Contribution – Understanding the causes of poverty in Africa

Ingénieur des Travaux Publics diplômé de l’Institut National Polytechnique Houphouet-Boigny (Cote d’Ivoire) et titulaire d’un Master In Management de l’Emlyon (France), Benissan possède plus de 5 années d’expérience dans des environnements multiculturels avec des missions allant du Program au Consulting Management.

Il a notamment travaillé sur des projets de développement urbains importants (réalisation d’échangeurs, constructions de centre hospitaliers universitaires, revue de schéma directeur de villes) et a participé à des projets de transformation d’entreprises dans les domaines de la santé et l’énergie.

Il manifeste un fort intérêt pour la compréhension et la résolution de problématiques concernant le développement économique et social des pays Africains, dans ce cadre il participe en tant que consultant en stratégie à la conception de recommandations portant sur l’amélioration de la qualité de vie des populations et la réduction de la pauvrété en Afrique.

Ces expériences ainsi que son double profil lui confèrent des aptitudes d’adaptation, de résilience et une volonté forte d’amélioration continue.

Benissan s’inscrit également dans le développement de sa communauté, en témoigne son implication depuis 4 ans en tant que mentor de jeunes professionnels souhaitant avoir une carrière à l’international et les projets de création d’Inclusive Business en Afrique auxquels il a participé en freelance.

Dans ce papier, écrit en collaboration avec PACT, il revient sur l’épineux sujet de la pauvreté en Afrique. 

Decades of progress in the global fight against poverty have been undone by the Covid-19 pandemic, causing a significant setback. Before the pandemic, the global poverty rate had declined from 38 percent in 1990 to 8.4 percent in 2019. However, the pandemic caused the estimated extreme poverty rate to increase to 9.3 percent in 2020, pushing over 70 million people into extreme poverty and bringing the global total to over 700 million.

Although considerable efforts have been made by governments and organizations in the post-Covid era, poverty reduction rates have slowed down in 2022 due to factors such as the ongoing war in Ukraine, a decline in economic growth in China, and rising costs of essential goods like food and energy. The rise in food and energy prices can negatively impact the poor in the short run and even cause an increase in the number of people living in poverty. However, in the long run, these price increases may have positive income effects since many poor households are either net food producers or earn income in agriculture.

Today, more than 680 million people live below the extreme poverty line, defined by the World Bank as surviving on less than $2.15 a day.

2022 is now ranked as the second worst year (after 2020) for poverty reduction in the last two decades. According to World Bank forecasts, 7% of the world’s population will still struggle with extreme poverty in 2030.

Of the 27 countries classified as Low-Income Economies, 23 are in Africa, which remains the continent most affected by poverty. Extreme poverty remains highly concentrated in Sub-Saharan Africa and fragile and conflict-affected economies. Sub-Saharan Africa accounted for over 60 percent of the global extreme poor, and over 35 percent of the population in the region lived below the international poverty line.

The impacts of poverty are devastating, including food insecurity and malnutrition, poor health outcomes and limited access to healthcare, low productivity in agriculture, limited economic growth and productivity, and social unrest and inequality. These negative effects can have severe consequences on individuals, communities, and countries, trapping them in a cycle of poverty.

In these challenging times marked by inflation, climate change, pandemics, and geopolitical tensions, it is crucial to address poverty in Africa, to achieve sustainable development goals and promote global prosperity.

Why is Africa so concerned about poverty issues ?

Poverty is a significant issue that affects millions of people in Africa. Despite significant efforts to address poverty through various aid, development programs, and policy plans, many African countries still face high levels of poverty and inequality.

One factor that may explain the continued presence of poverty in Africa is the existence of poverty traps. Essentially, poverty traps refer to a set of self-reinforcing mechanisms that cause countries to start and remain poor over time. These traps create a vicious cycle of low income, poor health, inadequate education, and limited access to resources, which make it difficult for individuals and communities to escape poverty.

