McKay, Andy

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Growth and poverty reduction in
 Africa in the last two decades
And how does Rwanda fare?
Andy McKay
University of Sussex
IPAR's Annual Research Conference 2011
9 December 
2011
IPAR Conference
Outline
 The Economist
 Recent SSA growth experience
 Recent poverty reduction arguments
 The AERC collaborative project
 Evidence on change in monetary 
poverty in Africa
 Change in non-monetary poverty
 Tentative explanations
 And how does Rwanda fare?
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2011
IPAR Conference
The Economist (January 2011)
“Over the past decade the simple 
unweighted average of countries’ growth 
rates was virtually identical in Africa and 
Asia” 
“The Economist finds that over the ten 
years to 2010, six of the world’s ten 
fastest-growing economies were in sub-
Saharan Africa”
Great: so what about poverty reduction?3
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2011
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Africa’s hopeful economies
The sun shines bright
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2011
IPAR Conference
Recent SSA growth experience
Substantial recovery in growth in Africa 
since mid 1990s (GDP increase c. 30%)
6
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
0
100
200
300
400
500
600
700
Sub-Saharan Africa GDP, constant USD
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2011
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Recent growth experience (2)
Focus on biggest 24 SSA countries: 
91% of population
WDI data, mostly local currency GDP
Mixed experience
 Some richer countries fared badly and 
some poorer ones quite well
7
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GDP in constant USD values
8
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2011
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GDP in constant USD values
919
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
0
100
200
300
400
500
600
700
800
Burkina Faso
Cameroon
Chad
Congo DR
Cote d'Ivoire
Ethiopia
Ghana
Guinea
Kenya
Madagascar
Malawi
Mali
Mozambique
Nigeria
Niger 
Rwanda
Senegal
Sudan
Tanzania
Uganda
Zambia
Zimbabwe
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2011
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Recent growth experience (3)
6 cases GDP p.c. lower in 2010 than 
1990, but only two disastrous cases
10
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
0
20
40
60
80
100
120
Per capita GDP since 1990: declining countries
Cameroon Congo DR Cote d'Ivoire Madagascar Niger Zimbabwe
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Recent growth experience (4)
11
10 cases where GDP p.c. in 2010 is >= 
50% bigger than 1990
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2011
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Recent growth experience (5)
Why growth recoveries in many cases?
 Commodities of course
 But many other factors
Growth in other sectors:  trade, telecom, 
manufacturing
 End of many conflicts
Greater macroeconomic stability
 Foreign investment and other private inflows
 Some microeconomic reforms (business 
environment)
 Urbanisation
 Fertility transitions  etc. 12
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2011
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Recent arguments on poverty 
in Africa
Sala-i-Martin and Pinhovskiy (2010) use 
national accounts data (GDP from PWT) 
to argue that “Poverty is falling in Africa 
… much faster than you think” (NBER 
Working Paper)
 Fast growth and falling inequality 
– But questions on reliability of underlying 
method  
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2011
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Poverty reduction arguments (2)
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2011
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Recent arguments on poverty 
(2)
Young uses DHS data to show 
impressive progress in Africa
 And argues for gross inconsistency of DHS 
data and PWT
But what does comparable standard 
household survey data tell us? 
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2011
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The AERC Growth-Poverty 
Nexus Project
Collaborative AERC project from 2008-
11
Framework papers on specific themes: 
growth-poverty links, agriculture, labour 
markets, informality, social protection, 
spatial patterns, globalisation
13 country studies on 11 countries:
 Benin, Burkina Faso, Cameroon (2), Chad, 
Ethiopia, Ghana, Guinea, Kenya, Malawi, 
Nigeria (2), Senegal 16
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2011
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AERC project (2)
Final workshop May 2011, finalised 
papers summer 2011
Country studies generally focused on 
one theme
Required focus on consistent poverty 
data sets and measures
National poverty lines, not dollar a day
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Evidence on change in 
monetary poverty
Seek to synthesise some results from 
AERC project
 Monetary data for 10 countries: poverty 
falls in all, not always monotonic
 Big falls in Ghana and Senegal
 Where we have severity, that falls (esp. 
Guinea)
 Where we can disaggregate U-R, rural 
poverty falls, urban poverty often rises
 Where we have inequality, it falls in most 
cases
18
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Change in monetary poverty 
(2)
Can broaden story to look at poverty 
trends in 9 more of top 24
 Comparable Data on 18/24; 71% of SSA 
population
Monetary poverty falls in most cases, 
except Côte d’Ivoire, and Zambia over 
1990s
 Large magnitudes also in Mozambique and 
Uganda over these periods, but small 
elsewhere 23
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24
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2011
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Changes in non-monetary 
poverty
Focusing first on AERC project countries
– where examined, non-income poverty 
usually falling: Benin, Cameroon, 
Chad, Ghana, Guinea, Nigeria
– Education improves a lot almost 
everywhere
– DHS data shows improvements in some 
indicators
• Infant mortality
• Not always malnutrition 25
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2011
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Changes in non-monetary 
poverty (2)
Extending to other countries of top 24
 Mortality rises in Côte d’Ivoire and 
Zimbabwe, falls elsewhere, often by large 
magnitudes (e.g. Madagascar, Rwanda, 
Tanzania)
 Malnutrition modestly falls in recent years 
