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Africa: Jobs, Justice, and Equity
AfricaFocus Bulletin
May 17, 2012 (120517)
(Reposted from sources cited below)
Editor's Note
"The extreme pessimism surrounding Africa a decade ago was
unwarranted. So, too, is the current wave of blinkered
optimism. Real gains have been made, but governments and
their development partners need to reflect on the
weaknesses, as well as the strengths ... Countries across
Africa are becoming richer but whole sections of society are
being left behind. ... The current pattern of trickle-down
growth is leaving too many people in poverty, too many
children hungry and too many young people without jobs." -
Africa Progress Panel, May 2012
This year's Africa Progress Panel report, released on May 11
and available at http://www.africaprogresspanel.org/apr2012,
like almost all international reports, has its quota of
compromise language and generalities. But it also is very
explicit in its focus on equity as well as growth,
denouncing 'land grabs' and high levels of internal
inequality in African countries. It highlights greater
equality and social justice as not only the right thing to do
but also as indispensable to sustained economic growth
benefiting the majority of African people.
For anyone concerned with the future of the continent and
its capacity to define its own path to development, this
report is essential reading.
It came a few days before the first Africa Human Development
Report from the UNDP, released on May 15 and available at
http://www.undp.org / direct url:
http://tinyurl.com/7y4g52j, which stresses the imperative of
food security for African development. [Excerpts from the
Human Development Report will appear in a future AfricaFocus
Bulletin.]
This AfricaFocus Bulletin includes the press release on the
Africa Progress Panel report, and excerpts from the
introduction and from the first part, which is entitled
"Africa Rising - But while some Africans are rising others
are not." Among excerpts included below is a box debunking
the widespread notion of a large African middle class as
"premature."
For previous AfricaFocus Bulletins on economic issues, visit
http://www.africafocus.org/econexp.php
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Africa Progress Report 2012 - Jobs, Justice and Equity:
Seizing Opportunities in Times of Global Change
Press Release
Africa Progress Panel warns that growing inequality
threatens Africa's growth
New report says that African leaders must deliver on jobs,
justice and equity to turn Africa's population boom into a
demographic dividend and avoid "disaster"
11 May 2012, Addis Ababa - The 2012 Africa Progress Report,
launched today by the Africa Progress Panel, warns that
Africa's strong economic growth trajectory - which will see
the region increase the pace of growth well beyond 5 per
cent over the next two years - is at risk because of rising
inequality and the marginalisation of whole sections of
society.
Kofi Annan, Chair of the Africa Progress Panel, states in
the report that, "Disparities in basic life-chances - for
health, education and participation in society - are
preventing millions of Africans from realizing their
potential, holding back social and economic progress in the
process."
The report notes that Africa has seven of the world's
fastest-growing economies, with 70% of Africa's population
living in countries that have averaged economic growth rates
in excess of 4 per cent over the past decade. However, the
report also records that most countries are not on track to
achieve the Millennium Development Goals by 2015, flagging
slow progress in areas such as child nutrition, child
survival, maternal health, and education.
The need for equitable growth is all the more critical, the
report states, because of Africa's "profound demographic
shift", which will see the continent's population double in
three decades, and continue to rise into the second half of
the twenty first century. The report highlights that today
there are 70 million more Africans aged under 14 than there
were a decade ago. Over the next decade that number will
rise by another 76 million.
The report calls for a "relentless focus" by policymakers on
jobs, justice and equity to ensure sustainable, shared
growth that benefits all Africans. Failure to generate
equitable growth could result in "a demographic disaster
marked by rising levels of youth unemployment, social
dislocation and hunger." Africa's governments and
development partners must urgently draw up plans for a big
push towards the 2015 Millennium Development Goals, the
report says.
The Panel's report identifies a range of challenges
demanding urgent action on the part of governments,
including:
Youth employment: Africa's youth population (15-24 year
olds) will rise from 133 million at the start of the century
to 246 million by 2020 - requiring another 74 million jobs
over the next decade simply to prevent youth unemployment
from rising. The report sets out an agenda for raising
skills and generating rural jobs through off-farm
employment.
Smallholder agriculture: In the absence of a concerted
effort to raise the productivity of smallholder agriculture,
the report cautions that Africa will remain vulnerable to
food security crises. It identifies 'land grabs' by foreign
investors and speculators as a major threat and urges
African government to consider stronger regulation.
