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Getting to Zero On Poverty in Africa

ANALYSIS

Last week, the United Nations General Assembly adopted the 2030 Agenda for Sustainable Development, with its 17 goals and 169 associated targets. Now that the goals and targets have been finalised, the real work begins. The first, and most important Sustainable Development Goal (SDG) is simply to ‘end poverty in all its forms everywhere’.

Africa faces the largest challenge to meet goal one. Soon, the burden of extreme poverty will be the most prevalent in sub-Saharan Africa, as rapid growth continues to lift millions of Chinese and Indians, among others, out of dire circumstances.

Eradicating poverty does not mean zero poverty, which would be unrealistic. Rather, it’s about reducing poverty levels in each country to below 3%. With an estimated total population of 1.17 billion Africans in 2015, 3% is 35 million people. By 2030, achieving that goal would mean that 49 million Africans (out of an estimated total population of 1.64 billion) would still live in extreme poverty.

According to the estimates of the African Futures Project, using the International Futures forecasting system, 418 million Africans (roughly 36%) currently live in extreme poverty.

This is calculated using the standard income line of US$1.25 in 2005 purchasing power parity, which is still generally used as appropriate benchmark under goal one.

The income level used to define extreme poverty (such as US$1.25 or less per day) has been updated a number of times and generally follows the rebasing of global economies.

This is done by a worldwide statistical partnership; the International Comparison Program (ICP) – now hosted by the World Bank. It’s a complex, time-consuming task, and is only done every few years.

In October last year, the World Bank released the latest global update, which now moves the comparison of global economies from 2005 to 2011 prices. Armed with the voluminous data from this recent rebasing, the next step to measure progress towards goal one is to release an updated extreme poverty line. Originally, extreme poverty was defined as persons living below US$0.90 in 1990 prices, which then became US$1.25 in 2005 prices: the level that is currently included in the SDGs.

Ahead of its upcoming annual meeting in Lima, Peru, the World Bank is expected to update the poverty line to either US$1.90 or US$1.92 in 2011 prices. The recalculation has limited impact in Africa, where we estimate poverty levels at 418 million using US$1.25 (in 2005 prices); and 408 million using US$1.92 (in 2011 prices). The update may, however, have larger implications for other regions.

Whatever the final level, forecasting done by the African Futures Project at the Institute for Security Studies underlined the huge ambition in the SDG goal on eliminating extreme poverty.

A base case forecast – where Africa’s 54 countries grow, on average, at around 5.8% per annum from 2015 to 2030 – would see the number of people living in extreme poverty decline from 418 million to 397 million over the next 15 years (in 2005 prices); or 408 million to 389 million (using 2011 prices).

Although it may appear disappointing, this relatively small decline in the absolute number of extremely poor people should be viewed against the simultaneous 39% increase in Africa’s total population size over this period.

Without additional measures, we expect that Africa’s total extremely poor population will therefore decrease from its current 36% of total population to about 24%. Africa’s prospects are positive – but more is required. To achieve the goal of eradicating extreme poverty by 2030, Africa would need to achieve an additional 21% decrease in poverty levels.

This is, undoubtedly, a huge challenge and implies significantly higher average growth rates than the current forecast. It also implies that Africa would have to make progress in reducing its stubbornly high levels of inequality (goal 10 in the SDGs is ‘reducing inequality within and among countries’).

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Written by PH

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