Friday, January 6, 2012


Antoinette Sayeh, Director of the IMF's Africa Deparment
Antoinette Sayeh, Director of the IMF’s African Department published on the site of the IMF an interesting article on Africa titled ‘ The Quality of Growth’. She starts with the observation that “Sub - Saharan Africa has had a great start to the 21st century—at least that’s what the numbers show. Year after year the region has racked up solid economic growth, even when the global economy was anything but sound. Low-income countries have done particularly well. Not only have average per capita incomes mounted steadily, but inflation has generally been tamed, debt pruned, and opportunities for foreign trade and investment opened up.”

But general statistics can be misleading especially when it concerns the poor people. The question is always if they get a share of the growing cake. Economic growth is a start but goes it together with some kind of income distribution? To determine if the fruits of economic growth goes also to the most vulnerable people in the region, the IMF “looked at detailed survey information on household activities and characteristics in six fairly typical lower-income countries in sub-Saharan Africa. The sample is of course rather small—and it didn’t include any major oil exporters or fragile states—but it gives an insight into how changes in the standard of living of the poor correlate with each country’s growth and into the factors that lifted poor people in these countries, as measured by their consumption.”

To promote employment for young Togolese workers the trade union founded a cooperative that helps them to become a mototaxista.
The survey learned that there “was a solid rise in average living standards of relatively poor households in each of the four higher-growth countries in our sample—Ghana, Mozambique, Tanzania, and Uganda—during the early 2000s. In contrast, poor households in Cameroon and Zambia—the two slowest-growing countries—fared less well in terms of changes in their consumption levels.”

Other results of the survey are that “ the poorest 25 percent of households consumed more when economic growth per capita was higher” and “when consumption of the poorest 25 percent of households rose, the number of people in absolute poverty fell. In other words, poor households did share in the benefits of growth. Furthermore, we know that among fast-growing countries in general, those that grow the fastest tend to see headcount poverty fall the most. Countries in our sample where the poorest 25 percent of the population did particularly well also showed sharp improvements in agricultural employment, especially in rural areas. So agricultural incomes seem to play an important role in making growth more inclusive.”

The Director of the IMF African Department concludes that “economic growth is critical to raising the quality of life for the poorest in society. But it’s equally clear that growth alone is not enough. Economic growth must generate the right sort of employment and, over the longer term, solid gains in education and human capital accumulation. For young people, in particular, school plus experience is essential for true inclusion in society.”

Another project sponsored by the Togolese trade union is a cooperative that helps women to become hairdressers.
Sayeh believes that in the short term there are two ways to raise the living standards of the poor. “The first is through income-generating opportunities in agriculture, from which most poor households derive their livelihood—for example, by promoting more productive farming methods (use of fertilizers, seeds) and building the appropriate infrastructure (roads, electrification, irrigation). Second, economic assistance must be targeted to the most vulnerable households."

Economic growth is the basic condition to make better the life of the poor and vulnerable people but it is not enough. Next is employment followed by a more equal distribution of income and welfare. State and government should play a vital role on both fields. Trade unions in rural, sub-urban and urban areas have a lot of first hand experience how to deal with employment and employers and have ideas about the distribution of income and welfare. Therefore they should be consulted by governments and other institutions about what kind of economic assistance to which groups in societies should be directed and how the distribution of income and welfare should be organized.

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