ERA 2005: Job creation lies at the heart of the poverty battle

ECA Press Release No. 21/2005

A new report by the Economic Commission for Africa (ECA) shows that despite record economic growth in Africa, poverty is actually getting worse.

The Economic Report on Africa 2005 (ERA 2005), ECA’s flagship publication, this year is entitled “Meeting the Challenges of Unemployment and Poverty in Africa”. It analyses the vicious cycle of inadequate economic performance and high unemployment.

Despite showing signs of rapid change, at a record 5.2 percent growth in 2005, Africa’s economy is dampened by record unemployment and higher rates of poverty than ever before. The implication is that poverty has been unresponsive to economic growth.

“As long as people are kept from participating in the economy as productive agents, people will continue to benefit only sparsely to whatever growth is actually achieved,” said Augustin Fosu, the director of ECA’s Economic and Social Policy Division which prepared the report.

And the record growth rate is still not enough. For a significant reduction in poverty, it must climb still further to over 7 percent a year on average.

“The volatility of growth has added to the vulnerability of the poor,” said Fosu. “Only a few countries in Africa have sustained growth over the years, though many have reformed and are on the right track.”

“And sustained growth is precisely what is necessary in order to increase employment and reduce poverty,” he added.

The report focuses on four key challenges for Africa in the fight against unemployment and poverty: structural transformation to break away from the under-utilization of rural labour, addressing widespread youth unemployment, harnessing globalization to create decent jobs, and creating an enabling environment for the fast expansion of private sector jobs through increased investments.

The report stresses that it is up to governments to transform African economies, particularly by taking advantage of opportunities presented by globalization. It says the key to this turnaround is political leadership, prioritizing broad-based job creation in national development programmes.

But with little data to engage the cause, planning bodies lack the evidence to support the urgency of placing employment at the core of poverty reduction strategies and development policies.

Furthermore, labour absorption has been low in the fast-growing sectors, such as oil and other extractive industries. Most people are employed in sectors such as agriculture, which provide only seasonal temporary employment, and rarely lead to income security.

The distribution of opportunities created by economic growth is also slim. Poor people lack the capacity to meaningfully participate in the economy, either as producers of goods and services or as suppliers of labour.

So in many cases, poverty is deepening, while education and healthcare are deteriorating.

The onus is now on governments to prioritize income generation programmes and extensive education campaigns, in order to bring Africans into the playing field, transforming them into participants of their own economic success.

The report was written by the ECA’s Economic and Social Policy Division (ESPD) with contributions from its Sustainable Development Division (SDD) and the International Labour Organization (ILO).

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