Columns 31.12.2013 08:00 am

Africa’s poverty amid plenty

Poverty and inequality still blight much of the developing world, especially Africa, and breed other social ills, including crime and social instability.

But considerable progress has been made in addressing both problems, and with more investment, they can be eradicated in our lifetime. The United Nations Millennium Development Goals, established in 2000, aim at halving global poverty by 2015, a target achieved in many countries five years ahead of schedule.

Much of the progress made thus far can be attributed to sound macroeconomic policy, stronger social-welfare programmes, and above-average economic growth. China has made the most progress in absolute terms, having lifted some 680 million people out of poverty from 1981 to 2010, with the share of its population living in extreme poverty (less than $1.25 per day) plummeting from around 84% to 10% over that period.

In Africa, too, strong economic growth, macroeconomic reform, fiscal prudence, and improved governance have helped to reduce poverty. Governments have become more democratic, and economies have become more open. Longstanding violent conflicts – in Mozambique, Angola, Rwanda, and elsewhere – have ended. Once a sorry tale of corruption and hunger, Africa’s development narrative has become overwhelmingly positive.

Foreign investors now view the continent as their next frontier. The US investment bank Goldman Sachs, for example, points out that Africa’s potential includes much more than natural resources. But, amid Africa’s new growth and dynamism, too many of its people – what the economist Paul Collier calls the “Bottom Billion” – continue to suffer from poverty, unemployment, illiteracy, and curable diseases.

A high degree of inequality within countries correlates with greater poverty, unemployment, and crime. Excluding Africa’s neediest from essential services erodes social cohesion and undermines what are still fragile democratic systems. So efforts to boost economic growth must be accompanied by concerted action to reduce inequality. There are no quick fixes, but action can, and should, be taken.

First, civil-society organisations should form an essential part of any anti-poverty programme. Second, policymakers need to focus on inclusive growth, job creation, and social protection as buffers against poverty, inequality, and economic volatility.

Third, public-private partnerships can help to ease bottlenecks that constrain trade. Governments can and should work with multinational companies to improve business conditions, especially in such areas as agriculture, energy, and transport, which have the greatest knock-on effects for other economic sectors.

Finally, if poverty and extreme inequality are to be eradicated, Africans must not allow themselves to become entirely dependent on rich-world investors and expertise in the quest to modernise their economies.

Local firms, with government help, must be ready to innovate, develop products for their domestic consumers, and find homegrown ways to raise living standards.

Mzukisi Qobo is deputy director of the Centre for the Study of Governance Innovation at the University of Pretoria and a research associate at the SA Institute of International Affairs.

 

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