Poverty traps can arise from various factors, including market failures, social norms, and policy failures. Ultimately, poverty traps can cause a self-reinforcing cycle of poverty, where the current causes of poverty become the consequences, thereby perpetuating poverty in the long term.

In the following we will look at some of the mechanisms observed.

1. Bad Governance and Political Instability

Bad governance and political instability are often cited as Africa’s main drivers of poverty. Poor governance, characterized by corruption, weak institutions, and lack of accountability, creates an environment where resources are often mismanaged or embezzled, leading to limited public investment in social services such as healthcare, education, and infrastructure.

In addition, bad governance and political instability often exacerbate inequality by creating unequal access to resources and opportunities and favoring a small group of elites at the expense of the broader population. This, in turn, can fuel social and political unrest, which can sometimes escalate into full-blown conflicts.

In 2020, the armed conflict has affected over half of the countries in Sub-Saharan Africa over the last twenty years. According to the United Nations Development Programme (UNDP), countries in conflict have poverty rates that are 20% higher on average than those of countries that are not in conflict. Moreover, countries affected by conflict for more than half of the post-Cold War period have, on average, a gross domestic product (GDP) per capita that is more than 30% lower than countries that have not experienced conflict. According to the World Bank, countries affected by conflict experience an average of 20 years of economic growth loss, which has a significant impact on poverty rates.

For example, the conflicts in the Democratic Republic of Congo (DRC) have had a significant impact on poverty rates in the country. The country has the highest number of internally displaced people in Africa, and the ongoing conflict has hindered economic development and led to the loss of human life, making it difficult for people to break out of the poverty cycle. In 2018, the poverty rate in the DRC was estimated to be over 70%.

In addition to the economic impact of conflict, it also has a devastating effect on social and human development indicators. Conflict leads to displacement, destruction of infrastructure, disruption of services, and loss of lives, resulting in increased poverty, reduced access to education and health care, disrupt agricultural production, and lower life expectancy.

Other part studies have shown that countries with strong governance systems are better equipped to reduce poverty and promote sustainable economic growth.

Addressing the root causes of conflicts and improving governance can go a long way in reducing poverty rates and promoting economic development.

2. High Transport Costs and Small Market Size

The lack of infrastructure and small market size are major contributing factors to poverty in Africa.

Historically, African countries have relied heavily on exporting primary commodities such as minerals, oil, and agricultural products, which often have low value-added and are subject to volatile prices on the global market. However, continent geography, including many landlocked countries and poor transportation infrastructure, makes it difficult to move goods and people efficiently, leading to high transport costs regionally. As a result, the cost of basic goods and services, including food and medical supplies, becomes more expensive for people living in poverty.

Additionally, most African countries have small domestic markets due to their relatively small population sizes, limiting the potential for businesses to grow and become competitive. These challenges are especially acute in rural areas, where poor transportation infrastructure and limited market size can make it difficult for farmers and other small-scale entrepreneurs to access markets, hindering their ability to earn a living and lift themselves out of poverty.

These structural failures lead to a dependence on external partnerships, as African countries have mainly traded with countries outside the continent rather than with each other, leading to missed opportunities for trade and economic growth.

High transport costs and small market size represent significant challenges to economic development in Africa, hindering growth and perpetuating poverty.

The African Continental Free Trade Area (AfCFTA), which aims to create a single market for goods and services in Africa, faces various challenges such as inadequate infrastructure, lack of standardization, and complex rules of origin that could hinder its success.

Addressing these challenges will require significant investments in transportation infrastructure and efforts to foster regional integration and economic cooperation.

3. Low productivity Agriculture

Agriculture is the backbone of the African economy and serves as the primary source of income for most of the population. However, it faces a multitude of challenges that hinder its growth and development.

Small-scale farmers in Africa have limited access to modern agricultural technology, which makes it difficult for them to compete with larger farms and achieve optimal yields. Africa has the lowest share of irrigated cropland of any major region of the developing world, just 6% of cultivated land is currently irrigated in Africa, compared to 14% in Latin America and 37% in Asia.

