Africa’s economic growth should benefit all

Posted on January 22, 2014 11:47 pm

Inequality is here is to stay whether we like it or not. Growth with equity has long been the stated objective of African governments. The current generation of elites who runs the continent never believes that economic growth should be managed to ensure all of us in the society benefits. Researchers have over the last six decades been warning of a widening income gap that is hurting social stability and has continued to slow the overall gross domestic product growth across the world. According to a recent study of wealth in Africa, the wealthiest 5% of Africans are expected to enjoy 45% of the continent’s GDP this year and 48% in 2015, while the poorest 5% will only be able to enjoy 1%. In cities across Africa, shopping malls are being built, people are buying more cars and fast-food restaurants are opening faster to meet the growing appetite of an emerging middle class. With that shift in the population, rural areas are losing out, being passed over for development.

Traditionally, in any growing African economy, infrastructure development has played a key role in this demographic shift, and the continent’s youth tend to flock to cities for higher and better paying jobs. Despite the scheme to pay farmers in the rural areas as part of a job creation program, research has shown that it only end up keeping most of them in poverty and there is need for authorities to find a way to provide rural population with a substantial means of living. As the African countries aspire to be among the biggest economies in the world within two generations, policy makers should ensure that economic prosperity benefits all and not just the metropolitan elites. Enhanced economic opportunities that include greater access to credit, especially for micro businesses should be supported by all and there is need for banking sector to extend their services to reaches more than 15% of the population they currently reach. This means that the vast majority of Africans are excluded from the financial system and for the continent to develop they must be included if we are to narrow the income gap. A lot remains to be done in terms of helping Africa’s least economically well off improve their lives.

Contador Harrison