1.

0 Introduction

Poverty in developing countries are caused by a number of factors including corruption and poor
governance, limited employment opportunities, poor infrastructure, poor resource usage, wars and
unending conflicts, poor World Bank and IMF policies, among others. Poverty is also caused by
cultural and structural factors. The poor lacks the capacity to influence social processes, public
policy, and resources allocation. Poor people are also said to lack access to relevant skills and
knowledge, education and personal development that could improve their livelihoods. Poverty can
only be fought in the presence of strong institutions, and equitable distribution of resources. This
requires a non-corrupt government1. However, in Africa, programmes designed to fight poverty
are not fully implemented because the funds end up in the hands of corrupt individuals, who pocket
the majority. Despite the renewed commitment over the past 15 years and more to poverty
reduction as the core objective of international development discourses and policies, progress to
this end remains disappointing. This is particularly evident in the extent to which the world is off
track to achieve most of the Millennium Development Goals, globally and in most regions and
countries. This inadequate progress raises important questions about the policies and strategies
that have been adopted to achieve poverty reduction, as well as about key international issues
including aid, debt and trade. Africa has the richest natural resources and yet it is poor and stagnant
in growth and development2. In other words, in spite of all the wealthy resources including human
and material in its possession, Africa is the worlds poorest continent. What are the causes and the
detrimental consequences?

2.0 Understanding Poverty and Livelihoods

Understanding poverty matters because of the scale and depth of poverty found in many
developing countries. Poverty reduction is now at the core of development policy-making and a
key commitment of donor agencies. There is considerable disagreement, however, over the extent
of poverty and over whether it is increasing or decreasing worldwide3.There is also disagreement

1
Elizabeth Francis, Poverty: Causes, Responses and Consequences in Rural South Africa, Chronic Poverty Research
Centre, 2006
2
Ibid

3
Ravallion M, How Not to Count the Poor: a Reply to Ravallion and Pogge, (Washington, D.C.: World Bank, 2002).
over how to define poverty. These consist of approaches that attempt to measure individual
deprivation, based on monetary income or on indicators of capability failure, approaches that are
based on concepts of social exclusion and approaches that reply on participatory methods to
establish the views of the poor themselves. All have advantages and disadvantages, in terms of the
aspects of poverty that they highlight or draw attention away from. They are based on different
conceptions of what poverty is and there is a significant lack of overlap between them. For these
reasons, they differ in terms of their implications for who should be targeted by interventions and
lead to quite different estimates of the scale and incidence of poverty. However, progress has been
made recently in analysing the causes of poverty and in making sense of the responses of poor
people to the pressures that place them in poverty. Some of the most interesting work on these
issues has been associated with the Chronic Poverty Research Centre (CPRC), or has been engaged
in debate with the CPRC. Research carried out by the CPRC has been diverse, but shares the
premise that studying the poor as a homogeneous category is superficial and misleading,
particularly where it is coupled with an assumption that their poverty stems from a lack of
integration into the market economy4. Nevertheless, it is a useful attempt to operationalise a
distinction between people who seem to be trapped in poverty from those for whom poverty is a
shorter-lived experience and who may have some potential to secure, or even improve, their living
conditions. This is an important first step in disaggregating the poor, though it is also essential
to recognise that there are many different ways of becoming, and remaining chronically poor and
that an analysis which makes sense in one context, or for one group of people, will not work for
another5.

3.0 Theory of Inequality and Poverty Determinants

Inflation may have a strong redistributive effect which could be positive (through its effects on
individual income wealth) or negative (through a progressive tax system). Inflation hurts the

4
Hulme, D. and A. Shepherd, Conceptualizing Chronic Poverty, World Development 31(3): 403-423, 2003.
5
du Toit A, Chronic and Structural Poverty in South Africa: Challenges for Action and Research, Chronic Poverty
Research Centre, Working Paper No. 56, 2005b
poorest segment of society because it causes the worsening of existing income inequalities in the
economy as money transfers from the poor to the rich and it becomes harder to meet lifes
necessities and people are trapped in a vicious circle of poverty. The negative effects of inflation
on the poor are intensified when wages fail to chase increasing price levels. In developing
countries, trade unions are weak and minimum wage laws do not work properly, due to weak
institutions, and workers are left with less or no rise in wages, while firms enjoy the benefits of
rising prices and get richer6.

