mental degradation and resource overuse. And it is far below what is
needed to sustain a major long-term boost in economic performance.
Africa’s development challenges go deeper than low income, falling
trade shares, low savings, and slow growth. They also include high
inequality, uneven access to resources, social exclusion, and insecurity.
Income inequality is as high as in Latin America, making Africa’s poor
the poorest of the poor. More than 40 percent of its 600 million people
live below the internationally recognized poverty line of $1 a day, with
incomes averaging just $0.65 a day in purchasing power parity terms.
The number of poor people has grown relentlessly, causing Africa’s share
of the world’s absolute poor to increase from 25 to 30 percent in the
Many people lack the capabilities—including health status, education,
and access to basic infrastructure—needed to benefit from and contribute
to economic growth. Health and life expectancy indicators are adverse, even
taking into account low incomes: in many countries 200 of every 1,000
children die before the age of 5. Large parts of the population are locked in
a dynastic form of poverty, progressively less able to escape because children
lack the basic capabilities to participate in a productive economy—and so
to contribute to growth. Despite recent gains, more than 250 million of
Africa’s people lack access to safe water. More than 200 million have no
access to health services. In the only region where nutrition has not been
improving, more than 2 million children a year die before their first birth-
day. More than 140 million youth are illiterate, and less than one-quarter
of poor, rural females attend primary school. Disparities in social spending
between poor African countries and rich industrial countries are massive.
Education spending in poor African countries averages less than $50 a
year—compared with more than $11,000 in France and the United States.
Many Africans are excluded from basic services—and from the power to
influence the allocation of resources.
Malaria typifies the tendency of many formerly global problems of
basic development to have become mainly African. At the turn of the 20
century, Africa saw 223 deaths a year from malaria per 100,000 people,
only slightly more than other developing regions. By 1970 the rate had
fallen to 107 in Africa, compared with only 7 in other regions. But while
the decline has continued elsewhere, the death rate has soared again in
Africa to 165 per 100,000. Social upheaval and civil wars, a breakdown
of health services in many countries, and growing resistance to anti-
malarial drugs are to blame (The Washington Post, 20 October 1999).
CAN AFRICA C LAIM TH E 21
Because of high income
inequality, Africa’s poor
are the poorest of the
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Then there is the HIV/AIDS pandemic. With 70 percent of the
world’s cases in Africa, AIDS has already had an enormous impact on life
expectancy in the countries most affected. It is projected to reduce life
expectancy by up to 20 years from today’s modest levels—more than eras-
ing the gains since the 1950s. AIDS orphans already make up 11 percent
of the population in the most afflicted countries. This could rise to more
than 16 percent in the next 25 years, with disastrous implications for tra-
ditional social structures. The ultimate economic impact of AIDS, not
yet fully known, promises to be devastating.
Unless action is taken, the scale of these problems will only increase.
Population growth continues to be faster than in other regions, so pri-
mary school cohorts will continue to grow rather than shrink as in most
parts of the world. For every potential worker between 15 and 64, Africa
now has almost one dependent, almost all of them young (see table 1.1).
Even with a progressive demographic transition, Africa’s dependency
rates will fall only gradually through the next century.
These aren’t the only hurdles. The spread of conflict threatens economic
and social progress. At least one African in five lives in a country severely dis-
rupted by an ongoing war. Governance issues loom large in explaining the eco-
nomic record of African countries. If present trends continue, few countries
are likely to achieve the International Development Goals for 2015 endorsed
by the international development community—goals covering poverty reduc-
tion, health, education, gender equality, and environmental preservation
(OECD 1996). Indeed, economic performance will have to improve just to
keep the number of absolute poor from increasing.
Africa Can Claim the Century—with Determined Leadership
In view of all this, what does “claiming the century” actually mean? Is
it a credible objective for Africans—and for their children? Economists
(and social scientists more broadly) are not known for their ability to pre-
dict short-term developments, let alone provide a vision of societies one
hundred years into the future. A more modest approach would be to ask
how, over the next few decades, Africa can reverse years of social and eco-
nomic marginalization in an increasingly dynamic and competitive
world, and so be well placed, after the early decades of the century, to take
advantage of the rest.
