sound economic policies and programs can ensure increased growth rates and reduce poverty
  • Good progress has been made on a few MDGs, even though the region lags in achieving the development goals

WASHINGTON, April 15, 2013— Africa’s booming economic growth fuelled by a rigorous focus on government and citizen accountability will boost poverty reduction and promote shared prosperity, according to the World Bank’s latest Africa’s Pulse, the twice-yearly analysis of the economic trends and latest data on the continent.

“The broad picture emerging from the data is that Africa’s economies have been expanding robustly and that poverty is coming down,” says Shanta Devarajan, the World Bank’s Chief Economist for Africa, and lead author of Africa’s Pulse.

“At the same time, the aggregate numbers hide a great deal of diversity in economic growth and performance, even among Africa’s faster growers,” Devarajan adds.

The analysis shows that about 25 percent of the countries in Africa, notably, Sierra Leone, Niger, Cote d’Ivoire, Liberia, Ethiopia, Burkina Faso, and Rwanda, grew at 7 percent or higher, putting them in league with the fastest growing countries in the world.

Throughout Sub-Saharan Africa, the report found, economic growth remained strong at an estimated 4.7 percent. Excluding South Africa, the region’s largest economy, the remaining economies grew at a powerful 5.8 percent—higher than the developing country average of 4.9 percent.

Although the analysis details steady and strong economic growth, it also shows that different countries are pursuing different development models, with different degrees of success. A look at Rwanda’s agricultural programs shows that its maize and cereal output has increased between 2006 and 2011 (Mason et al., 2011; World Bank, 2013b) partially through the Rwanda Crop Intensification Program. Under this program subsistence farmers, who traditionally grow an array of crops on very small fields, pooled their land, specialized in one crop, and were provided low cost fertilizer. This program has “has been the workhorse of the new agricultural strategy of the government of Rwanda,” according to Africa’s pulse.

The program’s success is seen partially in the economic expansion in Rwanda of 5 percent per capita GDP, which resulted in a 1.3 percentage point yearly fall in the country’s national poverty rate. A similar drop in the poverty rate in Ethiopia resulted from economic expansion there as well, the Bank’s Devarajan says.

Throughout Sub-Saharan African recent trends point to progress in the fight against income poverty. Between 1996 and 2010, the share of people living on less than $1.25-day in Sub-Saharan Africa has declined from an estimated 58 percent to 48.5 percent, according to provisional data in the report.

Like the continent’s steady economic expansion, progress on the millennium development goals varies among countries. The report notes that the progress made over the past ten years, when growth picked up, has been impressive. In fact, the region is on a trajectory to achieve the targets soon after 2015, as long as strong economic growth and a commitment to reforms remains.

Success on MDGs can be seen in the improvement in maternal mortality throughout the region. For example, the maternal mortality ratio in the region was 850 deaths per 100,000 live births in 1990, compared to the ratio of 400 deaths per 100,000 throughout the rest of the developing countries. In 2010, the value of this indicator was 500 deaths per 100,000 live births in Sub-Saharan Africa.

The under-5 mortality rate in Sub-Saharan Africa has declined substantially as well, from 178 deaths per 1,000 live births in 1990 to 109 deaths per 1,000 live births in 2011.

The outlook for the maternal mortality MDG is optimistic, the analysis notes. If the region doubles the effort made during 2005-10 it will be able to reach this goal by 2016.

Challenges remain

While the new assessment finds that Africa continues to grow faster than the global average, much remains to be done to raise the quality of life for the many who live in extreme poverty.  Makhtar Diop, the World Bank’s Vice President for Africa, notes that there is an enormous opportunity for energy and agricultural producing through the continent.

“Without more electricity and higher agricultural productivity, Africa’s development future cannot prosper,” Diop says. “The good news is that governments in Africa are intent on changing this.”