Government consumption is also one of the factors that affects income inequality; income
inequality may increase or decrease with government consumption. For example, if most of the
redistribution through the tax and transfer system is towards the poor, government consumption
might result in greater equality. However, it could have the opposite effect if government
consumption is not developmental (i.e. not pro-poor). Cross country studies, find the size of the
public sector to be significant in reducing income inequality7.

Differences in population growth across countries is another factor explaining inter-country

variation in income inequality. Although population growth generally declines as per capita
income rises, there is considerable variation in the population growth rate among countries at a
similar income level. Generally, it is believed that faster population growth is associated with
higher income inequality. One of the reasons for this is that the dependency burden may be higher
for the poorer group. One of the most important factors underlying income inequality is the level
of access to education. There is a two-way link here; on the one hand an unequal educational
opportunity leads to greater inequality in income distribution by widening the skilled and
productivity gaps in the working population, while on the other, unequal income distribution tends
to prevent the poor investing in education and acquiring skills8.

One of the most widely promoted hypothesis in the social sciences is that economic growth reduces
poverty. While growth without distribution is not merely a theoretical possibility, but is being
experienced in certain countries or regions, most researchers consider that the widespread poverty
in developing countries results from slow economic accumulation. The notion of a trickle down

6
Greenway, D., M., Wyn. and Wright, P, Trade liberalization and economic growth in developing
countries. Journal of Development Economics, 67 (1), 229-244, 2002.
7
Boyd, R. L, Government involvement in the economy and distribution of income: A cross country study.
Population Research and Policy Review, 7, 223-238, 1998
8
Barro, R. J, Inequality and growth in a panel of countries. Journal of Economic Growth, 5, 532, 2000.
effect proposes a downwards-spread of the benefits of economic growth, although this growth
sequencing does not indicate the time lag that the poor must wait after the rich get richer first9.

There is a theoretical consensus that rapid population growth aggravates poverty. Rapid population
growth necessarily redistributes the population structure in favour of the young and increases the
size of families in the poor stratum, thus increasing poverty. This process is more likely to affect
developing countries, where a combination of poor agricultural economies, limited human capital
and rudimentary technology mean that the increment of population does not translate to increasing
labour forces and consequently upgrading income levels10.

4.0 Trade and poverty

Trade liberalization also could lead to faster growth in average incomes, and that growth increases
the incomes of the poor proportionately, thus leading to decreased absolute poverty. One of the
surest tactics for developing countries to alleviate poverty is to pursue policies of trade
liberalization. However, the arguments and evidence presented are challenged by the record of the
effects of trade on growth and poverty in some developing countries11. Under a set of specific
conditions, trade openness could be effective in reducing poverty. Specifically, cross-country
analysis, and a case studies of China and Morocco indicate that it is difficult to assert that trade
liberalization is a powerful force for poverty reduction, and that the relationship cannot be
generalized in both cases, at either side of the debate. Other comparative studies find that growth
reduces poverty but the estimated relationship varies widely. The effect ultimately is strongest in
countries with less inequality in income and assets12.

9
Ravallion, M, Can high inequality developing countries escape absolute poverty? Economics Letters,
56, 517, 1997
10
Becker, Gary S, Edward L. Glaeser and Kevin M. Murphy, Population and economic growth. American
Economic Review, 89,145-149, 1999.
11
Ravallion M, Looking Beyond Averages in Trade and Poverty Debate. In: Nissanke M and Thorbecke E, (eds),
The Impact of Globalization on the Worlds Poor. Palgrave McMillan, UNU-WIDER Studies in Development
Economic and Policy, 2007.
12
Cashin P et al., Macroeconomic Policies and Poverty Reduction: Stylized Facts and an Overview of Research.
IMF Working Paper 01/135, (Washington, DC, 2001)
5.0 Causes and Consequence of Poverty in Africa

5.1 Poverty in Africa

Poverty in African society can be attributed to many factors. These factors are interwoven
and so complex in such a way that, if they are not carefully separated and treated, our dreams for
sustainable development in Africa will remain like a faint moon at the horizon.

