Economists discuss new guidelines to measure household poverty

04/11/2015
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Economists at the 10th African Economic Conference (AEC) are laying ground for new guidelines to measure household poverty based on new reasoning poverty in urban areas differ from rural areas.

The researchers believe the measurement of poverty based on the average national income does not accurately reveal the distribution of wealth to provide a proper basis for dealing with poverty.

The research findings that could lead to ground-breaking policy changes were presented during the discussions on a session on the “Determinants/Drivers of Poverty and Inequality in Africa” on Day 2 of the three-day conference in Kinshasa. 

In Cameroon, Hans Tino Ayemena Mpenya discovered that measuring poverty using money and income distribution was misleading because whenever poverty was reported to drop in urban areas, they increased in rural areas in Cameroon.

“The measurement of well-being using monetary inequality is misleading because some forms of poverty is created and worsened by the lack of basic health services,” Mpenya said.

Poverty caused by lack of money in cities was much higher, but poverty and inequality not associated with money to access key services was found to be higher in rural areas in Cameroon. The study also found the households headed by men were poorer, compared to women-headed households.

“This gap between rural areas and urban centres explain the monetary inequality.

Therefore, countries need initiatives to promote investments in rural areas. These initiatives should be channeled through local government administration units which are best suited to implement them.

In another research paper on Food and Non-Food Expenditure across different groups in South Eastern Nigeria, Obisesan Omobolaji of the Ibadan University, Department of Economics, defined urban poverty as lack of stable jobs and inability to sustain stable living conditions due to lack of education.

In rural areas, households lack access to water, electricity and access to communication like mobile phones. Omobolaji said the poor spent more money on food not produced locally. The local farmers also produced foodstuffs which they did not consume. “They eat what they do not produce while the non-poor spend more on food items not within their reach, which increases household expenditure.” She said high expenditure on key services such as electricity, transport and electronic goods added to the high poverty levels.

Experts at the Conference agreed the studies have shown a high potential for the development of policies to overcome unequal income distribution and new measurements of poverty in various areas.

The definition of poverty varies and relates to the kind of lifestyles being defined, the experts said. 

A robust discussion erupted at the 10th African Economic Conference following the presentation of a study paper measuring the contribution of education to Africa’s economic well-being.

Kolawole Ogundari, Development Economist at University of Delaware, Newark, presented a paper on Human Capital Contribution to Economic Growth in Sub-Saharan Africa, showing that investing in education has had little impact on the quality of economic growth and development in Africa.

In the paper, Ogundari argued the increased public expenditure on improving healthcare has shown to have a greater impact on economic growth. This is because healthcare led to long life expectancy.

However, Ogundari said government spending on education cannot be replaced with increased healthcare spending because the two sectors complement each other as primary sources of growth.