The bad news
But while African countries have some of the fastest growth in the world, the continent is falling behind other regions when it comes to poverty. “On current trends, Africa will account for 80% of the world’s extreme poor by 2030.
Moreover, many Africans live precariously above the international poverty threshold. Around 250m people live on $1.25 to $2.50 – and, for most, just one episode of sickness or one drought could send them back to extreme poverty.”
But, just as there are wide variations in the drivers of economic growth in different African countries, there are marked variations in the poverty snapshots. “Around half of Africa’s poor live in just four countries – the Democratic Republic of the Congo, Ethiopia, Nigeria and Tanzania – so the continent’s overall progress in reducing poverty will depend on progress in these countries.”
Countries where growth has succeeded in reducing poverty include Ethiopia, which halved the national poverty rate between 1995 and 2011, from 60% to 30%. “That reduction was achieved through broad-based economic growth, with agriculture making a major contribution, increased and more equitable public spending, and the development of labour-intensive manufacturing.”
Another example is Rwanda. In the first half of the decade after 2000, the country’s strong growth – per capita incomes rose by 2% annually – was not matched by poverty reduction, according to the report.
However, in the subsequent five years (2006–2011), household consumption in Rwanda grew at 3% per annum, but the incidence of poverty fell by 12%. Growth in household consumption accounted for 8.5% of the reduction, with a decrease in inequality adding another 3.5%.
“The success of both Ethiopia and Rwanda can be traced in no small measure to the role of agriculture,” the report concludes. “Poverty reduction and redistribution in Rwanda were fuelled by a spectacular increase in yields of cereals (by 73%) and roots and tubers (52% ) from 2006–2011.”
While the factors that account for both growth and poverty varies considerably across the continent, “most of the poor live in rural areas and work as agricultural producers. And agriculture is a powerful engine for reducing poverty and inequality”.
Economies that have sustained high growth over the long term have typically gone through a process of economic diversification, the spread of new technologies, rising productivity in agriculture, the expansion of the manufacturing sector, and the development of a skilled workforce, the report points out.
But, “these have not been characteristics of growth in Africa, even in sectors that are attracting foreign investment. Put differently, there has been a lot of growth but little structural transformation”.
The APP’s central theme is that Africa needs not just growth but an economic transformation, with agriculture playing a central role. A good deal of the rest of the report is dedicated to how Africa can base its industrialisation and other transformative strategies on agriculture. The wealth of its oceans, its natural resources including forestry, its population, its working-age youth and the dynamism of its people are all other factors that can enable Africa to cross over the tipping point and enter its next phase of sustained growth, which will include improved wellbeing of its majority – the ultimate aim of all economic policy.