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Poverty

Three myths about aid to Kenya

Wolfgang Fengler's picture

The World Bank and IMF have received much press attention in recent weeks in Kenya.  The Kenyan Kazi Kwa Vijana (“work for youth”) initiative, which the Bank was supporting through its Youth Empowerment Project, and Government’s decision to request substantial IMF funding to support macroeconomic stability have been the source of heated debates in parliament.

This gives me an opportunity to share some thoughts which are influenced by “Delivering Aid Differently”, a book which Homi Kharas and I co-authored and launched in Nairobi and Washington a year ago.

In recent years, the aid industry has been a focus of critical examination and the object of debate.

Poor Evaluation Methods Can Mislead: New Developments in the Millennium Villages Evaluation

Gabriel Demombynes's picture

by Michael Clemens and Gabriel Demombynes

Contrary to persistent perceptions that sub-Saharan Africa is mired in intractable misery, many of the region’s countries have experienced sustained economic growth, deepening democracy, improving governance, and decreasing poverty in recent years.

To take just one aspect of the African Renaissance, in five of six countries for which recent data is available—Malawi, Tanzania, Rwanda, Nigeria, and Ghana—rates of child malnutrition as measured by stunting have declined in the last decade. Because so much is changing in Africa, it is crucial to take this “background” change into account when evaluating the impact of local policy interventions.

This is evident when considering the Millennium Villages Project (MVP) evaluation, which we critiqued in a peer-reviewed journal article. Recently, we examined the three peer-reviewed papers that dealt with the MVP’s impacts and showed that they do not back up the project’s claims of large impacts, in part because they don’t take “background” change into account.

There’s a new development: The MVP has just released its first study that does try to distinguish changes observed at its village sites from broader changes happening across Africa.

Yes, Africa can end poverty…but will we know when it happens?

Waly Wane's picture

Today poverty data are available for almost all countries in the world1.  Because a country’s success is measured by the number of people it lifts out of poverty, identifying best performers is a fair exercise only if poverty indicators are fully comparable. One indicator used is the share of the population whose consumption (or income) level is below a nationally defined poverty line or the US 1.25 dollar PPP per day. But even if policy makers and other stakeholders can count on readily available statistics, the poverty numbers should not be taken at face value.

Data are useful if they give us a sense of reality

Poverty data are based on a set of arbitrary assumptions that may lead to erroneous conclusions.

Kenya rising and Germany falling: A tale of two populations

Wolfgang Fengler's picture

Today, October 31, 2011 our planet reaches a new milestone: we are 7 billion people on earth.

In the past, when the world’s population was a fraction of what it is today, the expansion of humanity was a source of alarm and many apocalyptic tales. More than 200 years ago, Thomas Malthus, one of the leading scholars and economists at that time predicted that the world would simply run out of food. Then, we were less than one billion people.

Now I want to take you on a journey into the future.

Why has the Kenyan Shilling declined so sharply?

Wolfgang Fengler's picture

How would you feel if, after a normal take-off, you noticed one of the engines on your plane wasn’t working properly? What if you then found out the other engine was overheating? Now suppose the captain announces that you should buckle-up because the plane is about to meet an approaching hurricane?

This is what Kenya’s economy is currently going through. The country is in the middle of a perfect storm, and the declining Shilling is the most visible manifestation of Kenya’s economic woes. Why has the Shilling been falling so much and so unpredictably?

The main reason is that Kenya’s economy is increasingly imbalanced: the country is importing too much and exporting too little.

Africa’s statistical tragedy

Shanta Devarajan's picture

Fifteen years ago, Easterly and Levine published “Africa’s Growth Tragedy”, highlighting the disappointing performance of Africa’s growth, and the toll it has taken on the poor. Since then, growth has picked up, averaging 5-6 percent a year, and poverty is declining at about one percentage point a year. The “statistical tragedy” is that we cannot be sure this is true.

Take economic growth, which is measured in terms of growth in GDP.  GDP in turn is measured by national accounts.  While there has been some progress, today, only 35 percent of Africa’s population lives in countries that use the 1993 UN System of National Accounts; the others use earlier systems, some dating back to the 1960s. 

To show that this is not an arcane point, consider the case of Ghana, which decided to update its GDP last year to the 1993 system.  When they did so, they found that their GDP was 62 percent higher than previously thought.  Ghana’s per capita GDP is now over $1,000, making it a middle-income country. 

Taxing the poor… through inflation

Wolfgang Fengler's picture

Imagine you are spending half of your income on something whose price suddenly increases by a quarter. Seems impossible? This is how in fact inflation has hit the poor in many developing countries, especially Kenya.

This September, overall inflation reached a record high of 17.3 percent. One year ago it was just above 3 percent. Why has it increased so sharply even though Kenya has followed prudent macro policies? The short answer is: food and fuel. In Kenya, food accounts for 36 percent of the average person’s expenditures; energy and transport another 27 percent. The urban poor spend more than 43 percent on food. Since January, food prices have increased by almost 25 percent (see figure), partly as a result of international trends but also due to Kenya’s- agriculture policies. Maize prices tripled between January and June until they retreated a little once the government waived import duties and the 2011 harvest started trickling in. 

African countries are among the fastest growing economies in the world

Punam Chuhan-Pole's picture

Despite a slowdown in the global economic recovery and an increasingly difficult global environment, Sub-Saharan African countries are continuing to post solid growth

Following a 4.6 percent expansion in 2010, the region’s output is expected to grow by 4.8 percent this year (5.8 percent excluding South Africa) and by more than 5 percent in 2012 and 2013. 

Indeed, African countries are amongst the fastest growing countries in the world: Ghana is projected to grow by well over 10 percent this year; and nearly 40 percent of the countries in the region are likely to see 6 percent or higher growth rates.  Growth in Africa remains closely linked to the evolution of international commodity prices—oil, metals, and non-food agricultural commodities—which have remained generally buoyant. 

Not surprisingly, a sharp deterioration in global conditions would weigh down on the region's prospects.  Moreover, this time around African countries will be more constrained in their policy options: because they have less fiscal space than they had in the wake of the 2008 global financial and economic crisis. Read the full analysis on Africa's Pulse.

If it is free, people will queue up…but for how long?

Vijay Pillai's picture

It’s a long ride on a non-motorable road to Pujehun district in the south of Sierra Leone.  We are on a visit to see how the country’s Free Health Care Initiative (FHCI) for pregnant women and young children is working out. 

In the maternity ward of the district hospital, a woman proudly shows us her new born baby – it’s her third child and fourth pregnancy.  But, more importantly, her first child to be delivered in a hospital.  She is among the thousands of women who have delivered in hospitals for the first time since the introduction of free health care. Are we seeing early signs of a change in health seeking behavior among the poor in the country?

Droughts and Famines in East Africa: From man-made problems to man-made solutions

Wolfgang Fengler's picture

How can droughts and famines be avoided? This is the big question many conferences and summits have grappled with in recent weeks. Unfortunately, it will be very difficult to avoid droughts in future because climate change will put more pressure on scarce land and extreme climate events, both rains and floods, will likely occur much more frequently — and even more unpredictably.

The first famine I remember was brought on by the horrible drought in Ethiopia in 1984. At that time, I was a boy in high school and one of Germany’s most famous actors, Karlheinz Boehm, visited our school to mobilize funds to help the suffering Ethiopians. He had previously established the charity, People for People. One of the silver linings of today’s suffering is the outpouring of financial support by ordinary Kenyans who have been moved by the intense suffering of their fellow citizens.

So how can we avoid this same crisis two years down the road? Or as my Kenyan friends say: How do we keep from begging again for money?

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