[ 2013-04-21 ]

Africa's boom not denting poverty enough: economists
JOHANNESBURG (AFP) - Fast-paced African countries
may have growth rates that are the envy of
developed economies, but the continent's boom has
failed in recent years to significantly dent
poverty levels, economists say.

Sub-Saharan Africa is set to grow by 5.6 percent
this year, according to latest figures from the
International Monetary Fund (IMF), with 18
countries hitting at least six percent.

"Sub-Saharan Africa is expected to continue
growing at a strong pace during 2013-14, with both
resource-rich and lower-income economies
benefiting from robust domestic demand," the IMF
said in its latest World Economic Outlook.

According to the World Bank, foreign direct
investment inflows rose 5.5 percent in the region
last year, against a plunge of 6.6 percent in
developing countries worldwide.

The investment-to-GDP ratio is the lowest among
developing regions, which the bank likens to
pre-boom levels in 1960s China and 1980s India
"suggesting increased scope for further expansion
in productivity-enhancing investment".

Africa's oil and mining wealth means that these
sectors dominate the overall flows, but investment
has also risen in services such as water,
construction, and electricity projects.

States with growing middle classes -- such as
Nigeria, South Africa, Ghana and Kenya -- are also
drawing investment to consumer areas such as
retail and banking.

Consumer spending makes up more than 60 percent of
Africa's GDP, a sector recently highlighted by
McKinsey & Company who found urban Africans spent
more on clothing and food than those in Brazil,
China and India on average.

Telecommunications, banking and retail are
flourishing, construction is booming and private
investment inflows surging.

But the continent's poor are still not riding the
wave.

"More than a decade of strong economic growth has
reduced poverty in sub-Saharan Africa - but not by
enough," said the World Bank last week.

Growth has been less poverty-reducing than
elsewhere in the world; and despite the faster
growth in resource-rich countries, levels of
poverty are falling at a slower rate , it said.

While strides have been made in reducing the
levels of Africans living on less $1.25 a day,
more than a third of the world's extreme poor
still live in sub-Saharan Africa

And it is still the only region in the world where
the number of poor people rose "steadily and
dramatically" between 1981 and 2010, according to
a recent bank note on poverty.

"The poverty rate is not going down at the same
rate that the growth rate is going up," said Soren
Ambrose, economist of anti-poverty group ActionAid
in Nairobi.

"The mining companies were given attractive deals:
those companies come in and do their business and
as a result the growth rates are up."

But, he added: "Not much remains, the amount that
is left in the country is not so much."

This year, only two regional economies, Swaziland
and oil-rich Equatorial Guinea, are set to shrink.
Powerhouse South Africa is struggling to take off,
with only 2.8 percent growth forecast.

Next year however, the IMF predicts growth of 6.1
percent in the region, largely thanks to the
revival of South Africa.

In its latest Africa analysis, the World Bank says
high commodity prices and domestic spending will
ensure the region stays among the world's fastest
growing.

But more has to be done to unleash the potential
of the continent's opportunities, it argues.

"Higher economic growth does not automatically
translate into higher poverty reduction," states
the report.

Source - AFP

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