Africa’s economic projections in the eyes of the World Bank

My international story of the month of October was from the World Bank’s most recent assessment of Africa’s economic growth this year and forecast for 2014.In its report, Africa’s Pulse, a bi-annual analysis of the continent’s prospects for economic growth, the World Bank paints a rather interesting picture of sub-Saharan Africa—one that is both overly optimistic yet at the same time a little depressing.It is optimistic because despite all the odds such as erratic weather conditions in these predominantly agriculture-based economies, raging conflict in some parts of the continent—both not good for economic growth, the bank predicts growth in the world’s poorest region to remain “strong” at 4.9 per cent this year.Moreover, “almost a third of countries in the region are growing at 6% and more, and African countries are now routinely among the fastest-growing countries in the world.”The bad news however is that despite being “routinely among the fastest-growing countries in the world,” a growing population that lives in sub-Saharan Africa remains under abject poverty.According to the World Bank, “almost one out of every two Africans lives in extreme poverty today,” despite sustained economic growth over the past years.Now the big question is; why has this fast-growing part of the world stubbornly remained home to the world’s poorest people? Or, why is this fast economic growth not resulting into equally fast reduction in the number of poor people?Ideally, strong economic growth means big investment in productive areas of the economy and hence higher levels of production that translate into better conditions of living. So, talk about an economy that is growing fast (producing more) but is at the same time one in which more people are getting poorer, is a contradiction.Are we talking about real economic growth or simply cooked up figures?It is true that most of sub-Saharan Africa is growing albeit at different rates, but this growth appears to be in vertical form rather than the all-encompassing horizontal growth.This type of growth is driven primarily by public investment in huge infrastructure projects such as roads, hydro electricity power generation dams, airports and sea ports etc. Yet most of these projects are funded through donor budget support.In East Africa, most of the apparent growth is as a result of huge foreign investment capital in the recently discovered oil and gas in Uganda and Kenya. More investors are pouring in money to prospect for oil along the Tanzanian and Somali coastlines.Africa’s rapid economic growth amidst biting poverty is therefore a result of concentration of resources in areas that although important for economic growth, they do not have a quick multiplier effect on the bigger part of the population.That is why Rwanda’s anti-poverty interventions such as one cow per poor family, support to families to build decent shelter and get rid of nyakasi (thatched huts) has had measurable reduction in poverty with additional over one million Rwanda’s emerging out of poverty.With the national development budget that seeks to directly address the needs of the people such as access to clean water, good health and education, the number of Rwandans living below the poverty line will only continue to decline.It suffices to note that while investment in infrastructure can stimulate higher growth; this can only be possible with direct equal investment in the sectors from which growth is to be expected.For example, while a good road is needed to ease movement of farm produce to markets in urban areas, that good road will not result in higher maize yield when rains fail. Only water can, through irrigation.That is why recent announcement of a plan to invest Rwf80 billion in irrigation, watershed management and adding value to agriculture produce is a good idea that will add momentum to poverty reduction. This is because the money will be invested in a sector that employs the rural poor.The writer is an editor with The New Times

Opinions

Africa’s economic projections in the eyes of the World Bank