Africa continues to grow strongly but poverty and inequality remain high and could stunt the continent’s overall growth going forward, the World Bank has warned.
The Washington-based institution said in its latest ‘Africa’s Pulse’ report that both private and public investments in agriculture, mineral resources, service sectors, tourism, as well as the creation of safety nets to support the poor have sustained the continent’s economy.
The group said GDP growth in Africa will continue to rise and pick up to 5.3 per cent in 2014 and 5.5 per cent in 2015 as the region continues to be a magnet for new investments and tourism.
Africa’s Pulse—the bank’s bi-annual report that analyses issues shaping Africa’s economic prospects—has indicated that economic growth in Sub-Saharan Africa (SSA) remains strong with overall growth forecasted to be 4.9 per cent in 2013.
“Almost a third of countries in the region are growing at 6 per cent and more, and African countries are now routinely among the fastest-growing countries in the world,” the report said naming Rwanda among top performers along with Ethiopia, Mozambique, Niger, and Sierra Leone.
But officials at the Bank have warned against rampant economic inequality and widespread poverty that still characterise the continent.
They have advised African governments to invest more in improving the agriculture sector because that’s where the poorest Africans work, create more off-farm jobs, and boost social safety nets in order to redistribute economic gains from the current economic growth.
The report noted that poverty and inequality remain “unacceptably high and the pace of reduction unacceptably slow” with almost one out of every two Africans currently living in extreme poverty.
Growth with equity is possible
Though experts at the bank estimate that economic inequality on the continent will fall to between 16 per cent and 30 per cent by 2030, they still see Africa as being the home for most of the world’s poor people by 2030 if appropriate steps are not made to quell inequality.
According to Francisco Ferreira, Deputy Regional Chief Economist at the World Bank Africa Region, Africa’s progress on ensuring that growth translates into considerably less poverty has been slow and hindered by high inequality.
“Africa grew faster in the last decade than most other regions, but the impact on poverty is much less than we would have liked. Africa’s growth has not been as powerful in reducing poverty as it could have been because of the high levels of inequality,” he said.
The economist added that growth with equity is possible in Africa but would require a decline in inequality in both outcomes and opportunities.
For a balanced economic growth and effective poverty reduction on the continent, the Bank’s experts suggest that African governments will need to create robust safety nets to help the poor benefit from economic growth gains, facilitate their access to loans, and improve the provision of public goods such as infrastructure.
The economists have also prescribed the improvement of the informal sector and agriculture sector where the poorest operate if successes in poverty reduction and economic equity are to be registered.