The poverty trap

Africa has a problem with poverty. The most poverty-stricken region of the world is tropical Sub-Saharan Africa, which comprises 49 of the 54 African countries (everything south of the Sahara Desert.) The World Bank defines extreme poverty as an income below a poverty line of $1.25 per day, measured in U.S. dollars at international prices of 2005. In 2010, an estimated 414 million people, or 48.5 percent of the population of tropical Sub-Saharan Africa, existed below this poverty line. According to Gallup World, in 2013, the 10 countries with the highest proportion of residents living in extreme poverty were all in sub-Saharan Africa. This is a result of geographic location, as well as historical, political, and developmental failures. Fortunately, that rate has been declining since 2000.

Worldwide, there are still an estimated 1.2 billion people below the extreme poverty line as of 2010, the year of the most recent data. Sub-Saharan Africa thus holds close to 40% of the total world population living in extreme poverty. Two main regions of the world are still stuck in a poverty trap, together these two regions constitute around 76 percent of all of the world’s extreme poverty. The other place where extreme poverty still exists in large numbers is South Asia.[ref]This region consists of Afghanistan, India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives. South Asia covers about 5.1 million km² and has a population of about 1.75 billion people, which represents 24% of the world population and makes it the most populated region in the world. South Asia has a poverty rate of 31% in 2010, which means a total of 507 million people lived in extreme poverty in this region.

The remaining areas of extreme poverty are in East Asia, where around 20% of the total population, or 250 million people, are still in extreme poverty. However, East Asia has by far the fastest decline of extreme poverty of any region, in conjunction with its remarkably high rate of economic growth.

In the Middle East and North Africa around 10 percent of the total population lives in extreme poverty, this means in raw numbers around 100 million people. The remaining 100 million of the world’s 1.2 billion poor are scattered in the other regions of the developing world (Latin America and the Caribbean, Europe, central Asia, small island states).

The World Bank places countries into high-, middle-, and low-income categories. The classification is based on the country’s GDP per capita. On the current criteria (2015), a country is low-income if its GDP per capita is below $1,035 per person per year, or about $3 per day.

It is noteworthy that there is a big gap for low-income countries between the GDP measured in regular exchange rates (nominal) and the GDP based on purchasing power adjustments (PPP). The price level of goods and services in the poorest countries tends to be lowest; the cost of a haircut will be much lower in a poor country, therefore the cost of living comparison has to be adjusted downward. In a typical poor African country, for example, the GDP per capita in PPP units tends to be three to four times larger than the GDP expressed at market prices.

A middle-income country is in a band between $1,035 and $12,615 per person per year. The high-income countries are above the $12,616 per person threshold. The middle-income group, which is quite big, is split between the upper-middle-income and the lower-middle-income, with the dividing line at $4,085 per person per year. These classifications and boundaries are frequently readjusted, but they allow us to understand the trends better: The world today is divided between 55 high-income economies (1.3 billion people), 103 middle-income countries (4.9 billion people), and 36 low-income countries (0.8 billion people).

In addition to these categories, the United Nations also has a special category for countries that are not only the poorest, but also have structural problems that impede their development - these are the so-called least-developed countries (LDCs). To identify LDCs, the United Nations Committee uses three criteria: gross national income (GNI) per capita; human assets index (HAI) and economic vulnerability. There are currently fifty countries on the list of LDC's and they are of course also heavily concentrated in tropical Africa, South- and Southeast Asia.

How did these vast differences across the world come about? How is it that there are countries like the United States at more than $50,000 per person per year of income, and countries like Niger at under $500 per person per year, less than 100th the income levels of the high-income countries when measured at market exchange rates? This huge gap certainly did not exist two centuries ago. Political and developmental efforts to create a world with more equality face the problem that the factors that created the inequality continue to operate and widen the gap: the economic engines that made some countries rich continue to propel them forward, and it is hard, if not impossible, for poor countries to catch up. This explains the huge migration rates we are witnessing in the last 20 years. With rising world population, migration streams will also continue to increase.

Extreme poverty is a multidimensional concept. Poverty is primarily the lack of adequate income, but it is also the inability to meet basic human needs for food, water, sanitation, energy, education, and work. Extreme poverty in Africa means that there is no access to energy, such as natural gas for safe cooking. Instead, poor people rely on wood-burning stoves that cause chronically smoke-filled homes and subsequent respiratory diseases in the children. Extreme poverty means that families cannot get decent schooling for their children, health care, and so on. Extremely poor people live in a trap. The factors that cause their poverty are largely beyond their control. They struggle for survival without being able to improve their condition, and they live in both rural and urban areas. African extreme poverty is still predominantly rural (roughly in a ratio of 60:40), but increasingly, it can be found in the urban slums as well.

