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Global Poverty Reduction 2001 : II. Regional Experiences
A. Africa21. The recent performance of Africa's economies shows significant improvements. In the 1980s and early 1990s, per capita income declined consistently. Since the mid-1990s, however, per capita incomes have increased in a number of countries. Nevertheless, the growth rates registered in the past few years are much below the rates required to have a significant impact on poverty reduction. As a whole, if Africa is to reduce the incidence of poverty by half by 2015 as proposed in the International Development Goals, it needs to achieve and sustain a growth rate of 7 percent per annum (UNECA, 1999). 22. Global markets provide opportunities for growth. However, for Africa to benefit from participation in globalized markets, macroeconomic and structural policies that inhibit competitiveness, the poor socioeconomic conditions in Africa, and suboptimal relations with its major trade partners must be addressed. 23. To generate sustainable growth, African countries need to import capital and consumer goods, but high import tariffs have been a constraint on imports. These tariffs, averaging 25 percent, are three times higher than those of the fast growing exporters and more than four times the developing country average (World Bank 1999). Non-tariff barriers also remain high in the region. Further, the sustainability of capital and consumer goods imports can be guaranteed only if African exports grow at a fast rate. The export performance in Africa has been unsatisfactory; African exports have grown at less than half the rate of growth of other developing countries. Africa's share in world exports declined from 3.9 percent in 1980 to 1.5 percent in 1997 (World Bank 2001a). The poor performance in export growth is attributed to the region's inability to maintain its market share in the production of key primary commodities, lack of diversification in its exports, the persistence of protectionism in the trade of some commodities, and previously overvalued exchange rates that adversely affected agricultural exports. 24. In addition to further multilateral or unilateral liberalization of trade, strengthening the ongoing effort toward regional integration should enhance Africa’s integration into the global economy. Regional trading arrangements can lead to economic benefits by increasing the size of markets and the level of trade between participants. However, these arrangements should also promote open trade policies toward third countries to maximize benefits. In this connection, it would also be desirable to rationalize the existing structure of regional arrangements in Africa by reducing the number of overlapping trading blocks. 25. In general, the adjustment process involves winners and losers. In some cases, the consequences with respect to income distribution could be significant. In Zambia, some maize growers lost as a result of trade liberalization within the domestic economy, whereas in Zimbabwe, the effect of liberalization was positive (OXFAM, 1999). In principle, losers from trade liberalization and other adjustment programs may be compensated through the provision of safety nets. In many parts of Africa, however, the high incidence of poverty, the large number of potential beneficiaries and the high financial requirements hinder the sustainability of safety net programs. In the near future, some of the budgetary constraints may be alleviated as the result of debt relief for heavily indebted poor countries (HIPCs), the majority of which are African. 26. Furthermore, Africa faces high protectionism with respect to its exports to the developed country markets. According to a recent World Bank study (2001e), if all trade barriers to African exports in the Canada, the European Union (EU), Japan, and the United States (US) were eliminated, non-oil exports would expand by 14 percent. It is also estimated that greater access to the agricultural markets of developed countries would increase real incomes in Africa by US $ 6 per person per year by enabling producers to sell their commodities at higher prices and in greater volumes (Biswanger and Lutz). Therefore, it is crucial for developed countries to lower their own effective protection to African exports, especially on agricultural products, in order to contribute to pro-poor growth in African countries. Although it would be preferable to do this in a multilateral setting, recent initiatives to provide duty- and quota-free access to the exports of poor countries could be extended as widely as possible. 27. The rise in global markets is attributed partly to improvements in communication technologies that are knowledge and skill intensive. At present, Africa’s human capital base is quite low. In addition, the HIV/AIDS pandemic is robbing African societies of some of its productive members (UNAIDS, 2000). Given that some of the victims of the pandemic are well-educated members of society, in addition to the human toll, Africa's competitiveness both in the national and global economy is being undermined. In the short-run, it may not be possible for Africa to take full advantage of the growth in global markets. In the long run, however, some of these problems can be addressed both at the national and international level. At the national level, not only should African governments increase spending on primary education and preventative health care, but they should also enhance the efficiency of such spending. The international community may also help by financing the development and provision of international public goods such as vaccines for HIV/AIDS and malaria, the effects of which affect the productivity and well being of the poor in Africa disproportionately. 28. While globalization offers a number of opportunities for addressing problems of poverty in Africa, African countries should recognize that strong national economies are prerequisites for effective participation in the global markets. To strengthen their domestic economies, policy makers must reform the policy environment even further to attract more investment and promote pro-poor growth. Efforts in this regard should include strategies towards good governance, a more stable macroeconomic environment, structural reform that enhances external competitiveness, diversification of exports, development of human capital (especially by reversing the harmful effects of the HIV/AIDS crisis), promotion of the private sector, effective negotiation with trading partners in developed countries for access to their markets, and efficient and equitable use of money saved under the HIPC initiative for financing targeted safety net programs.
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