IS AFRICA GROWING OUT OF POVERTY?
Ewout Frankema
Wageningen University, Utrecht University
Public Lecture at Fundación Ramón Areces, Madrid, 22 January 2015
A decade ago...
The African ‘Lions’
Real GDP growth
Estimate
Top 10 2000s Forecast
Top 10 2013-15
Angola
11.1
Turkmenistan
11.3
China
10.5
DRC (Congo)
8.4
Myanmar
10.3
Paraguay
8.3
Nigeria
8.9
Ivory Coast
8.0
Ethiopia
8.4
Mozambique
7.8
Kazakhstan
8.2
China
7.5
Chad
7.9
Ethiopia
7.3
Mozambique
7.9
Tanzania
7.1
Cambodia
7.7
Ghana
7.0
Rwanda
Source: IMF 2012
7.6
Nigeria
6.8
Yet another short-lived commodity boom,
or
the first stage of a transition towards sustained
economic growth and poverty alleviation?
Sub-Saharan Africa, 1950-2013
Average annual GDP per capita growth
Source: Maddison 2010; IMF 2012
Real wages of unskilled workers, 1870-2010
Source: Frankema and van Waijenburg 2014
Poverty trends, 1981-2010
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2010
Scenario’s of poverty trends to 2100
Five main socio-economic trends
of the past 20 years
(I) Improved macro-economic stability
Source: Africa Development Indicators 2014
(II) Export growth, 2000-2012
Purchasing power of
exports in terms of
imports (%)
Terms of trade
(share)
Export volume
(share)
108%
0.17
0.83
312%
0.36
0.64
151%
0.61
0.39
60%
0.70
0.30
90%
0.84
0.16
East Africa
Central Africa
West Africa
Southern Africa
North Africa
Source: UNCTAD 2014
Export-GDP relationship, 1995-2012
Source: UNCTAD 2014; African Development Indicators 2014
(III) Infrastructural investment
Construction of Highway Nairobi-Thika (Kenya)
(IV) Glimpses of an African ‘Green Revolution’
Rwanda, rice (paddy), t/ha
Benin, cassava, t/ha
Source: FAOSTAT
2014
(V) Declining intensity and changing nature
of violent conflict
Source: Centre for Systemic Peace, http://www.systemicpeace.org/CTfig04.htm
What drove the post-1995 growth recovery?
• “Lost Decades” of 1973-1995 (growth cycle)
• End of the Cold War
• Shifting global economic gravity (China, Brazil)
• Structural adjustment programs?
What’s new?
Exports per capita, 1850-2010
(in constant US$ 1980)
Per capita exports of ‘non-oil’ countries, 1850-2010
Chinese FDI offers in Africa, since 2010
A slow revolution...
Population density (pp/km2), ca. 1500
Africa total
Sub-Saharan Africa
Central & South America
North America
Eurasia total
India
China
Japan
Western Europe
Eastern Europe
Population
Land area
Denisty
(millions)
50
40
35
15
350
110
100
15
57
14
(millions of km2)
29.5
18.5
19.2
24.7
53.0
3.0
9.3
0.4
3.5
1.1
people/km2
1.7
2.2
1.8
0.6
6.6
36.7
10.8
37.5
16.3
12.7
Population density (pp/km2), 1900-2100
Source: Frankema and Jerven 2014; UN Population Prospects 2012
Concentration of economic power
Drivers of urban growth
• Ca. 50% of post-2000 GDP growth in SSA caused by
domestic structural change (McMillan & Harttgen 2014)
• Consumer demand concentration (market size)
• Agglomeration effects in product and factor markets
• Concentration of investment capital (partly export
revenue driven) and human capital
• Higher potential for labour division and economic
specialization
The temporal ‘order’ of development
• Urban economic growth comes ahead of agricultural
intensification; well-functioning land market institutions
(e.g. registration); rural infrastructure
• Urban growth financed by extra-continental trade relations
and foreign investment (FDI) flows.
• Urban growth goes ahead of human capital investment
(educational quality in particular).
• Urban growth goes ahead of well-functioning financial &
fiscal institutions (credit markets, tax systems etc.).
• Urban growth goes ahead of historically grounded
institutions of ‘citizenship’.
Can urban growth induce institutional reforms and
agricultural intensification?
Conclusion
• Yet another commodity boom? No, there is much more
going on.
• However, the specific ‘order’ of development implies a
lack of useful historical analogies to understand current
African growth, and its sustainability in particular.
• Policy implications:
– Strengthen rural-urban market connections, also if this implies
‘de-liberalization’ and fiscal re-distribution.
– Governing institutional reform (land registration, fiscal capacity,
financial institutions and evolution of ‘citizenship’).