Towards Poverty Alleviation and Greater Inclusiveness in Africa’s Middle Income Countries?

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Audrey Verdier-Chouchane

Poverty reduction strategies in Africa can be improved by understanding the sources of economic growth and how such growth translates into poverty reduction.

Using different household survey data at 5 to 10-year intervals, the AfDB’s Research Department conducted a pro-poor growth analysis in four of Africa’s middle-income countries (MICs): Mauritius, Morocco, South Africa and Tunisia.

While all four countries are shown to have moved from agro-based primary sector economies, with manufacturing, services, exports and tourism becoming increasingly important, significant differences emerge in terms of the poverty-reducing effects of the observed growth.

The concentration of South Africa’s growth towards higher earners almost exclusively in the urban areas for example contrasts sharply with Tunisia, where rural and unskilled workers primarily benefit from growth. In Tunisia, using a poverty line of USD 3, rural poverty headcount has fallen from 36% in 1990 to 28% in 2000. Similarly, the poverty headcount of analphabets has decreased from 31.5% to 24.6%.

A critical insight that emerges from the study is the crucial role of labor markets in transforming growth into poverty alleviation, and in spreading its impact in an inclusive manner. The liberalization of labor markets makes it easier for young and new graduates to acquire experience and entry into employment. That would not only decrease unemployment, but also boost growth while making it more inclusive.

The finding also discerns the development disparities across rural and urban areas more obvious. Previously, while poverty in all countries was predominantly a rural phenomenon, an important trend towards urbanization of poverty is now emerging. In less than ten years, the proportion of Morocco's poor living in urban areas has moved from a quarter to almost two-fifths.

This calls for policies that take cognizance of these trends in Africa's MICs, and calls for policies that alleviate the effect of rural/urban migration as force behind the rising trends of urban poverty. In particular, better social integration of rural migrants into urban settings, coupled with improvements in labor markets and training and educational services for new migrants remain key.

Given that poverty headcount is almost always higher among uneducated segments of the population (8% in Mauritius in 2006 against 3.8% among households whose head has some schooling), growth strategies should prioritize education and training. In doing so, women should be given adequate attention, as the incidence of poverty is generally greatest in female-headed households. In South Africa, 52.9% of female-headed households were below the poverty line of USD 3 in 2005 against 32.5% of male-headed households.