Africa rising leaves the poor behind

Finance minister Nhlanhla Nene. (Madelene Cronje, M&G)

Finance minister Nhlanhla Nene. (Madelene Cronje, M&G)

The consensus among African leaders at the 50th annual meeting of the African Development Bank in Abidjan, Côte d’Ivoire, this week was that, although the continent has shown strong economic growth over the past 10 years, it has not been inclusive.

The leaders were referring to the African Economic Outlook 2015 report, which estimates the economic growth figures will be 4.5% in 2015 and 5% in 2016, both of which are considerably higher than the 3.5% and 3.9% in 2013 and 2014 respectively.

The report forecasts foreign direct investment will reach $73.5-billion in 2015, with the bulk of it coming from China and South African companies, which have become leading investors in the continent.

But it became clear from the discussions that translating economic growth into economic transformation to create employment, alleviate poverty and reduce inequality has not happened. Globally, human development is lowest in Africa, and the report found that huge inequalities persisted, with the youth and women being worse off than men.

In an interview with the Mail & Guardian in Abidjan on Tuesday, South Africa’s finance minister, Nhlanhla Nene, said Africa had seen a lot of growth but poverty had worsened. This was because the policies that supported growth had failed to recognise that economic growth did not trickle down to the poor and most vulnerable in society.

Nene said the policies were chiefly directed at sectors such as finance and information-communication technology, which had benefited from foreign direct investment but were not socially redistributive in nature.

He said policies should be implemented that would ensure that, when the economy grew, the benefits would be shared by taxation, which should be redistributive and progressive, and take care of those who were poor.
If that didn’t happen, Africa would see more explosive situations such as the recent xenophobic attacks in South Africa.

“We learnt a number of lessons through this unfortunate xenophobia we experienced. It is a symptom of a bigger problem. The opportunities we have in the country are not adequate for young people. But we have learned a lesson; we are also looking at the challenges of unemployment and poverty,” he said.

South Africa needed to pay more attention to agriculture, and the country needed to take advantage of its young labour force, he said. Innovative technology needed to be introduced to agriculture so that it could attract young people.

Inequality had its roots in history and economic exclusion followed racial lines.

“In addressing that, we introduced BEE [black economic empowerment] and other policies, but these have been viewed as impediments to growth. Impressive growth patterns do no translate into why we are leaving the poor behind. BEE and the transformation agenda are critical to South Africa,” Nene said.

He said South Africa’s policies were now aimed at promoting industrial development, agriculture, agro-processing and absorbing low-skilled labour. But the focus should also be on the quality of growth.

“It is not about the numbers. If the growth is such that the vast majority are poor and unemployed, we need to shift focus. We need to identify opportunities where we can take part on the next level of the value chain, like manufacturing,” Nene said.

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