Education: The report calls for urgent action to tackle what
it describes as a 'twin crisis' in access and learning. With
30 million children out of school and many of those in
school failing to master basic literacy, Africa is illequipped
to generate jobs and take its place in a knowledgebased
global economy. The report calls for a strengthened
focus on education and the creation of appropriate funding
mechanisms.
Global economic governance and aid: The report notes that
Africa still has a weak voice in areas - such as trade,
finance and development assistance - that have a critical
bearing on its citizens. The report adds that aid remains
vitally important and that African governments and
development partners must deliver on their commitments in a
transparent and accountable way.
Caroline Kende-Robb, Executive Director of the Africa
Progress Panel, says: "Africa is rising and African
economies are growing faster than those of almost any other
region in the world. However, the current pattern of
trickle-down growth is not benefitting enough people.
Indeed, benefits measured by poverty reduction, maternal
health and childhood survival fall far short of what
Africans have a right to expect. The report calls for
renewed focus on jobs, justice and equity to ensure that
Africa's impressive economic growth is translated into
shared growth for all Africans."
Kofi Annan says: "The overall message of this year's report
is positive. Africa is on its way to becoming a preferred
investment destination, a potential pole of global growth,
and a place of immense innovation and creativity. But there
is also a long way to go - and Africa's governments must as
a matter of urgency turn their attention to those who are
being left behind. I believe Africa and its leaders can rise
to this challenge. If they do, Africa will become more
prosperous, stable and equitable. This is a prize which we
all, wherever we live, will share."
[Following sections are excerpts. For full text, including
figures and notes, visit
http://www.africaprogresspanel.org/apr2012]
Introduction
Commentary on Africa has suffered from extreme mood swings,
with the pendulum moving from episodes of pessimism to bouts
of euphoria. Twelve years ago, The Economist wrote off
Africa, describing it as "the hopeless continent". That
assessment was not atypical. After a decade of slow economic
growth and even slower human development in the 1990s, few
observers saw a bright future. How times change. Last year,
The Economist ran with a very different cover headline:
"Africa rising: the hopeful continent". According to the
title of one widely cited report, Africa has now become a
continent of economic "lions on the move," blazing a pathway
to prosperity. The commentariat spotlight, to quote a few
more reports, is now fixed on Africa's "rising middle
class," the "dynamic African consumer market" and "growth
opportunities for investors".
The extreme pessimism surrounding Africa a decade ago was
unwarranted. So, too, is the current wave of blinkered
optimism. Real gains have been made, but governments and
their development partners need to reflect on the
weaknesses, as well as the strengths, of the recent record -
and assess both the risks and the opportunities that lie
ahead.
A mixed balance sheet
Africa's economies are consistently growing faster than
those of almost any other region - and at twice the rate of
the 1990s7. Improved economic management has contributed to
the growth surge. Exports are booming and export markets
have become more diversified. Foreign direct investment has
increased by a factor of six over the past decade. Private
entrepreneurs have emerged as a dynamic force for change,
driving innovation and transforming outdated business
models. There is an emergent middle class, although its size
is often exaggerated. For the first time in over a
generation, the number of people living in poverty has
fallen. Fewer children are dying before their fifth birthday
and more are getting into school. Young and not-so-young
Africans are embracing new technologies that provide
information, expand opportunities and connect people to one
another and to the outside world. There have been setbacks
and episodes of political violence, but democracy is growing
deeper roots. Governance standards are improving.
Yet there is another side to the balance sheet. Countries
across Africa are becoming richer but whole sections of
society are being left behind. After a decade of buoyant
growth, almost half of Africans still live on less than
$1.25 a day8. Wealth disparities are increasingly visible.
The current pattern of trickle-down growth is leaving too
many people in poverty, too many children hungry and too
many young people without jobs. Governments are failing to
convert the rising tide of wealth into opportunities for
their most marginalised citizens. Unequal access to health,
education, water and sanitation is reinforcing wider
inequalities. Smallholder agriculture has not been part of
the growth surge, leaving rural populations trapped in
poverty and vulnerability.
