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Tea plantation in Rwanda: To boost rural incomes, more investment is needed to improve agricultural productivity.

Photograph: Africa Media Online / Ariadne Van Zandergen

Africa has the highest poverty rate in the world. Even though some countries are on track to meet the Millennium Development Goal (MDG) of halving poverty by 2015, most are likely to fall well short. Income inequality in Africa remains higher than in most other regions, while gender, ethnic and regional inequalities persist.

Such injustices endure for a variety of reasons, argues a new report by the UN Research Institute for Social Development (UNRISD), . The report, which was launched just before the September MDG summit of the UN General Assembly, highlights problems that have not been adequately addressed by the MDG approach. These include poor or unstable economic growth — which has failed to generate productive employment — and the fragmentation and underfunding of social policies. Moreover, governments have been ineffective and their policies unresponsive to citizens' needs, so the poor lack influence over public policies.

Following Africa's economic contraction of the 1980s and 1990s, growth picked up from 2000 through 2007, thanks to a boom in commodity prices and improvements in the world economy. This helped countries such as Ethiopia, Ghana, Mali and Senegal to reduce poverty. But even for these countries poverty remains high and growth has not transformed their economies or delivered decent jobs.

Employment and equity

In the world's high-income countries, economic growth fuelled a shift from agriculture to industry and from industry to services. But Africa has not been able to follow a similar course. Instead, industrialization in much of the continent has been stunted or narrow, while productivity in agriculture and services has been low.

As a result, labour markets have been segmented and unequal. There is widespread underemployment, incomes in informal and agricultural activities remain low and even relatively diversified economies such as that of South Africa experience persistent and large-scale unemployment. The terms and conditions of work are particularly poor for women.

Growth with jobs has been elusive for two reasons. First, globalization has weakened the links between agriculture and industry. Urban people are fed largely by imported food, which undermines domestic agriculture. Countries also import most of their manufactured goods rather than expanding domestic production. So agriculture and industry have stagnated. Second, free-market ideas continue to dominate macroeconomic policies, emphasizing tight spending, privatization and liberalization. From that perspective, employment is regarded as a byproduct of growth, with no need for specific policies.

Metalworker in Ladysmith, South Africa: Despite the country's well-funded and extensive social protection programme, joblessness remains widespread.

Photograph: Africa Media Online / Guy Stubbs

But to achieve growth that is equitable and creates jobs, deliberate policies are required. Among other things, African governments could:

• connect agriculture more productively to industry and other sectors,
• expand domestic production and raise the demand for locally made goods and services,
• invest in infrastructure and education to improve skills and the quality of employment for women,
• avoid austerity policies during periods of slow growth,
• promote progressive taxation, and
• demand global reforms that reduce sharp fluctuations in commodity prices and interest rates, phase out agricultural subsidies in rich countries and grant African exports more access to Northern markets.

Universal social protection

Social investments can also drastically reduce poverty levels. During the 1960s and 1970s, public spending on education and health grew rapidly in most African countries. Primary and secondary school enrolment rose and infant mortality declined.

But in the 1980s economic crises and extreme pro-market policies led to severe cuts in social expenditures in most countries. The burden of financing shifted to consumers through user fees. In Kenya, government spending on basic services fell from 20 per cent of total expenditure in 1980 to only about 12 per cent in 1997. As a result, low-income groups generally had access only to poor-quality services and could ill afford the fees required for better amenities.

In recent years, popular pressures and shifts in aid allocations towards basic services have led to increased social spending. Social assistance schemes such as free health care for children, pensions for the elderly and cash grants for the poor have proliferated. Yet Africa still spends only about 3.5 per cent of its gross domestic product on social protection, compared to an average of 4.5 per cent in all low-income countries, 10.5 per cent in middle-income countries and 20.6 per cent in high-income countries.

In countries where targeted social programmes are well funded and reach many people, results have been positive. This is the case in South Africa, where one in four people receives an income financed out of general taxation. Yet even there, poverty reduction has been seriously constrained by widespread joblessness and the high levels of inequality inherited from the apartheid era. In countries where such programmes are limited, targeting has failed to make significant and sustained inroads into poverty.

Social policies for reducing poverty must be grounded in universal rights. They must aim for redistribution, protect people from the risks of unemployment, sickness and old age, and enhance the productive capacities of individuals and communities. They cannot be separated from efforts to create employment.

Cashew sorting factory in Mozambique: To stimulate economic growth with job creation, Africa's agriculture needs to be connected more closely to industry.

Photograph: Richard Lord

States and politics matter

Countries that have reduced poverty in relatively short periods had political systems that deliberately promoted growth and enhanced welfare. For the most part they also built and maintained competent bureaucracies, institutionalized rights and had competitive democratic regimes.

In Mauritius, one of Africa's oldest democracies, small farmers collaborated with agricultural labourers and urban trade unionists to force the state to institutionalize social rights. These organizations contributed to the formation of the first nationalist party, the Mauritius Labour Party, which spearheaded social reforms. Today all major parties in Mauritius, which alternate in government, regard social rights as citizens' rights. There is a universal basic pension, free primary and secondary education and comprehensive free medical care.

During the anti-colonial struggles and early independence period, parties in other countries also had strong ties with urban and rural organizations and social movements. But the descent into one-party and military dictatorships, economic crises and the adoption of structural adjustment policies in the 1980s loosened the ties between citizens and states.

Today, in the design of anti-poverty strategies, many countries rely on the participatory procedures of the Poverty Reduction Strategy Papers (PRSPs), supported by the World Bank and International Monetary Fund. But the PRSP consultative process does not give citizen groups the power to effect real change. Participation is often limited to selected non-governmental organizations, without the involvement of associations of informal and formal workers, farmers or artisans, whose livelihoods are directly affected by development policies.

Competitive elections have opened up possibilities for demanding accountability from leaders. Taking advantage of a national election in 1993, the 400,000-member farmers' federation in Senegal forced the country's president, who was worried about the rural vote, to discuss agricultural policy. That led to an agreement to cut interest rates on agricultural loans, remove import taxes on agricultural inputs, issue a moratorium on farmers' debts and institute dialogue between the farmers' organization and the agriculture ministry. In general, however, limited electoral competition and the weakness of social movements in Africa have made it difficult to sustain gains.

Africa's experience so far suggests that anti-poverty measures that are not linked to production systems, broader social policies and politics will have limited results. Economic, social and political policies and institutions need to be consciously coordinated to achieve the maximum impact.