African Economies - a Mixed Bag of Prosperity, Rising Inequality and Opportunity

2 November 2015
press release

Kinshasa — The numbers look good but as much as African economies have grown in the past decade, they still produce inequality and lack fair distribution and inclusion declared the Economic Commission for Africa at the African Economic Conference currently taking place for the first time in Kinshasa in its ten-year existence.

"Real structural transformation is what is needed but structural economic transformation is not a magic bullet for narrowing inequalities," said Mr. Bartholomew Armah of ECA. For several years, he has been researching policies needed to achieve an inclusive transformation that benefits most of the continent's citizens.

Mr. Armah in his investigation on policy measures and drivers of structural transformation concluded that "limited decent job opportunities contribute to the slow change of Africa's economies". He cited the decline in employment to population ratio of 57.7% to 44.4 % between 2005 and 2012 as one of the main factors of this sluggish economic change.

There are no easy answers for a continent that simultaneously experiences economic growth and inequality. Academics and policy makers "affirm the relatively weak impact of growth on poverty in Africa," said Mr. Armah in a session moderated by Mr. Abdalla Hamdok, ECA's Deputy Executive Secretary.

Eastern Europe, Western Asia, Latin America, Caribbean and North Africa score the highest in inequalityelasticity of poverty between 6.85 and 4.34 whilst Sub-Saharan Africa scores a meagre 1.56 points.

Mr. Abbi Kedir, the economic forecaster at ECA pointed out that whilst global rates of poor people were reduced from 1.93 billion in 1981 to 897 million people, Africa, though it has improved its economies, has moved from having 291 million poor people in 1990 to almost 389 million in 2012.

Mr. Kedir asserted "progress on tackling poverty is good globally but it's not universal and that the burden of poverty is spread unevenly".

"More of the same will not get us to reduce the number of poor. The persistence of poverty and inequality expose the weak link between the fast growth and welfare," said Mr. Kedir.

Gathering data from approximately 20 countries, the ECA forecaster declared it would take an average of 33 years to reduce poverty in Africa with upper -middle income countries needing only 9 years, and lower-middle income countries requiring about 26 years whilst lower income countries will need 43 years to address the scourge of poverty.

Whilst Africa's gini coefficient of 0.43 over the period 2000 ‐ 2009is second only to Latin America which averaged 0.52 over the same period, poverty is declining but inequality remains high in the majority of African countries.

Mr. Armah therefore concluded that active policies are required to shape inequality outcomes. There is no single solution to Africa's poverty and developmental issues. Mr. Kedir warned against limiting solutions to one source. "Addressing growth and the development financing gap concerns do not solve developmental problems," he said.

These both change across time and space due to dynamics in effectiveness of social protection; climate change; service delivery improvement and the pace of escaping poverty.

As economic gaps widen in Africa, Mr. Armah believes "addressing inequality requires a focus on inequality of opportunity and inequality of outcomes," is the one of the ways forward for the continent.

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