The deep, persistent and enduring inequalities in evidence
across Africa have consequences. They weaken the bonds of
trust and solidarity that hold societies together. Over the
long run, they will undermine economic growth, productivity
and the development of markets. They weaken confidence in
governments and institutions. And they leave many Africans
feeling that their societies are fundamentally unjust and
their governments unresponsive. Economic growth alone is not
enough. In this year's report, we look at three of the most
critical ingredients for transforming a promising economic
upturn into a sustained recovery and lasting human
development - jobs, justice and equity. We highlight jobs
because livelihoods play such a fundamental role in people's
life-chances - and because Africa urgently needs to create
jobs for a growing youth population. We highlight justice
and equity because they are missing from the lives of too
many Africans, making the present growth socially
unsustainable.
A growing demand for equity and justice
We live in a world of rapid and unpredictable
transformations. Changes in demography and human geography
are re-making societies, not least in Africa. Climate change
is interacting with other pressures to reconfigure
agricultural markets. Economic power is gravitating from
West to East and North to South. The pace of technological
innovation is accelerating and the face of social protest is
changing.
The Arab revolutions of 2011 caught the world by surprise,
as social movements challenged and toppled autocratic rulers
across North Africa, the Middle East and the Arabian
Peninsula. In Europe and the United States, the financial
crisis has spawned new forms of social protest. In India, a
mass social movement is demanding action to combat
corruption. Villagers in a remote area of southern China
successfully mobilised against autocratic officials
responsible for overseeing land grabs. A shared sense of
frustration and discontent with unresponsive governments,
inequality and injustice links these movements.
Africa is not immune to the economic and political currents
that are reconfiguring globalisation. Its leaders need to
find a place in the global economic governance architecture
of a multipolar world. Africa's own demography and human
geography are changing. Failure to create jobs and
opportunity for a growing and increasingly urbanised and
educated youth population would have catastrophic
consequences, socially, economically and politically. Having
played a minimal role in creating dangerous climate change,
Africa's farmers face some of the gravest risks. And the
Arab Spring has not gone unnoticed by Africa's youth. The
circumstances may be different, but young people in Africa
also care about jobs, justice and equality - and governments
ignore them at their peril.
1. Economic Growth: Moving to the Premier League
In the world economic growth league, Africa has moved from
the lower echelons to the premier division. After a downturn
in 2008, recovery from the global economic crisis has
continued (Figure 2). Some of the fastest-growing economies
in the world are in Africa (Figure 3). Seven in every 10
people in the region live in countries that have averaged
economic growth rates in excess of 4 per cent for the past
decade. From 2005 to 2009, Ethiopia recorded higher growth
than China, and Uganda outperformed India. In 1996, there
were 13 countries with inflation rates above 20 per cent;
since the mid- 2000s, there have been no more than two. Much
of this growth and rebound is due to improved policies.
Africa's economic prospects remain promising. Growth in SubSaharan
Africa is expected to recover to 5.3 per cent in
2012 and 5.6 per cent in 2013, underpinned by strong export
demand, rising commodity prices and firm domestic demand,
and buttressed by government infrastructure spending.
It is not just the headline numbers that are impressive. GDP
per capita is also rising. Growth is more diversified, more
resilient - and in some countries less dependent on exports
of primary commodities. Revenues from natural resources
account for no more than onethird of Africa's growth over
the past decade. While the price boom in global commodities
has certainly contributed to Africa's recovery and the
regional terms of trade improved sharply in 2010 and 2011,
domestic consumer markets are also growing and Africa's
private sector is an increasingly powerful engine for
growth.
Export diversification has also played a vital role in
supporting strong growth. Before 2000, Africa's fortunes
were strongly tied to those of Europe and the United States.
These are still critically important markets. But deepening
ties with Brazil, Russia, India and China - the BRICs - as
well as Gulf countries and Turkey, helped first to insulate
Africa partially from the global economic downturn, and then
to drive recovery. The bulk of the "BRIC effect" has
operated through trade (see Part II, Section 3). But the
economic linkages go beyond trade. Chinese foreign direct
investment into Africa has grown rapidly over the past
decade.