As described below, simply preventing an increase in the number of
absolute poor over the next 15 years will require annual growth rates in
CAN AFRIC A C LAIM TH E 2 1
Without action, Africa’s
problems will only worsen
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excess of 5 percent, almost twice those of the dismal decades after 1973.
And reaching the International Development Goal of halving the inci-
dence of severe poverty by 2015 will require annual growth of 7 percent
or more—and a better distribution of income. If Africa’s terms of trade
continue to deteriorate as they have for many countries since the late
1960s, the growth requirement for reducing poverty will be even higher.
Is the goal of reducing poverty impossible? Not at all. Africa is not
doomed by its poverty or its poor development record. In the 1960s and
early 1970s many prominent economists considered Asian countries,
with their vast, poverty-stricken populations and limited resources, to be
caught in a low-level development trap. It was inconceivable in the early
1960s that the Republic of Korea would emerge as an industrial power.
The passing of time has shown how wrong such views were. The perfor-
mance of other regions, the findings of cross-country studies, and the
achievements of a number of African countries suggest that reversing the
increase in poverty is possible.
Trends in Africa will need to change radically for a catchup process to
materialize. This will require determined leadership within Africa. It will
require better governance—developing stable and representative consti-
tutional arrangements, implementing the rule of law, managing resources
transparently, and delivering services effectively to communities and
firms. It will require greater investment in Africa’s people, as well as mea-
sures that encourage private investment in infrastructure and production.
It will not happen without an increase in investment and efficiency. And
it will require better support—and perhaps more support—from the
international development community.
In facing these challenges, Africa has enormous unexploited poten-
tial—in resource-based sectors and in processing and manufacturing. It
also has hidden growth reserves in its people—including the potential
of its women, who now provide more than half of the region’s labor but
lack equal access to education and factors of production. African
economies can perform far better. The region has great scope for more
effective use of its resources—public and private, financial and human—
and much scope for improving the delivery of the essential services
needed to upgrade the capabilities and health of its people and increase
Even with better prioritization, the range of urgent challenges will strain
Africa’s limited capacity to make and implement policies and to nurture
strong institutions. But the sheer number of challenges is not insurmount-
CAN AFRICA C LAIM TH E 21
Africa has enormous
unexploited potential and
hidden growth reserves
require a fundamental change from Africa’s donors because Africa’s
governments are one of the excluded groups: with high aid depen-
dence, in many countries development policy is seen as being the pre-
rogative of donors rather than governments. Africa’s interests also need
to be articulated more effectively in global forums, especially those
dealing with trade and investment.
Within Africa there has been increasing research, analysis, and rethink-
ing on these issues. Consensus has emerged on the failures of past poli-
cies, though there is still debate on how best to move forward and a sense
that the region still needs to find its place in the world economy. Africa
has been experiencing its own Renaissance, in the true sense of a rebirth
of thought on governance and development policies, particularly in the
context of an increasingly globalized and competitive world. This is not
surprising: some 70 percent of today’s Africans were born after the end
of colonialism, and that proportion is rising rapidly.
Donors have also been reevaluating their role, especially since the end
of the Cold War reduced the imperative to fund loyal allies rather than
support effective development states. Donors have entered the new cen-
tury in the midst of a feverish debate on how to make aid more effective,
including a watershed change in the Bretton Woods institutions—the
World Bank and the International Monetary Fund, widely seen as the
main external architects of Africa’s economic policies.
This report selects a number of areas that seem important in answer-
ing the question of whether Africa can claim the 21
century. It brings
together the implications of this recent body of work—particularly that
emanating from Africa. It does not claim to be exhaustive. Nor does it
attempt to lay out a blueprint for individual countries. But it draws on
the many positive examples of African development to show how some
countries are approaching common issues. African economies and sub-
regions are diverse, and each will have to find its way to address the chal-
lenges of the 21
How Fast Must Africa Grow to Reduce Poverty?
The International Development Goals for the 21
by the global development community and endorsed by many develop-
ing country governments—set targets for poverty reduction, education,
health, gender equality, and environmental sustainability for 2015
CAN AFRICA C LAIM TH E 21
The many positive
examples of African
development show how
some countries are
(OECD 1996). Here we concentrate on one goal: halving the incidence
of absolute poverty, defined by the international poverty line of $1 a per-
son per day, from current levels.
