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September 26, 2018

Poverty defies growth in GDP growth

A view of Nairobi's Mathare slums. /Monicah Mwangi
A view of Nairobi's Mathare slums. /Monicah Mwangi

Africa’s progress is undeniable. Mortality among children under five has fallen from 163 per 1,000 live births in 1990 to about 49 in 2017. Although it remains high, stunting is in decline. African countries have recorded some of the highest increases in primary school enrolment.

Economic growth is impressive. Ghana, Ethiopia, Cote d’Ivoire, Senegal and Djibouti are among the top 10 fastest growing economies in the world. Rwanda and Tanzania are in the top 20. Moreover, about two-thirds of Africa’s economies are growing faster than the global economy.

Pundits have written tomes about Africa’s unprecedented surge. The Brookings Institution defends the Africa Rising saga. In the ‘African Economic Outlook 2018’, the African Development Bank declares: “Economic fundamentals and resilience improved in a number of African countries. In some, domestic resource mobilisation now exceeds that of some Asian and Latin American peers.”

The World Poverty Clock report is out. Africa is numero uno. Seven of the poorest nations are in Africa. Over 430 million Africans live in extreme poverty.

The current escape rate from poverty is negative 5.6 people per minute, against a target rate of 65. Hence, more Africans are falling into extreme poverty than are escaping. Contrast this with Asia, which has an escape rate of about 78 people per minute.

Kenya and its neighbours Tanzania, Rwanda and Uganda will not meet the poverty reduction SDG target by 2030. Poverty rates are rising in Burundi, where 74 per cent of the population live in extreme poverty.

In Kenya, 30 per cent ( 14.7 million) of an estimated 49.7 million people live in extreme poverty. The escape rate from poverty is a paltry, unremarkable 0.5 people per minute. About 20 million Tanzanians live in extreme poverty, while 14 million Ugandans live in extreme poverty.

The African Economic Outlook 2018 praises Africa’s structural reforms. But the question is why is poverty growing, rather than declining on the African continent?

Why is GPD growth not translating into poverty reduction and an overall increase in prosperity? Why is Asia projected to have two-thirds of the world’s middle class and Africa the largest proportion of the world’s poor?

Africa’s growth story, viewed alongside its enduring poverty, is a powerful indictment of the notion that GDP growth trickles down. There is no such a thing as trickle-down.

While Africa has made considerable progress in building physical infrastructure, including roads, railways, and expansion of power generation, very little has been achieved with regard to investments in people.

Public healthcare is in shambles. The majority of rural and urban populations are without water and sanitation. Schools are dilapidated and grossly understaffed. Agriculture is in decline. Malnutrition and stunting remain stubbornly high.

In his second inaugural address on January 20, 1937, Franklin D. Roosevelt spoke these immortal words: “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” The common denominator of our progress is our people, not headline GDP growth.

Alex O Awiti is the director of the East Africa Institute at Aga Khan University

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