Africa’s progress on poverty pushed back a decade, says Global Monitoring Report 2012

Poverty reduction in Africa has not often been a cause for celebration. Until recently, this position could have been considered a little unfair.  Despite being off track to meet the UN Millennium Development Goals (MDGs), Africa has been moving in the right direction. In sub-Saharan Africa, the proportion of people living below US$1.25 a day fell from 47% to 40% between 1990 and 2008. Over this period the number living above the poverty line in the region doubled. Despite sub-Saharan Africa having the highest population growth rates in the world, absolute numbers of people below US$1.25 a day actually fell between 2005 and 2008 by almost 10 million, to 390 million. Until last year, this progress was expected to accelerate, with poverty rates projected to fall to 35% by 2015, which would lift a further 50 million out of poverty in the process.

However, updated World Bank projections published recently in the Global Monitoring Report 2012 suggest that reaching such poverty rates in sub-Saharan Africa will be delayed by another ten years. High food prices and price volatility, which led to two price spikes in 2007/8 and 2010/11, are estimated to have pushed an additional 130 million people into poverty globally. Even more worrying are the long-term consequences for the millions who have fallen into, or have been held back from rising out of poverty.

Recovery will not be quick. By the time sub-Saharan Africa’s poverty rates recover to levels previously expected by the current 2015 MDG deadline (but now forecast for 2025) numbers of those in poverty would have increased to almost 800 million, once population growth is factored in. Contrasting that figure with the fall that was expected, prior to the food crises, by 2015 – down to less than 350 million – presents an alarming picture.

Growth has not protected the poor (although perhaps without it the situation may have been even worse). While gross domestic product (GDP) growth rates in Africa almost halved between 2009 and 2011, the situation was not all bleak. Thanks to sound macroeconomic policies GDP growth rates quickly bounced back to an estimated 5.6% in 2012 (4.5% in 2010), and are expected to remain strong. According to the new projections outlined above however, the poor will not bounce back as quickly. Growth has not sufficiently protected them from price shocks, nor will it be sufficient to help people escape and remain out of poverty within an acceptable time frame.

With some US$500 billion raised annually in domestic revenues, US$40 billion in foreign direct investment (FDI) and similar volumes of remittances received each year, Africa has the resources to tackle poverty head on. Official development assistance (ODA) to the continent, reaching approximately US$50 billion in 2011 (once debt relief is excluded), also has a key role to play through  application of its comparative advantage in relation to other sources, and effectively targeting investments to reduce poverty and vulnerability to shocks. If making advances on poverty reduction is left to growth alone, it won’t be long before the next crisis pushes progress back by another decade.