IS Africa really rising or only its elites? A new World Bank report could go some way in settling the debate — while putting to bed some myths that have become common dinner fare about the continent’s growth.
Poverty in a Rising Africa is the first of two key reports that the development lender says are meant to better inform the conversation about the progress on poverty reduction, and how to better tackle it.
The focus of the first report is on the huge challenges that the lack of good data on poverty poses, leading to the lack of wide consensus on Africa’s growth fortunes.
Take Nigeria for instance. Its population varies depending on who you talk to and by as much as 30 million, a statistical curiosity that has a significant impact on measurement of poverty trends across Africa, given it is the continent’s most populous state.
In 2004 and 2010, the West African nation carried out two living standards surveys, and w both showed no change in poverty.
A third survey in 2010 however showed a 26% poverty rate—half the estimate of the other two, and came as the country rebased its economy, overnight making it the continent’s biggest economy.
At least Nigeria at least has survey: On average only 3.8 consumption surveys per country were conducted in Africa between 1990 and 2014, or one every 6.1 years, compared to the average for the rest of the world of one every 2.8 years. While this is changing, most of the new household surveys do not capture crucial consumption data.
Such statistics are crucial data for estimating poverty trends, but even when these are available, they are largely incomparable or of poor quality.
“Consequently, countries that appear to be data rich (or have multiple surveys) can still be unable to track poverty over time (examples include Guinea and Mali, with four surveys each that are not comparable),” the researchers say.
The bank’s new study makes for unexpected trends, some of which we capture here:
1: When most of the data shortcomings are addressed by the researchers, including by using only good quality surveys and roping in non-consumption data other than GDP, the most conservative result shows the share of Africans living in extreme poverty (measured at less than $1.90 a day in 2011 international prices) fell from 56% in 1990 to 43% in 2012. If only the good quality surveys are factored in, that share fell even further to 37%. In a measure of how Nigeria’s population weight matters, half of this additional decline was attributed to the West African country—without it the share of the poor would have been at 40%. In other words, Africa’s poverty has been falling much faster than captured by existing data.
2: The continent is by no means out of the woods. Because of Africa’s booming population (see article), despite the significant fall in poverty rates, the number of those living in extreme poverty increased from 284 million in 1990 to 388 million in 2012. “These are staggering numbers. Further, it is projected that the world’s extreme poor will be increasingly concentrated in Africa,” says Makhtar Diop, the bank’s vice president for Africa, noting that the fight against poverty needs to be better understood.
3: Despite this, when non-monetary aspects of well-being such as health and education, political and mobility freedoms, social acceptance and freedom from violence and to decide are weighed up, overall the continent saw substantial progress. Between 1995 and 2012 adult literacy rates rose four percentage points, gross school enrollment rates increased dramatically, and the gender gap became narrower. Africans in that period saw life expectancy grow by six years while malnutrition and deaths from political violence fell dramatically—the latter by 75%—in addition to wide improvements in other areas. It has been a good time for the continent.
4: But progress overall still fell, because of poor outcomes. More children were enrolled in school, but currently more than two out of five adults are still unable to read or write. When the ability of sixth graders in Malawi and Zambia was measured, 75% could not read for meaning. Nearly two in every five children are still malnourished, one in eight women are underweight, while paradoxically, obesity is now a health concern. The message is that while robust numbers are desirable, quality is still as important, if not more so.
5: You would think politicians would like good data as it would enhance their electability. But many researchers have shown that the availability and quality of data generally reflects the preference of political elites. In a system where goods and services are traded for political support, there really is no real need for it—the support of a few power brokers suffices. Again, why maintain high quality data—an expensive undertaking—when you can instead channel resources to a patronage network? Additionally, good statistics improve accountability. In a nutshell, the existence of good data is a quick way to tell the quality of governance.
6: The World Bank says that while its report data does not show a systematic increase in inequality, it however does not take into account extreme wealth holders, on who statistics are difficult to collect. Africa had 19 billionaires last year according to the latest count by Forbes Magazine, while a raft of reports on wealth have seen an increase in high and ultra-high new worth individuals. Interestingly, the share of extreme wealth from the “traditional” areas such as extractives, which are prone to political capture, has been increasing: in the three years to 2014 four out of 20 African billionaires derived their wealth partially or mainly from telecommunications.
7: Inequality is not a black-and-white phenomenon. It can for example just be be self-reinforcing—the wealthiest Africans tend to live in countries with higher per-capita incomes. Also, not all aspects of inequality are bad—when it rewards effort and encourages risk taking it can promote growth. But too much of it and the socio-economic costs outweigh any benefits.
And the problem with it in Africa is that circumstances of birth can contrive to keep opportunities for upward mobility narrower than other regions—what is called inequality of opportunity. Of the 10 most unequal countries in the world, seven are in Africa, the majority in southern Africa. But because five of these countries have populations of less than five million people, when this is factored for then the continent has inequality levels comparable to other developing countries. But overall, inequality in Africa has widened—its Gini index rose from 0.52 in 1993 to 0.56 in 2008 (0 is perfect equality, 1 is perfect inequality).
8: Better educated women (secondary schooling and above) and children in households led by such women have been found to decisively score better across outcomes on areas such as health, violence and freedom of choice, a reason why so much development focus has been on the continent’s women, who suffer the brunt of disadvantage despite their unbridled potential. Yet the continent, together with the Middle East and parts of Asia, has a higher tolerance of domestic violence and less empowered decision making among its younger women, as opposed to older women in the world, “suggesting that a generational shift in mindset is still to come”, the report says.
9: Refugees increasingly have a bad name in recent months, and while the continent’s 3.7 million refugees in 2013 were a steep decline from 6.7 million in 1994, they were still an increase on the 2.8 million registered in 2008, and this is not counting the millions more internally displaced. Yet refugee status, despite the suffering, is not always associated with weak social and economic outcomes—local economies often benefit from their influx—through increased demand for local goods and services, better interconnectivity such as new roads and transport services, and entrepreneurship by the refugees themselves.
10: Oil billions in Nigeria, Angola, Gabon, Equatorial Guinea. There are shiny minerals in South Africa, Zimbabwe, DR Congo. Yet, the report says there is a “worrisome penalty” to residing in a resource rich country—people tend to be less literate, have shorter life expectancy, higher rates of malnutrition, suffer from more domestic violence and have less voice and accountability. And this is when conflict is taken out of the equation. In other words, it is about policy, not resources.
11: What is the effect of landlockedness on an African country? The common wisdom is that because countries without a coastline have higher transport costs that hinder trade and hurt their competitiveness (supported by another World Bank report no less), accounting for their lower economic growth. But this study says that when differences in income status, resource richness and conflict are controlled for, surprisingly landlocked countries did not reduce poverty at a lower rate than coastal economies, but disappointingly does not offer a reason why.