Additionally, climate change has negative impacts, such as droughts, floods, and unpredictable rainfall patterns.  Furthermore, soil degradation and erosion resulting from overuse and misuse of land can lead to reduced agricultural productivity, limiting the potential for economic growth. In sub-Saharan Africa, the average fertilizer application per hectare of cultivated land is 17 kg, compared to a global average of 135 kg.

Poor infrastructure, including inadequate storage facilities and limited transportation systems, makes it difficult to transport crops from rural areas to urban markets, leading to food waste, high transport costs, and limited market access, further impacting economic performance. Additionally, many small-scale farmers lack access to credit and financial services, making it difficult to invest in their farms and improve their yields, hindering their ability to scale their businesses. 

The low productivity of agriculture is thus at the root of poverty:

–      It results in low income for farmers who are unable to produce enough to meet their basic needs and those of their families.

–      It leads to food insecurity as the production of crops and livestock is insufficient to meet the demands of the population, Malnutrition resulting from food insecurity can have long-term consequences for the future economic opportunities of children, and it can also lead to social unrest, displacement, and migration, exacerbating poverty.

–      Its limited economic growth and development as agriculture is a major sector of most African economies.

It perpetuates the cycle of poverty, as low-productivity agriculture means that farmers cannot invest in their farms, resulting in even lower levels of productivity and income.

Improving access to modern agricultural technology, addressing the negative impacts of climate change, promoting sustainable land use, improving transportation infrastructure, and increasing access to credit and financial services are all critical steps that need to be taken to boost agricultural productivity and address poverty and food insecurity in African countries.

By prioritizing these issues, African governments, international organizations, and other stakeholders can help to ensure that agriculture can continue to play a crucial role in the economy and livelihoods of African populations.

4. Very High Disease Burden

Africa is facing a severe disease burden that is unique in the world. This burden includes a long history of exposure to severe diseases such as AIDS, malaria, tuberculosis, and other tropical endemics. The high prevalence of infectious diseases in Africa, such as malaria, tuberculosis, HIV/AIDS, and neglected tropical diseases, has significant impacts on economic growth, health outcomes, and poverty reduction.

Malaria is particularly prevalent in sub-Saharan Africa, with estimates suggesting that 90 percent of the 1 to 3 million malaria-related deaths each year occur in this region, primarily among children. The persistence of malaria in Africa is a consequence of poverty and weak institutions, and it contributes to a classic poverty trap. Although current technologies could control malaria, they would require more investment than Africa can afford. Meanwhile, malaria reduces productivity, frustrates foreign investment, and contributes to very high child mortality rates, thereby hindering Africa’s demographic transition and keeping the continent poor.

Infectious diseases have several negative impacts on African countries.

Firstly, they lead to high healthcare costs for individuals and governments, reducing the resources available for other essential services such as education and infrastructure development. As a result, limited resources are allocated to addressing immediate health needs, perpetuating poverty traps instead of investing in long-term economic growth.

Secondly, infectious diseases can limit workforce productivity and reduce economic growth. Illness and disease result in lost workdays, reduced work hours, and lower productivity, especially in agricultural and informal sectors where workers lack access to sick leave or social protection. This hinders the economic development of affected countries and their ability to escape poverty.

Thirdly, infectious diseases disproportionately affect the poorest communities, which have limited access to healthcare and basic sanitation services. This exacerbates existing inequalities as poorer households are less able to bear the financial and social burdens of illness and disease, thus contributing to the cycle of poverty and inequality.

Lastly, the high disease burden in Africa is also linked to limited research and development for diseases that predominantly affect low-income countries, which may impede the development of effective treatments and vaccines. This lack of innovation contributes to the perpetuation of poverty traps by limiting the ability of affected countries to address health challenges effectively.

Therefore, addressing the high disease burden in Africa is crucial for reducing poverty and promoting economic growth. This requires investments in public health systems, research and development, and access to basic sanitation and healthcare services. By doing so, African countries can effectively combat infectious diseases and break the cycle of poverty and inequality.

