Economic growth in some African countries has improved the well-being of the poorest. However, in remote areas poverty remains entrenched. New research argues that Africa’s economic growth will not be translated into poverty reduction until the poor are given better access to markets and to basic infrastructure, such as roads.

A paper published by the World Institute for Development Economics Research (WIDER) has examined the relationship between economic growth, income inequality and poverty in a number of African countries. Such an examination of the benefits of economic growth in Africa for the continent’s poor is made difficult by the range and complexity of issues involved – from market reforms through to the impact of the AIDS and malaria epidemics. Nevertheless, the research shows that the availability of sound infrastructure (especially roads) and proximity to markets are crucial if economic growth is to result in the reduction of poverty.

Households which already have a greater economic resource – such as land and access to high skilled workers – are better placed to profit from the new opportunities generated by liberalisation and deregulation. However, another key factor in the household’s ability to benefit from liberalisation is its proximity to roads and markets. The further it is from roads and markets, the poorer a household is likely to be. As the availability of public infrastructure and services differs considerably across the continent, the effects of economic growth are similarly varied across Africa.

The authors report that:

• Risks such as rainfall variations and ill health have profound effects on poverty levels; ill-health amongst Ugandans in 1992 noticeably increased the likelihood of being in poverty eight years later.
• Export-crop producers seem to have benefited more from economic growth than food-crop producers.
• Many African households live and work in an unstable environment, both physically and economically. They have insufficient access to credit or insurance to protect them from risks and are forced to engage in low-risk, low-return activities, which keeps them in poverty. The report argues that policies are needed to help the poor manage risk.

As well as access to markets and roads, poverty reduction is also dependent on the poor having access to electricity, sanitation, health, extension, education and credit. However, the authors argue that researchers and policy makers need to take account of geography in understanding poverty. In particular they argue that there is a need for more microeconomic evidence which can explain the disparity in economic growth, and the resulting reduction in poverty, that exists between different regions.

Source(s):
‘Reforms, remoteness and risk in Africa: understanding inequality and poverty during the 1990s’ by Luc Christiaensen, Lionel Demery and Stefano Paternostro, Discussion Paper No. 2003/70, UN University World Institute for Development Economics Research (WIDER), September 2003 Full document.

Funded by: World Bank

id21 Research Highlight: 9 February 2004

Further Information:
Luc Christiaensen, Lionel Demery and Stefano Paternostro
The World Bank
1818 H Street, NW
Washington DC 20433
USA

Tel: +1 202-458-1463
Fax: +1 202-473-7913
Contact the contributor: lchristiaensen@worldbank.org

Contact the contributor: ldemery@worldbank.org

Contact the contributor: spaternostro@worldbank.org

World Bank

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'Credit, food and labour. Constraints on structural adjustment in rural areas of South India'

'Growth, Distribution and Poverty in Africa. Messages from the 1990's'

'Chronic poverty and remote rural areas'

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