The Ambiguity of Growing Poverty and Inequality amidst Economic Growth in Africa

Top as the No.1 Sustainable Development Goal (SDG) is: “No Poverty”. This captures the commitment of the member countries of the United Nations to: “end extreme poverty in all forms by 2030”. This is a very noble cause, but is also a very ambitious goal, with more than 800 million people around the world currently living on less than $ 1.25 a day.[1] A United Nations report to review progress on the SDGs acknowledges that despite progress being made, the world is not on track to end extreme poverty by 2030. It estimates that there will still be 6 per cent of the world’s population living in extreme poverty by 2030. Africa, and particularly Sub-Saharan Africa, ranks poorly in terms of persistent extreme poverty, with the current numbers of the people living in extreme poverty higher than the other regions of the world and the figures are climbing. In the same trend, Sub-Saharan Africa also has the highest prevalence of hunger, higher numbers of the employed poor, fewer people with social protection, among others.[2]

The above realities in Africa contrast with the portrait that economically the continent is the second fastest growing region in the world.[3]  However, the result of this growth is not easily reflected in the conditions of living for the common people. A majority of the African countries experienced rising cost of living (inflation), with Zimbabwe experiencing the highest rate of this inflation, now at a rate of 175 percent yearly. This has made life difficult for the majority of Zimbabweans, including government workers, many of who would like to live in their places of work to avoid costs like rent and transport. This is reflected more dramatically in the life of individuals like Munyaradzi Masiiwa, a high school teacher in Harare who earns less than $ 30 a month. It is so little to support the needs of his family, sometimes lasting only for 3 days. In these circumstances, needs of electricity, adequate food and clean tap water have become luxuries. The Zimbabwean Government’s “austerity for prosperity” program has exacerbated the situation. It has resulted in reduced expenditures and cutting down subsidies for essentials such as electricity and fuel.[4] The country also faces a range of humanitarian concerns, with the UN and international aid groups stepping-in to fill gaps in food security, health and HIV care, water and sanitation, and social protection for vulnerable citizens. The root causes of the current crisis have been attributed to rampant corruption, mismanagement of public finances, and impunity being enjoyed by those that are fueling the crisis through arbitrage and resource haemorrhage.[5] This implies a form of inequality that has generated the situation, in combination with other factors.

This Zimbabwean story illustrates the situation of many of the African countries caught in similar situations of economic crisis, natural and man-made disasters. In such circumstances, the combination of poverty and inequality has a disastrous impact for the ordinary citizen, making the lives of the poor even more miserable. Inequality makes the poorest people more vulnerable in disasters. For instance, in a situation like this one in Zimbabwe that is battling the effects of drought, a cyclone and an economic crisis like the inflation (rising costs),[6] inequality makes the effects be felt differently by the poor and the rich. The response of the affected people and the efforts they make to recover and rebuild are also determined by their levels of vulnerability.  Those with resources usually recover and rebuild their lives faster than those without resources.  Besides, the disaster shocks like the food shortages can be exploited by the rich to make quick gains, either through profits or by influencing policies in their favour. This produces an inverse relationship between wealth accumulation and risks arising from disasters. Wealth is accumulated by those at the top, while risk is borne by those at the bottom of income distribution.

Source: Max Lawson, Oxfam Global Head of Inequality (2019)[7]

Addressing the problems of poverty and inequality requires solutions. Apart from immediate strategies to address the rising cost of living, there is need to provide jobs with better working conditions, ensure growth is sustainable and reduce inequalities. These need to be at the forefront of policy-making for growth to improve well-being.[8] These call for policies that aim to generate and redistribute resources, create jobs and deliberately aim to provide the services for the common good of all. One such approach that enables countries to generate and use resources has been through taxes, which are a legitimate way for raising revenue for public goods and services.

As one of its strategic goals, the Jesuit Justice and Ecology Network Africa (JENA) strives to contribute to end the injustice of poverty in Africa and ensure sustainable wellbeing for those who emerge out of poverty. Understanding that inequality and exclusion continue to exacerbate poverty, JENA would like to advocate for policy and actions that reduce disparities and support marginalized sections of the people. This can only be achieved when income is well-distributed and all growth and development is economically viable, socially equitable and ecologically sustainable. For that to be achieved, the development goals and strategies in the African countries should shift focus on the human person as the sole beneficiary, instead of being seen as labour and market only. Through just and fair taxes that raise and redistribute resources, such economic crises like rising inflation can be addressed, while also aiding long term development.

[1] https://www.undp.org/content/dam/undp/library/corporate/brochure/SDGs_Booklet_Web_En.pdf

[2] https://unstats.un.org/sdgs/report/2019/The-Sustainable-Development-Goals-Report-2019.pdf

[3] Dr Dirk Willem te Velde. 2018. “Africa’s economic growth in a new global context.” https://www.odi.org/events/4592-africas-economic-growth-new-global-context

[4] https://www.voanews.com/africa/zimbabwean-government-workers-feeling-high-inflation-heat

[5] Sally Nyakanyanga. 2019. “Why Zimbabwe is running on empty again”. http://www.thenewhumanitarian.org/news-feature/2019/07/23/zimbabwe-economic-crisis-inflation-fuel?

[6] BBC News. 2019. “Zimbabwe: A third of population faces food crisis, says UN.” https://www.bbc.com/news/world-africa-49259678

[7] Max Lawson. 2019. Oxfam Global, Head of Inequality.

[8] Dr Dirk Willem te Velde. 2018. “Africa’s economic growth in a new global context.” https://www.odi.org/events/4592-africas-economic-growth-new-global-context