Re‐evaluating Africa's growth, poverty and inequality nexus

• Published date: 01 November 2024
• Author: Babatunde Aiyemo
• Date: 01 November 2024
• DOI: http://doi.org/10.1111/rode.13107

REGULAR ARTICLE

Re-evaluating Africa's growth, poverty and

inequality nexus

Babatunde Aiyemo

Department of Economics, SUNY

Oneonta, Oneonta, New York, USA

Correspondence

Babatunde Aiyemo, Department of

Economics, SUNY Oneonta, Oneonta,

NY, USA.

Email: aiyemob@oneonta.edu

Abstract

This study evaluates the role of growth in poverty

reduction within the sub-Saharan Africa (SSA) region

in direct comparison to other global regions along

time-delineated thresholds. The study's results show

(i) A significant gulf in the performance of SSA econo-

mies in comparison to their global cohorts; (ii) An

improved role played by growth after the mid-2000s for

poverty reduction in SSA; (iii) A less deleterious impact

of rising income inequality on poverty reduction within

the SSA sub-region relative to other global regions, and

(iv) An improved performance of resource-dependent

SSA economies in translating growth to poverty reduc-

tion since the mid-2000s. The convergence in growth-

induced poverty reduction between SSA and its global

cohorts energizes prospects for attaining the Sustain-

able Development Goal of eradicating global extreme

poverty by 2030; it however also calls for renewed strat-

egies toward improving the efficacy of growth in future

poverty reduction within the sub-region.

KEYWORDS

economic growth, income distribution, poverty, resource

dependence, sub-Saharan Africa

JEL CLASSIFICATION

D31, D69, I32, O11

Received: 30 December 2020 Revised: 27 December 2023 Accepted: 11 April 2024

DOI: 10.1111/rode.13107

1446 © 2024 John Wiley & Sons Ltd. Rev Dev Econ. 2024;28:1446–1474.wileyonlinelibrary.com/journal/rode

1|INTRODUCTION

Current statistics indicate that less than 700 million individuals subsist in extreme poverty

1

;at

less than 10% of the world population, this is notably the lowest global poverty rate of any

period in documented history. While this outcome has enhanced the imperative of ending

global poverty, it also calls to attention the significant heterogeneity underlying the global effort

to eradicate poverty. In the 2018 Shared Prosperity report, the World Bank notes that the exten-

sive success that has so far materialized in the reduction of poverty has arisen primarily due to

the East Asia and Pacific (EAP), as well as the South Asia regions. The World Bank (2018)

report, moreover, also indicates that the epicenter of the war on poverty has noticeably shifted

to sub-Saharan Africa (SSA) with Nigeria and the Democratic Republic of Congo jointly

accounting for the largest concentration of the global extremely poor.

In painting a profile of poverty in SSA, The World Bank (2018) report notes that:

Sub-Saharan Africa now accounts for most of the world's poor, and—unlike most

of the rest of the world—the total number of poor there is increasing. The number

of people living in extreme poverty in the region has grown from an estimated

278 million in 1990 to 413 million in 2015. Whereas the average poverty rate for

other regions was below 13 percent as of 2015, it stood at about 41 percent in sub-

Saharan Africa. Of the world's 28 poorest countries, 27 are in sub-Saharan Africa,

all with poverty rates above 30 percent.

The foregoing raises two immediate questions. First, why has the global slowdown in pov-

erty eluded the sub-Saharan African sub-region so dramatically, and second, what measures

can be taken to address the sluggish pace of poverty reduction within this sub-region. The

urgency underlying the need for an enhanced poverty reduction framework in SSA is further

strengthened by the recently updated United Nation's Sustainable Development (SDG) blue-

print which, among other things, aspires to eradicate global extreme poverty by 2030. In a series

of policy forecasts however, The Bank notes that such an outcome relies heavily on an unprece-

dented average annual growth rate in the SSA sub-region. It suffices that the practicality of this

scenario is remote.

A number of factors are readily identifiable as driving the persistence of poverty within SSA,

notably; inequality of opportunity which results in significant intergenerational transmission of

poverty, a high economic dependence on price-volatile natural resources with low linkages to

the poor, sustained internal conflicts driven by long-standing ethnic divisions, weak institu-

tions, and low growth penetration.

2

These issues have received extensive coverage in the devel-

opment literature.

3

It is accordingly notable that the erection of measures to reverse the global

poverty threat emerging from Africa can be condensed into the deceptively simple objective of

the attainment of sustained poverty-impacting economic growth. Indeed, the World Bank's sce-

nario analysis is predicated on alternative growth platforms for the precise reason that poverty

reduction is verifiably most effectively anchored on growth-inducing policies (Dollar

et al., 2016; Ravallion, 2016; Sala-i Martin, 2006). Bourguignon (2003) defines the Growth Elas-

ticity of Poverty Reduction (GEP) as the percentage response of poverty to a percentage increase

in economic growth. This has typically been evaluated as subsisting between 2% and 4%. By

this token, every percentage increase in economic growth has empirically coincided with a 2%–

4% enhancement in the rate at which poverty declines within an economy.

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