While around the world extreme poverty has declined considerably, new World Bank estimates suggest that the number of extremely poor people—those who live on $1.90 a day or less—has fallen from 1.9 billion in 1990 to about 736 million in 2015. But the number of people living in extreme poverty is on the rise in sub-Saharan Africa, and they make up more than half of the extreme poor in 2015. Projections also point to the fact that by 2030, nearly nine in 10 extremely poor people will live in sub-Saharan Africa.
The Economic Commission for Africa (ECA) has launched the Africa Poverty Clock, so the efforts of African countries to reduce poverty will be monitored.
“As of today, the clock shows that more than 400 million people in Africa, equivalent to about 33 per cent of the population of the continent live in extreme poverty. The clock shows that, on this day, 25 March 2019, over 5,000 people have escaped poverty, but a similar number has also fallen into poverty,” Vera Songwe, the Executive Secretary of the ECA said in a speech recently in Marrakech, Morocco at the Africa Ministers’ of Finance Conference.
But why should Africa have more than half of the world’s poor when it is arguably the richest continent?
It is curious that there are some 60 per cent of Africans working in the agriculture sector, and yet around 600 million hectares of arable land remains uncultivated and that is roughly some 60 per cent of the global total. The land is being cultivated is not fully utilized for high yields – as farmers do not use improved tools and technology. Even though, some mobile technology is being deployed into agriculture, a lot more needs to be done to derive high yields. There are also challenges with the value chain in agriculture – even though Africa can feed itself and feed the rest of the world, there are poor road infrastructure that hinder the transportation of produce from one end to the other. There are also issues with storage, marketing and distribution. Most farmers also engage in subsistence farming with little commercial farming, with a great deal of the farmers depending on the rains.
The African continent is rich in natural resources. The continent with an estimated over one billion population is rich in renewable and non-renewable natural resources, however, there is general agreement that the continent does not benefit from its vast resources. These resources are mined and exported in their raw form.
Africa produces more than 60 metal and mineral products and is a major producer of several of the world’s most important minerals and metals.
Some of the minerals mined out of Africa include gold, diamond, PGE’s, silver, iron, uranium, bauxite, manganese, chromium, nickel, bauxite, cobalt and copper. Platinum, coal, and phosphates are also mined on the continent.
The continent also has rich forests, marine and aquatic resources that are being exploited for years, but Africa’s share of the revenues have been insignificant.
For instance in 2010 alone, the top 40 mining companies operating in Africa reportedly made net profits of about $110 billion, and they have a net asset base which exceeds $1trillion.
It is on record that in 2005 minerals accounted for more than 80 per cent of exports in Botswana, Congo, DRC, Guinea, and Sierra Leone and more than 50 per cent in Mali, Mauritania, Mozambique, Namibia and Zambia. By 2008 prices for minerals reached new heights, because of high demand from China.
And while these mineral and other resources are fueling growth and development in many industrialized countries, African countries remain poor, undeveloped and waiting for handouts from the developed world. Much of the budget support for most African countries, including mineral rich ones come from the developed countries.
Impact of illicit financial flows
The amount of funds that Africa loses to illicit financial flows can be used to sufficiently cater for the needs of its citizens, and invested in poverty reduction strategies.
Despite some progress since the fight against illicit financial flows was intensified, the continent in 15 years from 2000 to 2015, has lost an amount of $73 billion to illicit financial flows, according to a new study by the ECA.
A study released May 1, 2017, by the Global Financial Integrity found that about $620 billion to $970 billion was drained from developing countries primarily through trade fraud in 2014. The report indicated that illicit inflows estimated at $1.4 trillion to $1.5 trillion also occurred in the same year.
The study says the combined value of illicit outflows and inflows account for 14.1 per cent to 24 per cent of total developing country trade over 2005 to 2014, and sub-Sahara Africa continues to suffer the largest illicit outflows as percentage of GDP, it added.
The report further found that African countries lose much more than they receive when compared to the amount of money they receive in development aid.
The cost of corruption to Africa
In January 2018, the African Union during its 30th Assembly of Heads of State and Government held from January 22 – 29, at its headquarters in Addis Ababa, Ethiopia, launched the anti-corruption campaign in Africa. As to what the AU has achieved, it is not yet known.
But Africa reportedly loses $148 billion every year to corruption. Available literature however, says that while corruption, by itself, does not produce poverty, corruption has direct consequences on economic and governance factors, intermediaries that in turn produce poverty.
Notably, the quality of governance and governance structures in Africa ought to be insulated from corruption and its debilitating influences to reduce the incidence of poverty.
It is inconceivable that a country like Ghana where gold has been mined for 100 years, doesn’t seem to have benefitted much from the gold. When the country found oil in 2010, there was some kind of optimism that the country would learn from the mistakes of other countries before her to avoid falling into what has become known as the ‘Oil Curse.’ But it does appear that the country has been trapped and hit by the oil curse, barely 10 years after oil production started.
The country’s economic indicators look good. It seems on track to be the fastest growing economy in the world in 2019. But the growth doesn’t have the trickle-down effect to facilitate the necessary conditions and environment for poverty reduction.
As increasing inequality has been identified as one of the factors causing growing poverty in Ghana, some 40 per cent of Ghana’s population is vulnerable to poverty, even though Ghana has managed to reduce poverty from about 53 per cent, to 21.4 per cent within 1990 and 2012.
A fact sheet of the World Bank obtained by ghanabusinessnews.com, says the poverty rate has fallen below 40 per cent in the Central Region and below 20 per cent in most of the southern half of the country: the Greater Accra Region, Western, Ashanti and Eastern Regions, along with the southern parts of the Volta and Brong Ahafo regions.
In contrast “the poverty rate remains far above 40 per cent in most districts in the North” and “one out of three poor people lives in the northern rural areas, while in 1991 it was only one out of five.”
Fighting poverty is urgent, and must be fought at all fronts. The African citizen must not continue to live in poverty, with all the resources that the continent is endowed with.
By Emmanuel K. Dogbevi
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