Africa's Economies Grow But Poverty Increases

Interesting how a developing country can have increased income for it's inhabitants but still suffer increasing poverty. But like other countries in the world, developing or developed, some people that are more aggressive take control and they decide who will or won't share in most of the increased revenue.

Also, from the beginning of time it self, and the Bible has stated, 'the poor will always be with us' no matter how we try to solve the problem of poverty. A good example would be the United States that has spent $trillions of dollars to uplift the disadvantaged to prosperity, our welfare system, The War On Poverty, only to see no amount of money can change the nature of the beast especially when system has failed but politicians that are in control refuse to change the system.

Are Africa's Economies Growing While Poverty Increases?
Source: Laurence Chandy, "Why is the Number of Poor People in Africa Increasing when Africa's Economies Are Growing?" Brookings, May 4, 2015.

May 6, 2015

This year marks the 20th year since sub-Saharan Africa started on a path of faster economic growth. During that period, growth has averaged 5.2 percent per year. Meanwhile, the number of people on the continent reportedly living under $1.25 a day has continued to creep upwards from 358 million in 1996 to 415 million in 2011—the most recent year for which official estimates exist.

What can explain these divergent trends? Five factors can account for sub-Saharan Africa's disappointing poverty numbers:

• The first is the region's rapid population growth of 2.6 percent a year. While African economies are generating more income, that income has to be shared among an ever-increasing number of people.
• The second factor is the depth of Africa's poverty compared to poverty elsewhere. In 2011, the average person living in extreme poverty in Africa lived on 74 cents a day, whereas for the rest of the developing world, it was 98 cents.
• The third factor is that even though inequality is not rising in most African countries, inequality is already at unusually high levels. Where initial inequality is high, it is to be expected that economic growth deliver less poverty reduction, since the absolute increases in income associated with rising average incomes will be that much smaller for the have-nots versus the haves.
• The fourth factor is that there is adegree of mismatch between where growth is occurring and where the poor are on the continent.
• The fifth and final factor concerns data quality. Poverty estimates are drawn from household surveys which in most African countries are conducted infrequently. Those that do take place often suffer from operational glitches that affect the credibility of the results.

The dissonance between Africa's growth performance and its poverty numbers is a striking phenomenon that demands an explanation.