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FEATURE STORY

State of the Africa Region 2014: Using Africa’s Growth to Reduce Poverty, Improve Lives

October 11, 2014


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World Bank Africa Region Chief Economist Francisco Ferreira outlines Africa’s growth prospects and their impact on poverty. 


STORY HIGHLIGHTS
  • While Africa continues its positive growth trend, this growth has not translated into a fast-enough reduction in poverty and improvement in people’s lives
  • Although agriculture continues to employ most of Africa’s workers and contribute to poverty reduction, it is growing at a much slower pace than the services and natural resource sectors
  • There are also risks that threaten continued growth, including the current Ebola epidemic

WASHINGTON, October 11, 2014 – While Sub-Saharan Africa has sustained positive economic growth in the last 20 years, this growth has not translated into a fast -enough reduction in poverty, which remains more widespread and deeper in Africa than in the rest of the world.

This is the crux of the World Bank Group’s (WBG) concerns, Francisco H.G. Ferreira, WBG chief economist for the Africa Region, said during an event titled State of the Africa Region. The event was part of the 2014 World Bank-IMF Annual Meetings.



" We don’t care about growth per se, we care about growth as a means to something. In this institution, we care about growth as a way of improving the living standards of people. We care about poverty reduction. "
Francisco Ferreira

Francisco H.G. Ferreira

WBG chief economist for the Africa Region


“We don’t care about growth per se, we care about growth as a means to something,” Ferreira told the standing-room only crowd. “In this institution, we care about growth as a way of improving the living standards of people. We care about poverty reduction.”

Using analytical data from recent reports such as Africa’s Pulse and the Economic Impact of the 2014 Ebola Epidemic, Ferreira led a panel discussion with a presentation highlighting the “weak link” between growth and poverty reduction; the uneven nature of the region’s growth across countries, sectors and regions.

For example, while agriculture continues to grow and employ most of Sub-Saharan Africa’s employed, the services and natural resource sectors are growing much faster. Manufacturing is also growing at a slower rate than the services and natural resource sectors, Ferreira said, changing the way the WBG views structural transformation in Africa.

While promoting agricultural productivity growth remains paramount, data show that there is evidence of a “service elevator” out of poverty, Ferreira said. The service sector has shown strong growth, and it is making a significant impact on poverty, inspiring the WBG to look at how people can further benefit from the service sector, and how policies can help.

In addition, Ferreira said, there are core reasons why the manufacturing sector is declining in Africa; but they can be addressed by providing a skilled labor force, providing reliable and affordable power, and lowering transport, trading and transaction costs.

“The weaknesses of the manufacturing sector become less surprising when you look at all of the challenges that firms face,” Ferreira said. “But we shouldn’t give up on manufacturing.”

While exploring the services and manufacturing sectors, H.E. Newai Gebre-ab, minister and economic advisor to the Prime Minister of the Federal Democratic Republic of Ethiopia, reminded the crowd of the importance of agriculture for fast and sustainable growth.

“Services, while good for providing employment, is not a dynamic sector,” said Gebre-ab. “Fast, sustainable growth starts with agriculture.”

H.E. Amadou Cissé, minister for state planning for the Republic of Niger, also participated in the panel discussion. He pointed out some risks specific to Niger that create economic challenges for the country, such as the need for regional integration practices, and urbanization, which results in the rural poor not being able to take advantage of the wealth in urban areas.

“The policies we can currently adopt regarding economic development and transformation to reduce poverty reduction should definitely take into account this background,” he said. “We should make sure that we don’t adopt policies that exacerbate difficulties.”

There are also additional risks that impact GDP growth across the continent, Ferreira said, including fiscal deficits, the current Ebola epidemic and a new source of conflict; terrorism. 


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