The end of extreme poverty is within reach. Where is that extreme poverty that remains on the planet? There are roughly 1.2 billion people living below the World Bank’s poverty line of $1.25 per person per day. That number, thankfully, is down sharply from about 1.9 billion in 1990 and as a share of the population of the still growing developing countries, the poverty rate has fallen by more than half to 20% or so in the year 2010. So where are those remaining areas of extreme poverty?
The most poverty stricken region of world is tropical Sub-Sahara in Africa. Around 40% of the population of tropical Sub-Saharan Africa remains below the poverty line, though fortunately, that rate is declining now and has been declining since the start of the new millennium. The other place with remaining extreme poverty is South Asia. And there, the poverty rate is estimated to be perhaps around 30% of the population. If you take the total numbers there are, are around 400 million people living in extreme poverty in tropical Sub-Saharan Africa, there are around 400 million people living in extreme poverty in South Asia, that’s about 30% of the total in each case. Around 20% of the total population, around 250 million people are still in extreme poverty in East Asia. Though East Asia seen the fastest decline of extreme poverty, because of the rapid growth of China and neighboring countries. Around 10% of the total population of extreme poor, that is around a hundred million people are in North Africa and the Middle East. And the rest, which is around another hundred million are scattered in the remaining regions of the developing world, for instance, in Latin America and the Caribbean.
So we know, as we’ve noticed on many occasions that the two big areas for breakthrough are Sub-Saharan Africa and South Asia. Let’s take a look at the differential diagnosis for Sub-Saharan Africa and what can be done to help those parts of Sub-Saharan Africa still stuck in extreme poverty to accelerate the progress out of extreme poverty. Have a look at the year to year growth rates of the whole world economy and of Sub-Saharan Africa. This is the change of gross domestic product taken for the whole Sub-Saharan African region and the gross world product looking at a comparison. And what we can see is some very good news, and that is that the average growth rate in Sub-Saharan Africa of the overall economy picked up significantly after the year 2000. And indeed, Sub-Saharan African has been achieving economic growth faster than the average of the world economy. Sub-Saharan Africa has been growing at around 5% per year, now remember the rule of 70 if Sub-Saharan Africa’s growing at 5% per year, divide 70 by 5 that’s 14. That says that the period it takes for the African economy to double in size would be about 14 years. So, something’s going right and it’s possible even to get faster progress. If we make a differential diagnosis of Africa’s problems, of course we see that in those seven big categories where we want to investigate, there are challenges and issues in nearly all of them. In the physical geography, we’ve seen the problems of disease, and the number of land-locked countries, and the distance of population to the coast, which cry out for improved transport infrastructure, which cry out for improved public health, for example, to combat malaria, a geographically determined disease.
We’ve seen problems cultural attitudes of very high fertility rates in very poor places. Meaning that very poor households that have six or seven or eight children are not able to provide the investments in health care, nutrition and education that their children need to get out of poverty. Of course there have been many political failures and geo-political failures as well. A lot of violence, many wars, though fortunately many of those wars have come to an end. So there are places that have been stuck in conflict that have a chance for development, now that peace, if fragile is present and providing a new foundation for economic development. I think its fair to say that we would want to look at four categories of investment in Africa for that breakthrough. The first is in rural development. Especially to spur agricultural development.
The second is in the urban areas. Africa throughout its history has been predominantly rural, but it’s fast urbanizing and therefore, productive dynamic cities that can meet the needs of their populations is crucial. The third category, broadly I would say is the national infrastructure. The road network. The rail network. The power grids. The management at large scale of water resources. Because Africa, historically, has been bereft of the vital infrastructure that it needs for national or regional development. And the fourth big category that I would bid us to look at is demography and that is the challenge of Africa’s still very, very fast population growth. So let’s take a look at some of that. Turn first to the challenge of agriculture, as you can see in this map, which shows according to color the productivity of agriculture, measured as the amount of grain produced on each hectare of farmland, we see that Africa is among the low yield parts of the world. On average, small holder farmers in Sub-Saharan Africa have gotten a yield that is a grain output per hectare of farmland generally of between half a ton and one ton of grain per hectare. Now, this is not good in international comparative terms. Many countries have three or four or five tons of grain per hectare of farm land. And in the most productive grain-belts of the world, those yields can rise even to ten times Africa’s yield. Some farms getting ten tons of rice, or maize, or wheat per hectare of land. What’s the cause of this? Well, African farming faces many obstacles.