Countries caught in this poverty trap (LDC's) also have specific geographic conditions: The LDC countries in Asia (Afghanistan, Nepal, Bhutan, and Laos) are all landlocked, and so are many LDC's in Africa, for instance Burkina Faso, Mali, Niger, Chad, the Central African Republic, Uganda, Rwanda, Burundi, and Malawi. In fact, much of tropical Africa is landlocked; with a total of sixteen countries, Africa has the largest number of landlocked countries in the world. In those sixteen countries, the populations are both physically and politically far removed from the international community. Economic development depends heavily on international trade, which is significantly more difficult for them. This map shows the African countries. Good traffic infrastructure is missing: Rivers are scarce in Africa; and a good continent-wide railway or highway system still needs to be developed.

Large continental countries, such as Russia, face similar disadvantages. Most Russian cities and industrial zones are far in the interior of the country and face huge overland transport conditions to get to seaports or to import international goods for their industries.

Tropical regions are generally poorer than temperate-zone countries. Other geographic factors also influence the wealth of a region: Droughts, access to fresh water, crop productivity, soil quality, or diseases. In addition, countries which face the hazards of earthquakes and typhoons in the Caribbean and the Asia-Pacific rim (e.g., the Philippines) pay a long-term price for these vulnerabilities.

Strategies to end extreme poverty

There is hope on the horizon: the worldwide number of extremely poor people has already been sharply reduced from 1.9 billion in 1990 to 1.2 billion today. If the right measures are taken, the eradication of extreme poverty is possible, and African politics plays a major role in this development. Basically, Africa has to tackle two problems in order to substantially reduce poverty: create infrastructure, and curb population growth.

It will require a major buildup of infrastructure in order to end extreme poverty in Africa: This includes roads, rail, power, ports, and communication networks. Africa’s colonial rulers left the African nations with little infrastructure when they became independent in the 1950s and 60s. This can be illustrated by comparing India’s and Africa’s rail grids. India had just one imperial ruler, Great Britain. The British constructed a full rail network, mainly because they wanted to bring India’s cash crops, such as cotton, to the coastal ports. Africa, by contrast, was divided between several European powers (Great Britain, France, Italy, Spain, Portugal, and Germany until World War I). These rulers were in competition with each other, and they did not coordinate or connect their infrastructure investments. Africa’s rail system was mainly single lines running from ports to particular mines and plantations. Subsequently, modern-day Africa faces extremely high overland transport costs, in part because of the weakness of the rail network, combined with a very insufficient highway system. And the fact that the African continent hosts 54 countries makes the creation of a modern, continent-wide transport network an enormous challenge.

Other aspects of infrastructure are also important: There can be no economic development on a sustained basis without mass electrification. We have seen the satellite photos of the Earth at night, which indicate the places with nighttime electrification and illumination. It shows the bright lights of Europe or the United States, and the bright coastal areas of China and Japan. But in sub-Saharan Africa, the lights are out at night. To this day, a large part of rural Africa still lacks access to electricity. There is also not enough electricity for home activities, and a critical lack of power in order to pump water for irrigation; for refrigeration; for preservation of agricultural outputs; for industrial processing of food, textiles, and apparel; and for every other kind of industrial activity.

Nevertheless, Africa's economies are growing: The average growth rate in sub-Saharan Africa picked up significantly after 2000. Africa has been growing faster than the average of the world economies, above 5% per year. This pace is slowing in the last two years: according to the IMF, total GDP growth rate in 2014 was 4.5%, and in 2015 it was 3%.

Economic growth will not reduce poverty rates if the population growth rates outpace economic gains. Therefore, Africa has to curb population growth. It is currently at 2.5% per year, which basically dilutes any gains in the ratio of GDP per capita. Countries with high population growth rates have to work very hard to bring them down, or else they face more economic, social, and political disasters.

Population development and urbanization

Africa still has a very high fertility rate, which means that family sizes are very large on average, and the population is potentially growing at an exponential rate. (See the UN Department of Economic and Social Affairs Population Division (DESA), 2013.) The fertility rate for 2010–2015 is estimated to be 4.7 children. If each woman on average has more than two daughters, the population will double in the next generation. In 1950, sub-Saharan Africa’s population was only 180 million people. Today, sub-Saharan Africa’s population is around 900 million, a five-fold increase in 60 years. The United Nations Population Division developed three different scenarios for the population of Africa during the twenty-first century, depending on the fertility rate:

1. Moderate decline in the fertility rate: Africa’s population will reach 3.8 billion people by 2100, roughly four times larger than now.

2. Low decline in the fertility rate, also called the high-fertility variant: In this scenario, Africa’s population will reach an astounding 5.3 billion people by 2100.

3. High decline of the fertility rate, or low-fertility variant: If the birth rate falls more rapidly than the UN now projects as likely, the population in 2100 will be around 2.6 billion people, lower by more than 1 billion people as compared to the medium-fertility variant.

In addition to vital investments in agriculture, health, education, physical infrastructure, and electricity, Africa will benefit strongly by investing more in the reduction of today’s high fertility rates. How does a government promote voluntary fertility reduction? Women have to become a focus of politics:

1. Girls should be enabled to stay in school at least through the high school diploma level, in order to discourage child marriages.

