How can we address the interlinked challenges of poverty, inequality and growth in Africa after 2021?

Image: Laura Ockel on Unsplash.

The prospects for African development in the decade before the pandemic looked promising. Economic growth rates were positive and were expected to lead to dramatic reductions in poverty and inequality. However, this economic growth was taking place in a region with the highest levels of extreme poverty in the world and 6 of the world’s 10 most unequal countries. Thus, while poverty rates (the percentage of people living in a condition of poverty) declined, the total number of people living in income poverty increased from 283 million in 1990 to 431 million in 2017 and, without substantial interventions, this trend is expected to continue or worsen to 2030. This makes it highly unlikely that Africa will meet their SDG targets for poverty and inequality. It has been estimated that in 2021 a further 38 million Africans will fall into extreme poverty, and that inequality will increase due to the multiple impacts caused by the pandemic.

Several members of SALDRU, ACEIR and our colleagues from DPRU have recently engaged to discuss how we can understand the relationship between growth, poverty and inequality as the basis for actions to ensure inclusive development and the achievement of the SDG goals 1 (ending poverty) and 10 (reducing inequality) in Africa ahead of the debates that took place  in the International Summit on the SDGs in Africa, hosted by UCT.

These discussions involved different actors in a reflection about why Africa’s growth failed to create quality employment and improve equity, as well as reflection on the challenges ahead.

Why is growth not leading to inequality reduction in Africa?

In Africa, economic growth has been less inequality and poverty reducing than it has been in other regions of the world. Thus, understanding the texture of the relationship between growth and the labour market is a key prong in understanding and acting against these limiting linkages.

Despite positive economic growth in many African countries, the economic structure of several countries continues to be based on the production of basic commodities, the extraction of mineral resources, and agriculture. While there have been notable shifts with migration from rural to urban areas, this economic structural change has not shifted labour into more productive and higher paying jobs, but rather into informal and precarious jobs in urban areas. Employment on the continent remains defined by low productivity and high informality.

While there can be no denying that growth creates the potential for poverty and inequality reduction, it is equally important to acknowledge that growth has bypassed a great deal of poor people. In addition to this, the constraints on capabilities and social mobility in Africa remain important factors in explaining the persistence of poverty and inequality during the last decade.

The urgency of understanding COVID-19’s impacts

The COVID-19 pandemic has forced consideration of how these economic shocks intersect with vulnerabilities within households that heighten the chances of sickness and loss of life for all (but especially for the vulnerable and marginalised). Some of these stark scenarios have been illustrated by the work from researchers involved in the NIDS-CRAM survey.

In nearly all cases, the income and health shocks associated with the pandemic are occurring in circumstances in which there was already limited healthcare, social protection and social assistance coverage. Although several new programmes were introduced in many countries on the continent since the start of the pandemic, they have struggled to reach vulnerable populations, who are often invisible to administrative systems.

The pandemic has sharpened the pressing need for coordinated and well-designed social policies. However, the implementation of such policies now takes place with even tighter fiscal constraints. This makes it even more important than before that a coordinated set of well-targeted economic and social programmes are put in place within each country context. Such design requires an understanding within each country of the barriers that limit social mobility, and cause poverty and inequality to persist.

The way forward

In many African contexts the increment of economic growth was less inequality and poverty reducing than in other parts of the world. This situation is likely to have been worsened by the shocks associated to the COVID-19 pandemic and the deepening of inequities.

We need to reflect about what policies and actions may be able to turn the many pernicious cycles between growth, poverty, and inequality into virtuous ones. An integrated framing of the linkages between economic change and the capabilities and possibilities of people might constitute an avenue to unveil some of these possible policies.

All consideration of policies and actions must start from an assessment of the post-COVID-19 landscape and the future challenges that lay ahead. The elephant in the room remains the future (and unpredictable) impacts of climate change and climate breakdown. SALDRU researchers are currently undertaking such research to interrogate the complementarities in actions and policies to promote a just climate transition and those that address growth, poverty and inequality.

Such a framing requires new data, new research and new partnerships. This places huge responsibilities on Africa’s research community in interaction with policy communities and civil society, in which SALDRU will continue its role in informing policy and debate.