most places, but not Zimbabwe
28
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Summary of poverty evidence
In summary in relation to monetary 
poverty:
 Substantial reductions in Ghana, Uganda, 
Senegal, Mozambique?
 Reasonable falls in Burkina Faso, 
Cameroon, Ethiopia, Guinea, Malawi, Mali, 
Nigeria
 Modest falls: Rwanda, S. Africa, Tanzania
 Little change: Madagascar
 But increases in Côte d’Ivoire, Kenya, 
Zambia
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Summary of poverty evidence 
(2)
Monetary poverty does seem to be 
falling, but usually not at rates 
suggested by SiM&P
 And it is not falling a lot everywhere
DHS story is positive but not 
unambiguously so
Evidence of significant progress, but not 
to extent of SiM&P – and this is much 
better data 32
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Explanations for poverty 
reduction (AERC project)
Different country studies took different 
focus and have different explanations
 Labour: Cameroon1, Ethiopia
 Agriculture: Burkina Faso, Malawi
 Spatial: Cameroon2, Ghana 
 Institutions: Kenya
 Public spending: Chad
 Resources: Guinea
 Migration: Senegal
 Non-income outcomes: Nigeria1
 General: Benin, Nigeria2
33
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Explanations (2)
Beneficial impact of innovative 
agricultural policies where studied 
(input subsidies, new seeds), but not 
reaching the poorest (Burkina, Malawi)
Evidence of widening spatial inequality 
in some cases (Cameroon, Ghana)
 But timescale?
Significant poverty reduction among 
formal sector wage earners (Cameroon, 
Ethiopia) 34
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Explanations (3)
Institutions help explain differential 
district performance (Kenya)
Migration can be important (Senegal)
Public spending often not very effective 
instrument of poverty reduction in 
resource rich economies (Chad, Nigeria)
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The omitted countries
Monetary poverty: Angola, Chad, DR 
Congo, Niger, Sudan, Zimbabwe
Non-monetary poverty: Angola, DR 
Congo, Sudan
Expected to be less positive stories in 
most cases (20.1% of population in 
former case, 15.0% in latter)
 Qualifies SiM&P story more 36
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Explanations: the role of 
growth
Associations between good growth 
performance and poverty reduction 
(and their opposites)
 More effective where inequality fell e.g. 
Senegal
In lower growth cases falling inequality 
has contributed to poverty reduction
 But rising inequality limited poverty 
reduction in Rwanda, S. Africa, Uganda
Non-income outcomes less strongly 
associated with growth
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Role of growth (2)
Other factors are likely to matter for 
non-monetary outcomes:
 Effectiveness of public spending and 
service delivery
 External aid (similar issues)
Non-monetary improvements likely to 
be good for future growth and 
monetary poverty reduction
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Poverty changes
Growth has been important, especially 
in relation to monetary poverty 
So has been the ending of conflict or its 
continuing presence
Inequality has not systematically 
increased
Non-monetary outcomes often differ 
from monetary ones
Omitted countries likely less positive39
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So how does Rwanda fare?
Rwanda among countries that have 
raised its GDP by 50% between 1995 
and 2010
Rwanda relatively poor in East Africa, 
but quite good growth performance 
Monetary poverty fell modestly between 
200/01 and 2005/06 despite growth  
– Increase in inequality
– Increase in food prices cf. non-food
– Disappointing agric performance 40
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
50
100
150
200
250
Constant price GDP in LCU, 1995=100
Angola
Burkina Faso
Chad
Ethiopia
Ghana
Mozambique
Nigeria
Rwanda
Sudan
Tanzania
Uganda
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199019911992199319941995199619971998199920002001200220032004200520062007200820092010
0
50
100
150
200
250
300
350
400
450
500
US Dollar GDP, constant 2000 prices
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
20
40
60
80
100
120
140
160
180
200
GDP in constant prices, 1995=100
Local currency units
Ethiopia Kenya Rwanda Tanzania Uganda
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So how does Rwanda fare? (2)
But more impressive performance in 
non-monetary indicators
– Big expansion of education, even if 
quality may still be an issue
– Impressive reductions in infant and 
child mortality: better progress than 
some neighbouring countries
– Also reasonable progress in 
malnutrition 44
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Rwanda health outcomes
–
46
infant mortality stunting stunting underweight underweight
1992 85 48 29
2000 107 43 24
2005 86 45 51 23 18
2007/08 62
2010 50 44 11
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Rwanda mortality compared to 
elsewhere in East Africa
–
47
infant mortality
2000 2005 2010
Ethiopia 97 77
Kenya 52
Rwanda 107 86 50
Tanzania 99 68
Uganda 89 75
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So how does Rwanda fare? (3)
Impressive and rapid reductions in 
fertility
Improved health care practices 
–
48
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2011
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So how does Rwanda fare? (3)
Impressive and rapid reductions in 
fertility
Improved health care practices 
–
49
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In summary
Impressive growth recovery in SSA
Progress on poverty reduction 
(monetary and non-monetary) across 
most countries
But some faster than others: what can 
we learn from successes?
In Rwanda impressive progress in 
education and health, esp. last 5 years
Awaiting results on monetary poverty ...53
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2011
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In summary (2)
There is substantial opportunity for 
Rwandans to work on these questions
– Good quality data and accessible
Opportunities for greater Rwandan 
participation in AERC and similar 
networks
At times helpful to have regional and 
continent wide perspective
54
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Growth and poverty reduction in Africa in the last two decades: and how does Rwanda fare?

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Growth and poverty reduction in Africa in the last two decades: and how does Rwanda fare?

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