2. Child survival rates should be increased, so that families realize that having fewer children is “safe” in terms of their survival. Families do not need to be large to ensure the survival of a few of the children.

3. Family planning and contraceptives should be available for free or low cost for those households that decide to reduce their fertility rate.

Africa is still the world's most rural region, but it is catching up fast: urbanization rates (the tendency of people to move to cities) are extraordinarily high. Africa’s urban areas are roughly growing at around 5 percent per year, which means it takes around 14 years for the urban areas to double in size: a large urban agglomeration of 5 million people today would become a mega-city of 10 million in just 14 years! Africa's urbanization conforms to a world-wide trend: The world population will reach 8 billion by approximately 2025, and 9 billion by 2040. Much of this increased population will be in urban areas, since the total rural population is expected to remain roughly constant at around 3.3 billion until 2035, and then to decline slightly to 3.2 billion by 2050. In terms of numbers, all future population growth on the planet is urban population growth. The proportion of the world living in urban areas is going to rise from around 53 percent in 2013 to around 60 percent by 2030 and 67 percent by 2050. Urban conglomerates need to coalesce into functional cities, and the success of this effort will define future global development. Achieving prosperous, healthy, and resilient city-formation is going to be a core challenge of sustainable development.

Miscellaneous facts and numbers

• According to 2016 World Bank estimates, the share of Africans who are poor fell from 56% in 1990 to 43% in 2012. However, due to population growth, in absolute numbers, today Africa has more poor people than ever. The most optimistic scenario shows about 330 million poor in 2012, up from about 280 million in 1990. Poverty reduction has been slowest in fragile countries, and rural areas remain much poorer, although the urban-rural gap has narrowed. (Worldbank Report: Poverty in a rising Africa, March 2016.)

• Non-monetary dimensions of poverty have been improving, but the challenges remain enormous. Compared with 1995, adult literacy rates are up by four percentage points and the gender gap is shrinking. Newborns can expect to live six years longer and the prevalence of chronic malnutrition among under five-year-olds is down six percentage points to 39%. At the same time, despite substantial improvement in school enrollment, the quality of schooling is often low and more than two in five adults are still illiterate. (World Bank Report: Poverty in a rising Africa, March 2016.)

• Approximately 30% of people living in sub-Saharan Africa are undernourished. The Food and Agriculture Organization (FAO) of the United Nations estimated that 239 million people (around 30 percent of the population) in sub-Saharan Africa were hungry in 2010. This is the highest percentage of any region in the world. In addition, the U.N. Millennium Project reported that over 40 percent of all Africans are unable to regularly obtain sufficient food. (Source for this and the following points: Borgenproject: Poverty in Africa Facts, 2014.)

• In sub-Saharan Africa, 589 million people live without electricity. As a result, a staggering 80 percent of the population relies on products such as wood, charcoal and dung in order to cook.

• Thirty-eight percent of the world’s refugees are located in Africa. Due to continuing violence, conflict and widespread human rights abuses, the United Nations High Commissioner for Refugees (UNHCR) reports that 11 million people, including stateless people and returnees, exist in Africa.

• Fewer than 20 percent of African women have access to education. Uneducated African women are twice as likely to contract AIDS and 50 percent less likely to immunize their children. Meanwhile, the children of African women with at least five years of schooling have a 40 percent higher chance of survival.

• The median age in Africa is only 19.7 years, with 33.3 years in Mauritius, and only 15.1 years in Niger. Uganda for instance has a median age of 15.6 years, with a population of 37 million. (Comparatively, the median age in Europe is 40 years.)

• Out of the 34 million HIV-positive people worldwide, 69% live in sub-Saharan Africa. There are roughly 23.8 million infected persons in all of Africa. 91% of the world's HIV-positive children live in Africa. More than one million adults and children die every year from HIV/AIDS in Africa alone.

• 39 out of the 55 African countries have high levels of fertility. In 34 of the 58 high-fertility countries in the world, population will triple in the 21st century. Globally, women now have an average of 2.5 children during their childbearing years. In Africa, however, the average is approximately 4.7 children per woman. Moreover, in four African countries, the average woman is still expected to have more than six children, leading to unsustainable population growth. Malawi, for example, which has 18 million people today, is projected to have a nearly tenfold increase in population by 2100, to an estimated 130 million. The African nation with the largest population, Nigeria, is projected to increase from slightly more than 180 million people today to more than 730 million by 2100.

The UK is roughly the same size as the island of Madagascar. The picture also lists the top 100 countries in the world in terms of biggest land size. Russia is by far the largest country in the world, with more than 17 Million km^2. It is almost twice the size of the second-largest country, Canada. Also in the group of the top five countries by size are China, the US and Brazil. It is interesting that the US is almost three times the size of India, which nevertheless has a population that is four times bigger!

The reason for underestimating the size of Africa originates in the construction of maps and the projection of space: The earth is a globe with flattened poles, but we project it into a two-dimensional space, which makes the equatorial areas smaller in comparison to the areas further north and south.