By: Masahudu Ankiilu Kunateh
Email: [email protected]
After more than a decade of strong economic growth, the World Bank says that Africa has been able to cut poverty on the continent, but not by enough.
While the broad picture emerging from the data is that Africa’s economies including Ghana have been expanding robustly and that poverty is coming down, the aggregate hides a great deal of diversity in performance, even among Africa’s faster growers, says Shanta Devarajan, the World Bank’s Chief Economist for Africa, and lead author of the World Bank’s latest Africa’s Pulse report.
Devarajan added that during the second half of the 2000s, Ethiopia and Rwanda saw their economies expand at 8-10 percent (or between 5 and 8 percent per capita), which resulted in a 1.3 to 1.7 percentage point yearly fall in their national poverty rates. In contrast, poverty reduction in some other countries has lagged far behind growth.
The Africa’s Pulse suggests that a number of emerging trends on the continent could help to transform its current state of development over the coming years.
These include the promise of large revenues from mineral exploitation, rising incomes created by a dramatic expansion of agricultural productivity, the large-scale migration of people from the countryside into Africa’s towns and cities, and a demographic dividend potentially created by Africa’s fast-growing population of young people.
On consumer spending, the twice-yearly analysis of the issues shaping Africa’s economic prospects report noted that consumer spending which accounts for more than 60 per cent of Africa’s Gross Domestic Product (GDP), remained strong in 2012.
This trend, the report explained was driven by declining inflation, which fell from 9.5 percent in January 2012 to 7.6 percent in December 2012.
It added that improved access to credit, for instance in Angola, Ghana, Mozambique, South Africa, and Zambia; lower interest rates–for every interest rate hike there were three cuts; and a rebound in agricultural incomes, thanks to more favorable weather conditions in countries such as Guinea, Mauritania and Niger, which all experienced better rains compared with the 2010/2011 crop year and the steady remittance inflows, which are estimated at $31 billion in 2012 and 2011.
Increased investment flows are supporting the region’s growth performance. In 2012, for instance, net private capital flows to the region increased by 3.3 percent to a record $54.5 billion; and foreign direct investment inflows to the region increased by 5.5 percent in 2012 to $37.7 billion.
Africa’s Pulse notes that exports are also driving the continent’s growth and that the traditional destination of these goods over the last decade is changing as well. Since 2000, the overall growth of Sub-Saharan exports to emerging markets, including those of China, Brazil and India, and to countries in the region has surpassed that to developed markets. Total exports to Brazil, India and China were larger than to the EU market in 2011.