- May 8, 2023
- Posted by: AITRC 2
- Categories: News, Blog, Report
WEEKLY TRADE POLL FOR AFRICAN COUNTRIES
MAY 2023
With a population of over 1 billion, Africa is a diversified continent with natural and human resources that could contribute to inclusive growth and eradicate poverty. With the largest free trade area in the world and a market of 1.2 billion people, the continent is forging a whole new path for growth by utilizing the AfCFTA initiative to maximize the potential of its resources and population.[1]
African economies continue to be constrained by persistently high inflation driven by rising food and energy costs, weaker currencies, and slow investment development, leaving consumers and investors uneasy. Public debt in Africa has increased by over three times since 2010, and economic growth in Africa is not homogeneous among subregions and nations. In 2022 there were nine more nations than in 2021 with two-digit average annual inflation rates. Additionally, Sub-Saharan Africa’s (SSA) economic growth fell to 3.6% in 2022 from 4.1% in 2021; the region’s economic activity is expected to further slow down to 3.1% in 2023. The downgrading is justified by the persistently weak global economy, high inflation rates, and difficult local and international financial conditions in the context of high debt levels. The 2024 and 2025, growth is projected to accelerate to 3.7% and 3.9%, respectively, indicating that the current downturn in growth should end this year. However, the medium to long-term growth circumstances continues to be insufficient to lower severe poverty and increase shared prosperity.
Poverty is when a person lacks the income (or other means of support) to reliably meet their basic personal needs, such as food, shelter, and clothing[2]. The poverty rate is the number of people (usually expressed as a percentage) in a given demographic group whose income falls below the poverty line. The issue of extreme poverty, multidimensional poverty and inequitable growth remains a challenge for many African countries as roughly 60% of the world’s extreme poor in 2019 lived in Sub-Saharan Africa alone, while 81% of the global poor at the poverty line of $3.65 lived in Sub-Saharan Africa or South Asia[3]. This has resulted in economic challenges, including high-income inequality, unemployment, informal economies, limited access to finance, and inadequate infrastructure that inhibit private sector development. Understanding the direct and indirect correlation of the following challenges, such as weak governance, corruption, inadequate institutional capacity, limited access to resources, global economic crisis, climate change, and conflicts, is crucial for designing targeted interventions and policy reforms to address the obstacles extreme poverty hindering advancement.
Figure 1: African Population Living in Poverty Source: World Bank
The World Bank report, as seen in Figure 1, showed that although the percentage of Africans experiencing extreme poverty had decreased significantly from 54% in 1990 to 41% in 2015, the continent’s overall population had increased significantly during that time, from 278 million in 1990 to 413 million in 2015. This was due to the continent’s rapid population growth. According to the report, if current trends continue, the poverty rate will only drop to 23% by 2030, while the proportion of people living in poverty worldwide will increase from 55% in 2015 to 90% in 2030. Farming is the main source of income for the majority of the 82% of Africans who live in extreme poverty. Poverty rates are noticeably higher in fragile and conflict-affected states, and persisting gender inequality, poor education, health, and other factors make it more difficult to reduce poverty.[4]
WEEKLY AFRICA TRADE POLLS (FIRST WEEK MAY, 2023)
Figure 2: The Fight Against Extreme Poverty in Africa
In light of this, Africa International Trade and Commerce Research (AITCR) conducted a weekly poll for African countries to evaluate public opinion and obtain feedback on how Africa is progressing toward the goals of reducing extreme poverty and embracing equitable growth. Findings from the poll, depicted in Figure 2, reveal that 35 percent of the respondents assert that Africa is making “great progress” toward the goals of reducing extreme poverty and embracing equitable growth, 59 percent opined that Africa is making “little progress” toward the goals of reducing extreme poverty and embracing equitable growth; while 6 percent said that Africa is making “no progress” toward the goals of reducing extreme poverty and embracing equitable growth. Thus, the poll confirmed that Africa had made little success in expanding its economy in the struggle against extreme poverty and is therefore lagging in the rankings of progress towards meeting the United Nations’ sustainable development goal.
The Sustainable Development Goals (SDGs) of the United Nations have made significant progress worldwide, but many African countries, in particular, are still behind in advancing some of the critical indicators such as gender equality, access to health and education, climate sustainability, and other key SDG indicators.[5] Thus, a just transition for Africa will depend on effectively utilizing the economic advantages of oil, gas, and mineral resources, including good governance and sound macro-fiscal management of resource revenues, while simultaneously putting forth the effort to transition to a low-carbon future. Effective resource management can open up a multitude of options for investments in human development, value addition, and the creation of jobs.
Based on the findings of this poll, there is a need for evidence-based policymaking and a deliberate multi-dimensional innovative approach to address extreme poverty and achieving equitable growth; thus, Africa International Trade and Commerce Research (AITCR) makes the following policy recommendations as a way forward to African governments and other stakeholders:
a) Strengthening governance and combating corruption to ensure transparent and accountable management of resources.
b) Investing in infrastructure development, including roads, energy, clean water, and telecommunications, to facilitate trade, investment, and access to basic services.
c) Promoting sustainable agricultural practices and value chain development to enhance food security, create employment opportunities, and boost rural livelihoods.
d) Prioritizing education and healthcare, ensuring access to quality services for all, particularly marginalized groups and gender inequality.
e) Fostering regional cooperation and attracting responsible foreign investment to promote economic diversification and job creation.
f) Engaging local communities, civil society organizations, and international partners in decision-making processes and promoting inclusive development approaches.
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[1] Africa Overview: Development news, research, data | World Bank
[2] https://worldpopulationreview.com/country-rankings/poverty-rate-by-country
[3] https://blogs.worldbank.org/opendata/march-2023-global-poverty-update-world-bank-challenge-estimating-poverty-pandemic/?cid=SHR_BlogSiteTweetable_EN_EXT
[4] Accelerating Poverty Reduction in Africa: In Five Charts (worldbank.org)
[5] Some African Countries See Progress in Ending Extreme Poverty, But Many Face Massive Challenges Ahead: SDG Report 2020 (globalcitizen.org)
