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In this week’s blog Jesse Muraya (new Guest Blogger for Gen Dev) writes about the ‘economic growth imperative’ for Africa.  As always post your comments & share widely on all social media you can!

According to the Economic Commission for Africa (2012), the 21st century has been characterized as the “decade of Africa’s economic and political renewal.” this evident from the up-beat tone amongst the vast majority of Africans worldwide. Numbers do not lie: the decade has seen growth in Africa average more than 5 percent a year and been fairly constant throughout.  As the economist magazine has also observed for the last 10 years, “six of the world’s ten fastest-growing economies were in sub-Saharan Africa”.  Despite the various economic crisis’ that have ravaged the western world during the past few years, Africa has been resilient in growth and those merely creating a dent in Africa’s growth curve.

Being a Kenyan who has lived abroad for a few years, I have come back to Kenya to see several changes. Infrastructure has changed drastically, that is, heavy road construction, electrification projects, expanding cities, etc. It also not a rare occurrence to hear the occasional sentiment from Kenyans about their excitement for the growth experienced within their beautiful capital city, Nairobi.

The positive attitude and high growth rate in Africa however, has not trickled down to help sole the poverty problem. The boom seems to only benefit a select few in the population and not a sum-total of the nation.  Those with wealth are better able to leverage on their education and position in society to increase their income unlike the poor majority who lack education and legal structures to enable them to rise above their present state. The outcome here being few people living in gated compounds that are highly guarded with those surrounding living in poverty. These high levels of inequality will only lead to crime within the society, which is. It is therefore no shock that this year Kenya has seen a rise in violent related crimes within the last 2 years, despite its growth rate averaging over 4.1%. This happens as the plight of those outside the magic circle becomes intolerable.

Africa’s impressive economic growth has not yielded substantial reductions in poverty rates. The proportion of people in Central, Eastern, Southern and Western Africa living on less than $1.25 a day declined in 1990-2005, but only from 58% to 51%. This low level of falling poverty rate is referred to as the growth- poverty elasticity. Recent global estimates show that sub-Saharan Africa has the lowest growth-poverty elasticity in the world. According to the ECA (2012), a 1 percent increase in growth reduces poverty by only 1.6%, however in North Africa it is 3.2% and Western Asia has the highest elasticity. High income inequalities in Africa have greatly contributed to this low level of growth-poverty elasticity in sub-Saharan Africa.

Such inequality is also attributed to the reduced levels of access and use of social services by those in sub-Saharan Africa. Economically sustainable social protection programmes adopted by governments can reduce income inequality while promoting an all inclusive growth. According to the ECA (2012), Africa only spends 8.7% of GDP on social services; this is the lowest of all the world’s regions. Some studies have shown that countries with high levels of investment in social services portray low levels of poverty and more equal societies.

Achieving the MDG’s by the deadlines specified would require an integrated approach that integrates interrelatedness of social and human development.  Africa’s main sources of growth have changed very little over the years: agriculture and natural resources remain the main drivers for growth. Therefore in order to achieve its MDG goals there need to be a diversification of the growth sources to manufacturing, services sector, etc. This coupled with support from the government to enhance social protection and build the legal and physical structures to encourage all inclusive growth in Africa.
Given that the majority of Africans is the youth, they are often the most vulnerable to the effects of high income inequality. As a result you will find huge levels of disgruntled young people with no jobs. This dissatisfaction amongst the youth can only lead to crime and other evils within society. Given this grim outlook, the youth have the largest say within the African society and therefore can have the greatest impact in the country. One evident case is that of the Arab Spring; the majority of those on the streets seem to be people aged below 40 yrs old and were able to topple a whole government. I am not therefore telling people to take to the streets and start a revolution, all I am saying is that with peaceful means of engaging with key policy makers and the government, they can have the government to encompass methods to reduce income inequality and therefore have an all inclusive economic growth rate in Africa.

See references:
http://www.economist.com/blogs/dailychart/2011/01/daily_chart

http://www.uneca.org