POVERTY: Africa’s Future and the World Bank’s Role in it

Introduction
For at least four reasons, Africa in 2010 has an unprecedented opportunity for transformation and sustained growth. First, until the onset of the global economic crisis, economic growth was averaging 5 percent a year for a decade, accelerating to 6 percent for 2006-8. Growth was widespread: some 22 non-oil exporters had 4 percent or higher growth from 1998-2008. While Africa was badly hit by the global crisis, thanks to prudent macroeconomic policies and financial support from multilateral agencies, the continent avoided an even worse growth shortfall in 2009, and has rebounded in 2010.
Second, alongside the acceleration in growth, progress on the MDGs has been sufficiently rapid that many countries (such as Malawi, Ghana and Ethiopia) are likely to reach most of the goals, if not by 2015 then soon thereafter. Africa’s poverty rate was falling at one percentage point a year, from 59 percent in 1995 to 50 percent in 20051. Child mortality rates are declining; HIV/AIDS is stabilizing; and primary completion rates are rising faster in Africa than anywhere else.
Third, Africa’s private sector is increasingly attracting investment, with much of the funding coming from domestic banks and investors. Returns to investment in Africa are among the highest in the world2. Success of ICT, especially mobile phone penetration, shows how rapidly a sector can grow. Private capital flows are higher than official development assistance (and FDI is higher than in India). China, India and others are investing large sums in Africa.
Fourth, the climate for market-oriented, pro-poor reforms is proving robust. Although the payoffs to economic reforms fell during the global crisis, policymakers continued with prudent economic policies, even in the face of contradictory policies elsewhere—because the public demanded them. The voice of civil society is increasing, as evidenced by Uwezo on education in Kenya, citizen report cards in Ghana, and the various groups demanding accountability for resource revenues.
Putting all these factors together, we conclude that Africa could be on the brink of an economic takeoff, much like China was 30 years ago, and India 20 years ago.
To be sure, African countries still have to tackle persistent, long-term development challenges, such as undiversified production structure, low levels of human capital, poor service delivery, and weak governance, including corruption. Furthermore, in the last five years, more challenges have come into sharper focus:
 Growth has not been accompanied by sufficient increase in productive employment, especially for the 7-10 million young Africans who enter the labor force every year.
 Even redistributed growth and productive employment may not be enough for the chronically poor, who suffer from food insecurity and under-nourishment.
 African women—who are both contributors to and beneficiaries from development—still lack legal and property rights, and access to finance and modern business practices. They also risk dying from childbirth at alarming rates.
 Climate change, through its effects on water, will threaten Africa’s agriculture.
 The large number and persistence of fragile states indicates that these countries may be stuck in a low-level equilibrium “trap,” for which non-traditional solutions must be found.
 The co-existence of a massive infrastructure deficit and the large number of small countries in Africa signals the need for regional solutions.
 Fiscal austerity in developed countries, as well as criticism and political backlash against foreign aid, means that official development assistance may be constrained.
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