Transition and inclusive development in Sub-Saharan Africa Antonie de Kemp Policy and Operations Evaluation Department Include conference 21 November 2018

Contents Development of economic growth, inequality and poverty in Sub- Saharan Africa Why economic growth did not translate in to a higher reduction of poverty Policy options

Economic growth

Poverty did not decrease equally: Reduction of extreme poverty from 58% to 41% Increase in the number of poor people from 376 million to 389 million About 1/3 lives in fragile countries

Fragile contexts (OECD)

The example of Rwanda Percentage poor 2001 Percentage poor 2014

Causes: Increase in private consumption was lower than economic growth, due to: High public expenditure (larger reduction of multidimensional poverty, higher HDI) High private investments (mining, construction) High intensity of poverty (high poverty gap) High inequality Demographic development Structure of economic growth

Poverty and inequality:

Governance and inequality

Development of inequality in six countries

Demographic development

Dependency children and youngsters (<20)

Structure of economic development Economic growth caused by: Production and export of natural resources (resource boom) Recovery after conflict (Ethiopia, Rwanda, Uganda, Mozambique) Government expenditure (aided by ODA and debt relief) and private investment (mining, construction) The use of more land for agriculture Increase of the services sector (telecommunications) Hardly an economic transition towards a modern economic development

No structural transformation of the economy: Productivity in agriculture remains low, contributing to high food prices Enclave character of the mining industry Manufacturing sector remains small and does not offer much employment Dutch disease effects negatively impact the competitiveness of local producers on the international (China, India) Dual character of services: employment mainly in informal low productive services Jobless growth

Contribution of sectors to GDP and employment

Development manufacturing

Comparison Burkina Faso Ethiopia Rwanda Senegal Tanzania Uganda Economic growth 0/+ ++ - + Poverty -- Poverty reduction Multidimensional poverty Inequality Good governance Government effectiveness Population policy Tax revenue ODA per capita

Challenges: Economic growth was and is not sustainable and not inclusive Sub-Saharan Africa will not realise SDGs 1 and 10 High urbanisation will lead to a further congestion in the cities without the creation of many new jobs Annually 15-20 million African youngsters enter the labour market A large majority does not find a job with an income above the poverty level The factors contribute to frustration and radicalisation Risks of a ‘trickle down’ of instability from the MENA region (the ring behind the ring)

Megacities

Policy options Increase agricultural productivity, especially focusing on smaller farmers (land reform and ensuring land rights) Development of an agro-industry Strengthening (rural) infrastructure Strengthening construction, greening of the economy, tourism, and employment in health and education Education, education, education: focused on connection to the labour market Basic health care and SRHR Cash transfer programmes