5. Education

The continent of Africa faces some of the highest rates of educational exclusion in the world, according to The Borgen Project. Shockingly, over one-fifth of children between the ages of 6 and 11, and one-third between the ages of 12 and 14, are out of school, with almost 60% of children in sub-Saharan Africa between the ages of 15 and 17 not attending school. These figures represent approximately 263 million children and youth, which is equivalent to about a quarter of the population of Europe.

Education is an essential component of human capital development and economic growth. Without education, individuals lack the knowledge and skills needed to secure higher-paying jobs, start businesses, or participate fully in society. Unfortunately, access to education in Africa is often limited due to a variety of factors, including poverty, conflict, gender inequality, and inadequate education infrastructure. In many African countries, families cannot afford the costs associated with education, such as tuition fees, uniforms, and textbooks. Moreover, in some areas, schools are not easily accessible, particularly in rural or conflict-affected regions.

The lack of access to education perpetuates a cycle of poverty from generation to generation. Children who do not receive an education are more likely to remain in poverty as adults and are also more likely to have children who will also struggle with poverty. The absence of educational opportunities for young people in Africa translates into limited opportunities for them to improve their economic situation, which, in turn, perpetuates poverty in many African communities.

Overall, improving access to education in Africa is crucial for the continent’s economic growth and the well-being of its people. This will require addressing the root causes of educational exclusion, including poverty, gender inequality, and conflict, as well as investing in education infrastructure and making education more affordable and accessible for all.

6. Limited access to credit and financial services

Access to formal financial services remains a significant challenge in Sub-Saharan Africa, with less than a quarter of adults having access, according to the World Bank. This lack of financial inclusion is a major obstacle to the growth of small and medium-sized enterprises (SMEs) in the region.

With around 350 million adults lacking access to traditional financial services, factors such as the high cost of banking, lack of infrastructure, and low financial literacy contribute to financial exclusion. Africa’s retail-banking penetration stands at just 38 percent of GDP, which is half the global average for emerging markets, according to McKinsey.

The lack of access to credit and financial services prevents people from breaking out of poverty by hindering investment in education, health, and economic opportunities. This can lead to a cycle of debt and poverty, leaving individuals and families vulnerable to unexpected expenses or setbacks. Furthermore, limited access to financial services can impede national economic growth by constraining small businesses’ ability to expand and create jobs, ultimately perpetuating poverty.

In conclusion, lack of access to formal financial services is a significant challenge for individuals and small businesses in Africa, hindering economic growth and perpetuating poverty.

Addressing this issue will require investment in infrastructure, financial education, and policies that promote financial inclusion, such as microfinance and mobile banking. By expanding access to credit and other financial services, Africa can unlock its full economic potential and improve the well-being of its citizens.

What should we do?

It is essential to tackle the causes of poverty in Africa, as they can perpetuate a cycle of poverty that can be extremely difficult to break. Without effective intervention, individuals, families, and entire communities can remain trapped in poverty for generations, with limited access to education, healthcare, financial services, and other essential resources for economic development.

To break the cycle of poverty, a multifaceted approach is needed that addresses the root causes of poverty and invests in sustainable development. This includes improving access to education and healthcare, building better infrastructure, promoting sustainable agricultural practices, and implementing policies that support economic growth and job creation.

To achieve sustainable development in Africa, it is also necessary to address systemic issues such as corruption, political instability, and conflicts, which can undermine poverty reduction efforts and economic growth promotion.

Individuals, organizations, and governments must continue to prioritize efforts to break the cycle of poverty traps in Africa. In this regard, Young Africans have a crucial role to play in breaking the vicious cycle of poverty in Africa. By acting and continuing to work towards sustainable development, they can contribute to building a better future for their communities and the continent as a whole.

By investing in sustainable development and promoting policies that support economic growth and job creation, we can contribute to creating a more prosperous and equitable future for all Africans.