Growth is not sufficient for poverty reduction, but it is essential—no
country has achieved a sustained improvement in the economic fortunes
of its citizens without substantial, as well as broadly based, increases in
income. Indeed, where growth has been sustained and has increased con-
sumption, poverty in African countries has been reduced (chapter 3).
How growth affects poverty also depends on how it is distributed.
Especially with Africa’s high income inequality, it is essential that growth
be broadly based rather than narrow. But while cross-country evidence
shows a wide range of variation between changes in income levels and
distribution, it finds a neutral overall relationship between growth rates
and inequality. So, income distribution is assumed here to be constant.
The performance needed to halve the incidence of absolute poverty
depends on the period in which it is to be achieved. Demery and Walton
(1998) consider a period of 25 years, corresponding to the interval between
the latest data available (for 1990) when the goals were formulated and 2015.
This also produces a useful minimal criterion for Africa. The region’s pop-
ulation is doubling every 25 years at current growth rates, so achieving this
target would mean that the absolute number of absolute poor is neither
increasing nor falling. To achieve this minimum goal, consumption per
capita would need to rise by almost 2 percent a year. With a constant sav-
ings rate, GDP would need to grow by 4.7 percent a year. But savings rates
are too low to sustain the investment needed for rapid growth. Adding in an
increase in the savings rate of 10 percentage points spread over 25 years sug-
gests a target GDP growth rate of 5 percent a year just to prevent an increase
in the number of the poor. Only a few African countries, including
Botswana, Mauritius, and Uganda, sustained such growth rates in the
1990s—and a recent evaluation suggests that few countries have the condi-
tions and resources to sustain such growth in the long run (UNECA 1999).
But the growth hurdle to halving poverty by 2015 is now far higher
because, on average, income and consumption levels did not rise in the
1990s. Including the projected increase in savings, the average GDP
growth needed would be more than 7 percent a year. And if Africa’s terms
of trade continue to deteriorate, or if the savings provided by foreign assis-
tance continue to fall, the growth requirement will be even greater.
Africa’s growth goal is higher than those for other regions for several
reasons. First, consumption per capita needs to rise rapidly because of low
CAN AFRIC A C LAIM TH E 2 1
Growth is not sufficient
for poverty reduction, but
it is essential
incomes, large numbers of poor people, and a very high poverty gap.
Second, Africa’s population growth rate is the highest in the world. Unlike
other regions—particularly East Asia, where the ratio of working-age
population to dependents has risen sharply to around two to one—
Africa’s dependency ratio has remained close to one (see table 1.1). There
are signs that Africa is embarking on a demographic transition, and some
projections foresee a considerable decline in the dependency ratio in the
middle of the 21
century. But today sharply lower fertility rates are lim-
ited to a small group of middle-income countries with far better repro-
ductive health care, far higher contraceptive prevalence, and far higher
health spending than the rest of the region (table 1.2).
A third factor raising the growth hurdle for Africa is the need to
increase savings while also allowing consumption to rise fast enough to
reduce poverty. Higher savings and investment are not sufficient for
growth—the productivity of investment, as captured by the long-run
incremental output-capital ratio, needs to double to place Africa on the
same trajectory as fast-growing regions (see table 1.1). Africa can call on
some hidden reserves. Countries can grow for a period with moderate
investment rates when recovering from extremely depressed conditions,
such as those caused by extended conflict. And reversing Africa’s massive
capital flight—estimated at almost 40 percent of private savings in the
early 1990s (table 1.3)—could boost domestic savings.
Even so, in the long run investment rates would need to be sustained
at around 30 percent for an extended period if growth is to make a
major dent in poverty. Both agriculture and industry are severely decap-
CAN AFRICA C LAIM TH E 21
Table 1.2 Indicators of a Demographic Transition in Africa by Income Group
Fertility (percent), 1990
Fertility (percent), 1995
Infant mortality (per 1,000 live births), 1990
Infant mortality (per 1,000 live births), 1995
Maternal mortality (per 100,000)
Contraceptive prevalence (percent)
Health spending per capita (dollars), 1990–96
Note:Lowest-income countries are less than $300 per capita. Low-income countries are $300–765 per capita. Middle-income countries are more
than $765 per capita.
Source:World Bank data.
Savings must increase
while also allowing
consumption to rise fast
enough to reduce poverty
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