Wednesday, October 21, 2020

How Khama can eradicate poverty

If President Ian Khama’s plan to eradicate is to work, the current per capita income of every poor Motswana must increase at an annual rate of at least 6.0 percent. “This could be challenging for Africa to achieve, but not impossible. This assumption should consider some important facts.

First, an average growth rate of per capita income of the poor of at least 6.0 percent must take into consideration the chronic poor that are often hidden by such averages. Second, if the per capita income of the poor grows by that amount, there is no guarantee that their consumption will actually grow by a minimum of 6 percent over the period.

And finally, the policy of the government should be consistently targeted at reducing inequality in each country,” says a joint report of the African Union Commission, United Nations Economic Commission for Africa, African Development Bank and the United Nations Development Programme-Regional Bureau for Africa that assesses progress in Africa toward the Millennium Development Goals. Botswana’s GDP per capita is currently US$6785 and as the same report notes, the country’s income inequality is the third highest in Southern Africa after Namibia and Comoros’. Southern Africa has the highest geographic concentration of this sort of inequality in the world.

The report lists Botswana among “outlier countries” where income inequality remains stubbornly high. Khama stated mission is to eradicate absolute poverty but his detractors say that his programmes are not robust enough for the realisation of such ambition. The projections from the Africa Progress Panel, which the Governor of the Bank of Botswana, Linah Mohohlo is a member of, show that eradicating poverty in Africa by 2030 could be ambitious. The joint report says that the prospect of eradicating poverty will be determined by policies adopted by governments, not past trends.

“For instance, a high growth (at least a 2 percentage point increase in per capita income per year) and the share of consumption allocated to the poorest 40 percent of the population to rise by 0.25 percent of GDP per year is a favourable scenario that could lift more than half of the poor out of poverty by 2030 (about 163 million out of poverty). To reduce poverty to 3.0 percent by 2030, based on the current scenario with an unchanged distribution of income (as described above), the per capita income will have to grow at a rate of 7.5 percent.

Were the distribution to be steadily worsened (that is, 0.2 percent of GDP is reallocated in favour of the richest 10.0 percent), the economy would be required to grow at 11.0 percent per capita annually,” the report says.

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