One is that the farmers traditionally have been too poor to be able to keep the soils filled with the nutrients needed. Especially with the nitrogen, potassium, and phosphorus needed to have high yields of crops. If you don’t feed your crops with a decent nutrients, you don’t get growth. And in Africa, the soils have been relatively bereft of the key nutrients that are needed for farmers to get a high yield. The next map shows us why. In all other parts of the world, farmers used extensive fertilizers, both organic and chemical to replenish the key nutrients, especially the so called macro nutrients of nitrogen, phosphorous and potassium that are taken out with each crop. When a crop is harvested, out go the nutrients. Somehow those nutrients have to be put back in, whether in green manures so called of organic farms or whether through chemical fertilizer, which puts nitrogen back into the soil. But Africa’s peasant farmers have been so poor that they have been farming without the advantage of those added nutrients. And that has kept them in a poverty trap. Because of their poverty, they can’t buy the fertilizers that they need, whether organic or chemical. Their soils therefore continue to be depleted of key nutrients. The yields remain low. And year after year, the farmers get a very, very meager income and farm families face tremendous bouts of hunger. It’s not only the fertilizer input that’s key, other inputs necessary for high yields include water management through irrigation. And that requires wells and pumps, typically. And good seed varieties where seeds are bred through a variety of means to give high yields. And African farmers traditionally have lacked the means to invest in irrigation and to invest in high yield seeds in just the same way that they’ve lacked the means to replenish the soil nutrients. It all adds up to an agricultural poverty trap. It all tells us that a high priority for Africa to breakout of extreme poverty is to invest in its small holder farmers with government programs that enable even the poorest farmers to get the inputs that they need whether on credit or as a grant so that they can have higher yields, higher income and thereby start investing in these crucial inputs and then peasant farmers stuck in poverty,can become commercial farmers earning a good income and then using a part of that improved income to keep making the investments in soil nutrients, in water management, and in improve seed varieties. Now to bring this about requires investment in infrastructure.
We’ve already looked at the difference in the railroad map of Africa and India, but let’s look again. Remember that in India, the rail network was a complete grid created by British imperial rule. Whereas in Africa, you just have small, rail lines not even connected with each other, typically running from a single diamond mine or gold mine, or maybe from a plantation area to a port. Well that’s a big problem, even for agriculture. Because farmers need to be able to buy fertilizer at low cost. They need to be able to market their grain output and other output at low transport cost. And if the transport network doesn’t exist to bring the inputs to the farm and to bring the produce from the farm to the market, eats up a tremendous amount of the potential income, so investing in the basic transport infrastructure, whether it’s the road network, or whether it’s the rail network, is also absolutely crucial. Other aspects of infrastructure are also especially important in the 21st century. I would say it should be taken as a given that there can be no economic development on a sustained basis without electrification. But have a look at this well known world picture taken by satellite by NASA of the Earth at night which basically tells us where there are lights on due to an electricity grid. And you can see the bright lights of the United States. The bright lights of Europe, the lights of China and Japan, the lights of the Arabian Peninsula and of India. But look at sub-Saharan Africa. Its lights out at night. A large part of rural Africa, and that’s the predominant part of the African population, still lacks access to electricity. And that means not only not having lights at night for children to study and for being able to go about one’s activities at home. But it means the lack of reliable power for pumping water, for irrigation, for refrigeration for preservation of agricultural outputs for processing of food for textiles and apparel and every other kind of manufacturing activity. The absence of electrification has been a huge barrier and another aspect of Africa’s poverty trap. Without electricity, productivity is very low. Poverty means the inability to invest in the electricity that could help lift the region out of poverty. That’s the poverty trap once again. The vicious circle. It has to be broken either by Africa taking loans to invest in infrastructure, such as electrification. Or by receiving grants and development assistance that would enable Africa, through the help of richer countries and international organizations to be able to undertake those investments, even if they can’t be afforded out of Africa’s income itself. Now in the 21st century, another aspect of infrastructure worth mentioning is information technology. And here there’s good news. Because these technologies are so powerful and the costs of bringing them in have come down so much that Africa now has massive access to mobile telephony, reaching even the most remote villages. It has several submarine cables of fiber optics surrounding the continent and bringing increasingly the Internet and broadband connectivity to Africa. Like the rest of the world, Africa is now poised for a breakthrough. By targeted investments in agricultural productivity, targeted investments in the core infrastructure of Africa’s fast-growing cities, targeted investments in the national scale infrastructure such as the road and rail network, or the fiber network, Africa can make a breakthrough that has eluded it throughout its history. But there is one final point that is key, and that is that Africa, like the other parts of the developing world, also needs that rapid, voluntary reduction of fertility rates, so that economic growth can keep ahead of a rapidly growing population. Back in 1950, Africa’s population was only 180 million people in the Sub-Saharan region. By now, that population has increased roughly five times to a population of around 900 million. On the current fertility estimates, Africa’s population would continue to soar. So that by the end of the 21st century, Africa’s population would be an astounding 3.8 billion people. This is too much for Africa’s physical environment, for the water and for the crop yields, especially in an era of climate change. It’s too much for very poor families needing to invest in the health and the nutrition and the education of their children. So, in addition to the investments in agriculture, in health and education, in roads, in rail, in fiber optics, in electrification, Africa too needs to invest in the rapid voluntary reduction of fertility rates of today’s poor households making sure that family planning and modern contraception are available, making sure that young girls aren’t forced to drop out of school, because they lack the income to go on, but have the opportunity to go on to a full secondary education, and a university education, so that girls don’t end up illiterate, married young, and starting on another cycle of poverty with six or seven or eight children. When Africa puts together that fore fold strategy of rural, urban infrastructure and demographic transformation, all within reach, Africa, like the rest of the world, will break free of the poverty trap, and by 2030 indeed can end extreme poverty.