Aid failing to halt tide of poverty

The proportion of people living below the threshold has dropped globally, while the number of poor is on the rise in Africa.

A boy shivers in the rain as drought-hit people carry sacks of maize received from an aid agency in southern Ethiopia.

JOHANNESBURG // One of the quintessential African images is that of a small child in tattered clothes herding a few scrawny cattle homeward to a group of round mud huts, their thatched roofs catching the light of the setting sun.

While it is picturesque, the reality is that the life it represents is one of grinding hardship, perpetual hunger and little prospect of improvement. And, according to newly released figures from the World Bank, the proportion of Africans living in extreme poverty has been left virtually unchanged in a quarter of a century, despite the continent's resource wealth and the billions of dollars it has received in aid.

Using new figures for purchasing power parity exchange rates, which reflect the real value of money in each country, and a baseline definition of 'poor' as an income of US$1.25 (Dh4.58) a day at 2005 prices, the Washington-based institution has revised its standard poverty statistics. The findings show that globally, the proportion of people living below the threshold has dropped dramatically, from one in two in 1981 to one in four in 2005. Even taking population growth into account, the absolute numbers have fallen from 1.9 billion people to 1.4bn over the period.

In sub-Saharan Africa, though, the picture is very different. The percentage of people living on less than $1.25 a day is almost identical at the start of the table in 1981 and at the end - 50.8 per cent to 50.4 per cent - while the number of poor has almost doubled, from 200 million people to 380m. "All these countries have got poverty alleviation strategies, so either there is something wrong with the strategies themselves or they are not being implemented properly," said Dianna Games, director of the consultancy Africa@Work.

"Huge amounts of aid have gone into Africa with absolutely no result. Corruption will have played a big role in hollowing out the state and having so many resources diverted to unproductive uses." She pointed out that agriculture was "still in the starting blocks" on the continent, even though 70 per cent of Africans make their living from the land. At the World Bank, though, Shantayanan Devarajan, its chief economist for Africa, said that it was important to keep the figures "in perspective".

While the proportion of people under the poverty threshold had increased at the start of the period, peaking at 57.5 per cent in 1996, it had been falling ever since, he said. "You can say, 'what's gone wrong?' But I would turn it around and say 'what's gone right?' The most important antidote to poverty is economic growth." The oil shocks of the 1970s, which in turn led to the debt crisis of the 1980s, led to a "horrible time" in African development, he said. "Growth was very slow if not negative during that period so poverty increased.

"It's a development tragedy, the literature calls it Africa's growth tragedy." But many countries have since changed policy tack and stabilised their economies, he said. "The development efforts and economic reforms that African countries undertook are now bearing fruit." Nonetheless, he cautioned that the 380m people figure will keep growing before it starts to decline. "We still have a long way to go."

For Steve Radelet, senior fellow at the Center for Growth and Development, and an adviser to Ellen Johnson-Sirleaf, the president of Liberia, the key change has been the advent of democracy in countries across Africa. In 1989, he pointed out, there were three: Botswana, Mauritius, and Cape Verde. Now, while changes of government at the ballot box are still a rarity, and notwithstanding the likes of Somalia, Zimbabwe and the Central African Republic, more than 20 African countries can be considered democracies.

"There has been an enormous shift linked with both the end of the Cold War and the end of apartheid," he said. "That whole generation of dictators that was playing on the Cold War lost a lot of support - almost every country was getting support from one or the other." Another driver of change was a generational shift among African leaders. "That first generation, many of them came out of a conflict, they were warriors that had fought for the end of colonialism or independence, had won, and were then thrust into governance without institutional strength and fairly quickly turned to being dictatorships. Maybe some of them started out thinking they were going to be benign dictatorships, but the temptations were too much.

"In the 1980s, most countries in Africa were complete basket cases, with black-market exchange rates, hyperinflation, huge budget deficits, economic growth was negative, most were in a receivership programme with the IMF, they couldn't get credit anywhere else. That's all changed."There's been a change in political systems and governance and that's leading to better economic outcomes in these countries."

Only Zimbabwe has hyperinflation now, Mr Radelet said, while the dual exchange rates have gone, and since 1996 the democracies have improved on every single one of the six indicators for good governance, with Africa's economic growth averaging more than five per cent for several years. Even so, the democratic gains of the recent past are not necessarily secure, he said. "It's the first big step in the right direction, sustaining that over time is going to be hard. Who knows what the future will bring?"

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