African growth not inclusive: World Bank

Growth has been strong in Africa but the World Bank is worried it has not done enough to reduce levels of inequality

  • By Thierry Ogier
  • 09 Oct 2013
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Economic growth in Africa has not been inclusive enough, the World Bank has warned in an unprecedented assessment of the limited progress brought by the overall GDP increase.

Growth, which has been encouraging in most parts of Africa and even spectacular in a few cases, is expected to be close to 5% on average this year, and even more in 2014 and 2015.

But Francisco Ferreira, acting chief economist for the Africa region, said GDP per capita growth over the past 10 years – 1.8% on average – had been “below the developing countries average”.

“Africa grew faster in the last decade than most other regions, but the impact on poverty is much less than we would have liked. Africa’s growth has not been as powerful in reducing poverty as it could have been because of the high levels of inequality. Growth with equity is possible, but it requires a decline in inequality in both outcomes and opportunities.”

Nearly half of the African population was living below the poverty line in 2010, which was an improvement from the 58% that were registered by the World Bank in 1999, but the pace of reduction is “unacceptably low” and inequality “unacceptably high”, he told Emerging Markets.

“This is precisely why we are urging the World Bank to not just monitor inequality, but actually start tackling it head on,” said Nicolas Mombrial, head of Oxfam’s Washington office. “We strongly believe that we will not be able to end poverty without addressing inequality, and we won’t be able to do that without specific and targeted efforts to reduce the gap with the richest,”

Ferreira said the World Bank was now much more willing to talk about inequality reduction than in the past. “There is a growing recognition that we must tackle inequality,” he said, citing income distribution programmes that are currently underway in various countries.

“I would not describe it as a mea culpa; just as I don’t think the bank can claim credit for huge successes in, say China or Botswana, I don’t think the bank can be held accountable for the growth elasticity of poverty in Africa either.”

Progress towards reducing inequality in Africa has been slower than elsewhere. “On average in the developing world, one percentage point of GDP growth reduces the incidence of poverty by 2%. In sub-Saharan Africa that number is 0.7%. That is too low,” he said.

  • By Thierry Ogier
  • 09 Oct 2013

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