2. The Record on Poverty: Constrained by Inequality
Economic recovery has been accompanied by accelerated
progress towards most of the Millennium Development Goal
(MDG) targets. Africa has started to turn the corner on
reducing poverty. Between 1999 and 2008, the last year for
which data are available, the share of Africans living on
less than $1.25 a day fell from 58 to 48 per cent. More
encouraging still, the rate at which poverty is falling
appears to have gathered pace. The World Bank's most recent
estimates suggest that the number of poor people in the SubSahara
region fell by around nine million between 2005 and
2008.
Other social indicators have also improved. Compared with a
decade ago, Africa's children are less likely to die before
their fifth birthday, women are less likely to die from
complications of pregnancy or in childbirth, and more
children are getting into school. The average annual rate of
reduction in underfive mortality has accelerated, doubling
between 1990-2000 and 2000-2010. Measured by the rate of
reduction, 6 of the 14 best-performing countries in the
world - including Ethiopia, Ghana, Malawi and Niger - are in
Africa. The number of out-of-school children has fallen by
13 million.
The overall record on poverty, however, does not match
Africa's economic growth. There are still 386 million
Africans struggling to survive on less than $1.25 a day and
Africa accounts for a rising share of world poverty. At the
start of its growth surge in 1999, Africa accounted for 21
per cent of the world's poverty. By 2008, that share had
reached 29 per cent. And while much has been made of the
growth of Africa's middle class, this group remains small
(Box 2).
Some of the countries with the strongest economic growth
have a mixed record on reducing poverty. In Mozambique, for
example, household survey evidence showed no decrease in
national poverty from 2002 to 2008 and in the Central
regions there was a marked increase in poverty. Tanzania has
been one of the world's fastest-growing economies. Yet from
2000 to 2007 income poverty fell only from 35 to 33 per
cent, according to household budget surveys. Taking into
account population growth, this amounts to an additional one
million Tanzanians living below the poverty line. Economic
growth reduced poverty in Africa, but less than might have
been anticipated, with Africa's poor receiving too small a
slice of the expanding wealth cake.
Africa's wealth disparities are among the biggest in the
world. One widely used measure of inequality, the Gini
index, captures the concentration of household income or
expenditure (the higher the index, the greater the
inequality). In China, where political leaders have
identified rising inequality as a threat to social stability
and future growth, the Gini index is 42. There are 24
countries in Africa with higher inequality scores than
China. In Mozambique, Kenya and Zambia, the Gini index is
between 45 and 55, while in Botswana and South Africa it is
over 60.
The poorest 20 per cent in Sub-Saharan Africa typically
receive 6 per cent or less of national income; and the
poorest 40 per cent in most cases receive less than 15 per
cent (Figure 6). In many countries, the pattern of economic
growth is reinforcing these inequalities. One recent poverty
assessment for Lesotho, which has one of the world's highest
levels of income inequality, concluded: "The main reason for
the high poverty rate is not slow economic growth but high
inequality." That verdict has a far wider application in
Africa.
The lesson to be drawn is not that growth is unimportant.
The challenge is to harness economic growth to a more
equitable distribution of opportunity and income. Meeting
this challenge requires public policy action on two fronts.
First, governments need to mobilise revenues from growth and
invest those revenues in the basic services and economic
infrastructure that offer poor people greater opportunities
(see Part V). Second, governments need to foster an
environment that enables the creation of jobs and more
resilient livelihoods, so that poor people can contribute to
economic growth, "produce" their way out of poverty and
secure a greater share of the benefits from growth.
The two goals of growth and equity are not mutually
exclusive. The central objective should be economic growth
that increases equity and creates jobs. Indeed, a wealth of
evidence is now showing that greater equity can boost growth
and strengthen the rate at which growth converts into less
poverty. Conversely, high levels of inequality act as a
brake on growth, limiting the potential for development of
markets and investment.
The recent experience of Rwanda is instructive. The 2011
Household Living Conditions Survey documents a triple win of
high growth in income, falling inequality and a steep
decline in poverty. From 2005 to 2010, average incomes rose
from US$333 to US$540, inequality fell (the Gini coefficient
dropped from 0.52 to 0.49) and poverty declined from 57 to
45 per cent, resulting in one million people lifted out of
poverty. African governments might also look to wider
international experience. One country with most-reduced
poverty since 2000 is Brazil - and here, too, success has
been built on strong growth and improved income
distribution. Inequality constrains poverty reduction, and,
as highlighted later in this section, social disparities are
also acting as a brake on progress toward other MDGs.
