Several people, from The Economist to this blog, have been highlighting Africa's accelerated GDP growth of about 5 percent a year for the decade before the 2008-9 global economic crisis, and the two years since the crisis. But has this growth served to reduce poverty?
The latest globally consistent estimate of poverty rates has an answer: Yes.
Using the measure of people living on $1.25 a day or less, the World Bank's poverty measurement team, led by my colleague Martin Ravallion, estimates that the percentage of poor Africans fell from 58 percent in 1999 to 47.5 percent in 2008. This rate of decline of about one percentage point a year is a welcome change from the previous decade when growth was much slower and the poverty rate increased.
In the past, even when the poverty rate fell, we typically found that the absolute number of poor people rose because of rapid population growth. Between 2005 and 2008, for the first time, the absolute number of poor people also declined, from 395 million to 386 million. Nine million Africans, equivalent to the entire population of Benin, escaped poverty during those three years.
What about individual countries? Here, we should look at national poverty estimates, which use countries’ own poverty lines.
My colleague Mimi Oladipo's post on this blog documented Rwanda's moving one million people out of poverty. In a survey of 18 relatively fast-growing African countries, Andy McKay finds that poverty fell in almost all of them, albeit at different rates.
Ghana and Uganda showed significant declines in poverty, helped by the fact that inequality also declined. Where growth was anemic or negative, as in Cote d’Ivoire, poverty rates increased.
In short, economic growth reduces poverty. But we cannot be complacent. Given that it is the region with the highest poverty rate, Africa's rate of poverty decline is too slow. African countries need to grow faster, and increase the growth elasticity of poverty--the rate at which a given level of growth reduces poverty.