People do not eat GDP

Africa’s Gross Domestic Product (GDP) grew by 3.3 per cent annually between 2010 and 2015. The East African Community (EAC) economies did a bit better with an average of 6 per cent GDP growth rate since 2011. But to whose good has this growth been?

Africa’s Gross Domestic Product (GDP) grew by 3.3 per cent annually between 2010 and 2015. The East African Community (EAC) economies did a bit better with an average of 6 per cent GDP growth rate since 2011.
But to whose good has this growth been?

The just-released State of East Africa Report 2016 surmises that even as the economies of EAC member states have been recording considerable growth rates, this growth has been accompanied by growing inequality in virtually all the countries.

In spite of the growth, the report says, the economic boom has not generated the jobs or prosperity for all that it was expected to. The levels of poverty, hunger and malnutrition in these countries still remain staggeringly high.

But this is not an EAC phenomenon alone. In the larger Africa and the developing world in general the trends are the same, leading to a long standing doubt about whether our current economic model built on GDP can ever be inclusive or sustainable.

Growth, observes one commentator in The Guardian, has been the main object of development for the past 70 years, despite the fact that it’s not working. Since 1980, the global economy has grown by 380 per cent, but the number of people living in poverty on less than $5 a day has increased by more than 1.1 billion (see “Forget ‘developing’ poor countries, it’s time to ‘de-develop’ rich countries”).

With this is an acknowledgement that GDP growth has been the main strategy for eradicating poverty. Isn’t it time we had a rethink in our theory of progress, with emphasis that sustainable development be imperative?

The principle of sustainable development was first defined in the seminal 1991 report “Caring for the Earth” thus: “improving the quality of human life while living within the carrying capacity of supporting eco-systems.”

The influential report was jointly issued by the International Union for the Conservation of Nature (IUCN), the UN Development Programme and the World Wildlife Fund for Nature (WWF).

Note that the implication in the term “sustainable” is that “development” must come at no cost to future generations, and must commit to well-being for all.

It is also no coincidence that the notion of wellbeing for all is connected with eco-systems, and thus the question of whether the GDP economic model is sustainable.

Hitherto, the popular view has been that GDP growth is the only way to create a better world through an economic system that demands ever-increasing levels of extraction, production and consumption.

Growing population and increasing consumption adds pressure on ecological constraints and contributes to climate change, compounding resource risks for any economy.

Therefore, GDP growth has not only not reduced poverty, but has come with additional social ills that include increased debt and the inequality cited in the State of East Africa Report.

All these effects undermine the notion of “wellbeing for all” underwritten by the UN through the Human Development Index (HDI), which provides an alternative to national income as a standard of development.

HDI is based on the life expectancy, education and income of a nation’s residents. On a scale of zero to one, UNDP defines 0.7 as the threshold for a high level of development (0.8 for very high development).

Sub-Saharan Africa is predictably short, at an average of 0.518. And, despite the impressive GDP growth, EAC has a lower showing, at an average of 0.484, which the State of East Africa Report confirms.

As the report explains, it offers some hypotheses as to why inequalities persist and why efforts to address them are unlikely to be successful in the absence of a committed attempt to dismantle and recreate the institutions that distribute power and the networks that have emerged to extract benefits from them.

In the end, one cannot help but indeed conclude that people do not eat GDP.