Bad news: It could take Zimbabwe 190 years to double incomes

To give some context, sub-Saharan Africa’s average per capita income of $1,431 is where the USA and Western Europe were around 1835.

AFRICA’S economies are growing, but not fast enough to keep up with population growth, and in sixteen Africa countries – including Cameroon, Malawi and Cote d’Ivoire – per capita income growth is so slow that it will take at least 76 years to double average incomes, if the current trends continue.

The overall growth figures are rosy – but they don’t tell the whole story. Excluding South Africa, GDP growth in sub-Saharan Africa reached almost 6% last year, second only to the performance of East Asia.

Since 2006, eight more African countries were categorised as middle-income, that is, having a per capita gross national income between $906 and $11,115 (according to the World Bank Atlas method).

The World Bank  forecasts that if the momentum can be maintained, another 10 countries – including Rwanda, Mozambique and Chad – could attain middle-income status by 2025.

A mixed bag

Factoring for population growth pours some cold water on the optimism though; average incomes per capita have been rising by a more modest 3-4% a year since 2000, but the good news is that they are now around one-third higher than they were at the turn of the millennium.

Still, it’s a big turnaround from the previous two decades; between 1980 and 2000, average incomes in Africa contracted by over 20%.

Keep Reading

• Chamisa under fire over US$120K donation
• Mavhunga puts DeMbare into Chibuku quarterfinals
• Pension funds bet on Cabora Bassa oilfields
• Councils defy govt fire tender directive

If the Africa boom of the past few years can be sustained, average per capita incomes in Africa will double over the next 22 years, says  this report by the Africa Progress Panel.

But the regional average masks huge variations between countries: some are going to leave others in the dust. If countries like Mozambique, Rwanda and Sierra Leone sustain the growth of the past decade, they would see average incomes double in less than 17 years.

The fastest growing countries tend to be resource rich and starting from a low base: Angola and Liberia could see incomes double in just 11 years, and in Ethiopia and Nigeria, it could be just 12-13 years.

In these countries, the next three or four election cycles are crucial, as the leaders in charge over the coming years will determine whether the momentum can be sustained or not.

But many Africans may get left behind. This stunning graph by the Africa Progress Panel shows that 396 million Africans – the equivalent of two in five – live in countries where it will take more than 25 years to double average incomes.

Some of these countries are fairly rich today so don’t have as much room for growth, such as South Africa, Seychelles and Botswana.

But held back by sluggish growth and high inequality, a country like Kenya is performing dismally for its resources, education levels and international attention – if the current trends continue, it will take 60 years for average per capita incomes to double in Kenya and Senegal.

Sixteen African countries currently have either negative per capita GDP growth or are growing at less than 1%. It will take them at least 76 years to double average incomes – the equivalent of three generations.

The most dismal of all is Zimbabwe, where projections show that it will take 190 years to double the per capita income today (READ:  Debts weigh down Zimbabweans; even siblings suing each other after failing to settle in-house).

Africa is Latin America in 1910

To give some context, sub-Saharan Africa’s average per capita income of $1,431 is where the USA and Western Europe were around 1835, Eastern Europe and Latin America was around 1910, the Middle East was in 1950, East Asia was in 1965 and South Asia was in 1985, according to data from  this OECD report.

Historical data shows that the later a country starts industrialisation, the faster it doubles per capita incomes, thanks to advances in technology. It is estimated that it took England around 60 years to double its per capita income when the Industrial Revolution began in the 18th century, and for the US, it took about 50 years during the American economic take-off in the late 19th century.

But for East Asia to double per capita incomes from today’s “Africa equivalent” took just 20 years, from 1965 to 1985, and the same can be said for South Asia, which doubled incomes from the Africa equivalent in 1985 by 2005.

Still, economic growth alone isn’t sufficient to lift people from poverty. The experience in Western Europe and America was that industrialisation worsened inequality and living standards and conditions, as many factory workers lived in overcrowded shantytowns with poor sanitation; diseases such as cholera and tuberculosis were rife.

It took proactive legislation to spread the benefits of economic growth to all, such as in Britain by giving free meals for school children (1901), the payment of old age pension benefits, and the establishment of Wage Councils that set minimum wages in certain industries (1909) and of laws that provided for sickness and unemployment benefits in certain industries (1911).

Massive challenge

The challenge for African countries is enormous. This recently-released report  tracking Africa’s progresson the Millennium Development Goals shows that although the percentage of Africans in absolute poverty has declined from 56.5% in 1990 to 48.5% in 2010, in absolute terms, the number of poor people has actually risen from 290 million to 414 million, thanks to the high population growth rate.

The sector driving the growth process is vital in reducing poverty. For instance, the significant reduction in poverty in recent times in Ethiopia and Rwanda has been linked to the rapid growth in agriculture.

“This is not the case for extractive sector-driven economies such as Angola, Nigeria and Zambia, which are mostly enclave sectors and not integrated into the rest of the economy,” the report says.

But the good news is that taking the annual average, poverty declined faster over the 2005-2008 period than over the 1990-2005 period, reflecting accelerated progress on this indicator by African governments.

This achievement has been linked to higher growth rates, improved governance environment, and implementation of social protection programmes in several countries.

BY  CHRISTINE MUNGAI | MAIL AND GUARDIAN AFRICA