Africa Meets Poverty Reduction Targets

During my stay in Lagos, I met a woman who asked me what my impressions were. I told her I found it hard to look at the poverty there, which surprised her, “Where do you see poverty?” she asked, pointing out the many signs of development there. As a matter of fact, poverty and wealth coexist in Nigeria and in so many other countries. So how does Africa fair on its goal of reducing poverty?

“Africa is on time” is the title of a report by staff of the Federal Reserve Bank of New York.* Its main message is that Africa is on time for reducing poverty. Some of its main findings are:

1. 

   Poverty in Africa is falling fast. Driven by economic growth, the % of African people living on less than $1/day fell from 34% in 1990 to 21% in 2011,  and this is projected to drop to 16.7% in 2015 – on time (except for DRC) to meet the Millennium Development Goal of halving this % between 1990 and 2015. Analyses using other indicators also point to a fall in poverty.

2. Poverty reduction in Africa is taking place to all countries across the board regardless of their geography or other differences such as whether they are landlocked or coastal, mineral-rich or mineral-poor, have favorable or unfavorable for agriculture, and regardless of their colonial history. (See my related posts on growth in Kenya and Nigeria.)
3. The study also presents evidence pointing to a reduction in income inequality: the Gini index declined from .665 in 1990 to .63 in 2011. This index measures the extent to which the distribution of income within an economy deviates from a perfectly equal distribution (0 = perfect equality; 1 = perfect inequality).

Two caveats with regard to the last point: (1) the decline in inequality doesn’t look proportional to the poverty reduction in Africa; and (2) the analysis is not done at the country (or groups of countries) level – if it had been it would have been quite interesting and illuminating.

 Poverty reduction in Africa is to be celebrated – more so if it goes hand-in-hand with social development . But let’s not forget that millions of people still live in conditions of extreme poverty. Let’s not fall into the “globalization of indifference“: poverty figures mask the harsh reality of the lives of millions of our equals – each one of them, a unique human being with a unique life.

Business leaders have an important role to play here. A new report by This is Africa reminds us that chief among economic opportunities is having a job. Many African business leaders have job creation as a top priority. Can we learn anything from them?

 

* The study was published in 2014, it’s based on data from 1990-2011, and from countries for which enough data are available; some estimations are made for countries with insufficient data. It the authors’ views, not those of the bank.