Researchers call for improved governance and the establishment of strong, credible institutions

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On Tuesday, November 3, researchers gathered in Kinshasa at a fringe event held during the 10th African Economic Conference. The session, chaired by Professor Bernadette Kamgnia, Acting Director of the African Development Institute at the African Development Bank (AfDB), featured three presentations on the relationship between poverty, inequality and growth in Africa, and on potential responses to these problems across the continent.

The first paper, entitled “Why did Africa fail to reduce poverty sufficiently during the MDG period?”, was presented by El Hadji Fall, Janvier Alofa and Marc Akplogan.

The authors point to the fact that Africa has achieved growth of 5% over the last 15 years, thereby outstripping the performance of other regions. Citing the 2014 MDG report, they indicate that the poverty rate fell from 56.5% in 1990 to 48.5% in 2010, with inequality decreasing from 45.8% to 43.9% over the same period. While Africa accounted for 15% of the world’s poor population in 1990, this figure had risen to 35% in 2010.

The authors argue that, in order to reduce poverty by a sufficient level, a high economic growth rate must be sustained over the long term, through genuine, structural transformation of the continent’s economies. The paper also stressed the need to implement more targeted income distribution policies by increasing spending on social services (education, health, etc.), especially in profit-based economies (oil, mining, etc.). Moreover, the authors call for additional measures to make Africa’s economies more attractive to business and investment (improving human capital, creating a more conducive business climate and strengthening institutions), in particular by improving productivity in agriculture and other productive sectors, especially manufacturing.

“Further efforts are needed to combat corruption, improve governance and establish strong, credible institutions. This, in turn, will ensure that resources are managed in a transparent manner,” the report authors argued.

The study also pointed to the influence that economic structure can have on poverty reduction, with significant variations between countries and regions. For example, growth has a significant impact on poverty reduction in countries with a primarily agricultural economy, such as Tanzania, Ethiopia, Tunisia, Morocco, Mali, Guinea, Malawi, Rwanda and Cameroon. Similarly, in some countries with a predominantly industrial economy, such as Congo, Nigeria and South Africa, growth acts as a key driver of poverty reduction, particularly where inequality is low.

The second paper, entitled “An analysis of household expenditure in Ghana”, was presented by Jacob Novignon, a researcher from the Kwame Nkrumah University of Science and Technology in Kumasi, Ghana. The paper looks at inequalities in household income in rural and urban areas, focusing in particular on the impact of subsistence, education and health spending.

The author argued that, while Ghana is often cited as a high-growth economy, inequality was high across all regions of the country in 2013, unlike in 2006. In his view, the government needs to do more to reduce inequality if it wishes to avoid widespread poverty. Novignon also covered questions relating to transfers, agricultural income and the high rate of self-employment, as well as the impacts of these factors on inequality and poverty. “Subsistence accounts for 48% of total household expenditure, far exceeding spending on education and health.”

The third paper, entitled “Economic growth: employment and poverty in Cameroon”, was presented by Talla Fokam Dieu Ne Dort, a researcher from the Faculty of Economics and Management, University of Dschang, Cameroon.

The findings of the paper show that employment in Cameroon is largely based on self-reliance: a factor that is not favourable to poverty reduction. The author argues that poverty reduction policies must focus on employment quality. The study reveals that, while economic growth has a significant positive impact on poverty in Cameroon, employment intensity has absolutely no influence whatsoever. “The key sectors of Cameroon’s economy are dominated by informal labour.”

The author called on the government to focus its policy-making on inclusive growth by investing in human capital as well as in productive sectors.

The session was attended by leading researchers and practitioners, many of whom made an important contribution to the debates and discussions. These included Frannie Leautier, CEO and co-founder of Mkoba Private Equity; Domingos Mazivila from the United Nations Development Programme; Gilbert Galibaka from the AfDB; and Abbi Kedir from the UN Economic Commission for Africa.