South Africa's Prof. Bhorat Delivers Lecture On Economic Growth and Inequality in Africa

6 June 2018

Addis Ababa — As part of activities marking the two-day Expert Group Meeting (EGM) and Policy Forum on "Poverty, Inequality and Jobs in Africa," which started on 6 June in Addis Ababa, a keynote lecture titled "Economic Growth and the Pursuit for Inequality Reduction in Africa" was delivered by Haroon Bhorat, Professor of Economics and Director of the Development Policy Research Unit at the University of Cape Town.

Professor Bhorat stated that income inequality has on average declined in Africa, driven by economies that are not highly unequal, and that in high-inequality African economies, there is a stronger relationship between economic growth and inequality.

Prof. Bhorat noted that the relationship between growth and poverty in Africa, excluding North Africa, in the last twenty years has been -0.7, which means that a 1% growth in consumption is estimated to reduce poverty by 0.7% compared to a global figure of 2 percent drop in poverty for every 1 percent growth.

He said a defining feature of the African labour market is that an exceptionally high proportion - approximately 74 percent - of the Sub-Saharan Africa's labour force are self-employed, as opposed to being engaged in wage employment.

Mr. Bhorat explained that income from self-employment, which is directly dependent on the profits of the enterprise, is historically more variable than wage employment. Also noteworthy is that the majority of the labour force (56%) are engaged in agricultural activities, while 77 percent of the self-employed workers find themselves in the agricultural sector, having a compounding effect on the volatility of household incomes.

The professor stated, "Unemployment isn't the biggest challenge in Sub-Saharan Africa. The region's biggest challenge is the working poor."

In recommending a pathway out of the paradox of robust growth not being commensurate with poverty reduction, Prof. Bhorat said "Natural resource dependence and the associated impacts such as governance failures, capital intensity and the Dutch Disease effects remain critical to resolve for more inclusive growth," adding that "without domestic manufacturing, economic growth is not sustainable."

In his welcome remarks at the Keynote Lecture, ECA's Deputy Executive Secretary, Abdalla Hamdok, said "this lecture is very timely" because it comes at a time ECA is celebrating 60 years of "excellent contribution to the development of this continent." Mr. Hamdock cited, among other achievements, ECA's role in what became known as Africa's Alternative Framework to the Structural Adjustment Programme.

"We would like to embark on the kind of growth that can provide sustainable employment opportunities for our youth," said Mr. Hamdock.

The event was organized by ECA's Social Development Policy Division and chaired by the Commission's Special Advisor on the SDGs,Aida Opoku-Mensah.

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