BOX 2: Rising slowly - an African middle class
As even a brief visit to any major African city confirms,
retail sectors and higher-income housing markets are
booming. According to the World Bank, economic growth 'is
creating an emerging African middle class of hundreds of
millions of consumers." The African Development Bank claims
that one-third of Africans are already middle class. Major
consultancy firms like McKinsey and Accenture have also
celebrated the rise of
middle-class consumer markets in Africa.
Such conclusions are premature. After a decade of high
growth, almost half of all Africans still live below the
$1.25 a day poverty line. Another 30 per cent - 246 million
people - live in the poverty grey area, on between $1.25 and
$2.50 a day. Only 4 per cent of Africans have an income in
excess of $10 a day (Figure 4). In other words, the vast
majority of what commentators describe as Africa's middle
class has either moved just across the $1.25 threshold, or
is living well within the gravitational pull of the poverty
zone.
Analytical work by the Brookings Institution provides
another view. Using a range of $10-$100 per day for
membership of a "global middle class," Brookings finds that
Africa accounts for just 2 per cent of the world's middleclass
population, and 1 per cent of purchasing power.
3. Looking for Work: The Employment Challenge
Employment is the engine of social development. It is
through their jobs that people generate income, plan for the
future, and contribute to wealth creation, social cohesion
and share in national prosperity. Economic growth in Africa
is creating employment, but not on the required scale. As
demographic pressures mount, it is imperative that
governments across Africa develop more employment-intensive
patterns of growth at higher levels of skills and
productivity.
Every year, 8 million to 10 million young Africans make the
difficult transition from school to work. While youth
unemployment is a concern, African participation rates in
the labour market are among the highest in the world. This
is for the simple reason that, in the absence of functioning
social welfare systems, young people have no alternative but
to work. Not that employment is an automatic escape from
poverty. Most Africans work in insecure, low-wage and often
hazardous employment, with no prospect of developing their
skills. In Nigeria, Mozambique and Burundi, for example,
over 60 per cent of young people in employment earn less
than $1.25 a day.
Employment creation in the formal sector falls far below the
level required to absorb new market entrants. Moreover, most
new entrants lack the skills they need to enter firms
operating at higher levels of productivity and wages. As a
result, the overwhelming majority of young people are
destined for employment on farms, rural enterprises or in
the informal sector.
Despite growth, labour markets remain informal
Africa's decade of growth has done little to alter
underlying labour market conditions. Agriculture still
accounts for almost two-thirds of livelihoods. Across most
of the region, livelihoods are dominated by smallholder
farming, off-farm employment in rural areas, and informalsector
enterprises, including household businesses and
micro-enterprise. Small companies and the informal sectors
dominate manufacturing. In Ethiopia, for example, only 5 per
cent of people engaged in manufacturing activities work in
firms with 10 or more employees.
To make progress, governments need to provide the conditions
that enable formal-sector wage employment, predominately in
the private sector, to grow rapidly. Even in fast-growing
economies like Ghana, Rwanda, Tanzania and Uganda, formalsector
employment is starting from such a low base that it
has failed to keep pace with the growth of new entrants to
the workforce. In Uganda, waged jobs grew at 13 per cent a
year between 2003 and 2006, but this absorbed less than one
in five of new labour-market entrants.
As estimates by the World Bank underline, even on the most
optimistic assumptions about the growth rate of wage jobs,
the majority of Africans will remain in informal jobs until
well after 2020. Given Africa's underlying demography, the
structural transformation to a labour market dominated by
private wage employment will take several decades. While
more must be done to facilitate the growth of private wage
employment, this should not divert attention from three key
sectors for labour-intensive growth:
- smallholder agriculture and the scope for raising
productivity and employment through a Green Revolution (we
highlight the critical role of agriculture in Part II);
- rural household enterprise, which represents the fastestgrowing
livelihood sector in most lowincome countries;
- the urban informal sector, which will need to absorb a
growing share of Africa's young people as human geography
changes.
AfricaFocus Bulletin is an independent electronic
publication providing reposted commentary and analysis on
African issues, with a particular focus on U.S. and
international policies. AfricaFocus Bulletin is edited by
William Minter.
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