One of these factors is illiteracy. It has remained a terrible ulcer on the leg of development in
Africa. It is one of the impediments that have not pushed Africa forward to achieve sustainable
development. It is one of the forces turning the wheel of sustainable development in Africa
anticlockwise. From the Heavily Indebted Poor Countries (HIPCS) 1997 selected human
development indicators, we will notice that some African countries still fall below 40% of adult
literacy. These are Niger 14%, Somalia 24%, Mali 31% Sierra Leone 31%, Senegal 33%, Guinea
36%, Ethiopia 36%, Benin 37%, Liberia 38%. From this statistics, you will now evaluate its impact
in Africa13.Think of an illiterate who will want to keep basic records of his daily commercial
activities, think of an illiterate who would want to be trained to develop his skills in any business
venture. Think of an illiterate who will want to use a computer, think of an illiterate in our so-
called global village who is faced with the latters challenges, etc. This issue is not a voluntary act
or wish of the people to remain illiterates. It is due to their inability to afford for even basic
education. It is just that education has never reached their threshold. This has been as a result of
poverty and or negligence by those who can afford to provide these basic needs of life. If a panacea
is not sought for, Africa will remain vulnerable to underdevelopment, ignorance and insecurity14.

On the other hand, we hold some of the avaricious, dishonest and heartless African leaders are
responsible for auctioning and or mortgaging the economic base of their countries for their
personal gains. Some of these leaders divert money borrowed from International Financial
Institutions and developed countries for developmental projects into their private pockets. The
best economic constructions that these dictators have ever done for Africa is to dismantle their
economic treasures and build them at the backyard of Europe and the U.S.A. If these practices

13
Tazoacha Franc, The Causes and Impact Of Poverty On Sustainable Development In Africa, A Paper Presented At
The Conference Poverty And Sustainable Development Held In Bordeaux, France, 2001
14
ibid
(embezzlement, foreign investment, capital flight) are halted, sustainable development in Africa
will not be advocated for, but would be copied as a model15.

One of the main things that could be done to help alleviate poverty and strive for sustainable
development in Africa is to build their capacity. That is to intensively and extensively train
development experts for Africa. They could be trained towards the new socio-economic landscape.
Most educated people in our society do not have the skills to marshal the economy of their
countries forward. It is not because they do not want it but because they cannot afford
for this training. That is knowing what to do and not knowing how to do it has been the main
shackles holding the development of Africa backward. If these people are trained and given seed
capital to start off their businesses, sustainable development will come spontaneously to the
society16.

Many stakeholders, who have tried to salvage the poor from their plight through financial
assistance, have often missed the target. That is they direct the assistance into wrong hands the
rich. Consequently, this assistance does not reach the real targeted people the poor. They are
diverted by some government administrators and so called contractors into their private use at the
expense of those dying in abject poverty. What I mean is that, most of this assistance given to most
African governments never reach the grassroots. The assistance disappears from the hands of those
who sign for it and never reach the grassroots. The poor remain at the bottom gaping like hungry
chicks of a bird waiting to be fed. One should not be deceived that sustainable development in
Africa can ever begin from the top. The idea of putting financial resources on top to trickle down
to the bottom (grassroots) has failed in Africa. These resources do not trickle down 2 cm deep and
gets dry. If stakeholders and donors could reverse this method and try the trickle up method, that
is giving assistance and resources to local governments and organisations at the grassroots level;
assistance to Africa for sustainable development will be a farce17.

15
Yunus, Muhammad, Alleviation of Poverty is a Matter of Will, not of Means, Grameen Bank, 1994
16
Forzi, George Ngu , An Overview of BERDSCO (NGO) Field Experiences (From Establishment to Achievement),
BERDSCO,1999.
17
Tazoacha Franc, The Causes and Impact Of Poverty On Sustainable Development In Africa, 2001
5.2 Consequence of Poverty in Africa

The impact of poverty on sustainable development in Africa is devastating. Due to the inability of
the people to harness the resources that will improve their living conditions, it has helped to
dismantle their hopes of life. Therefore the economic activities of these people continuously face
diminishing returns. This impact is seriously felt in the agricultural sector as well as other sectors
of the economy. Since farmers lack the appropriate technology, updated skills, modern technology,
capacity building, innovative techniques, tools, lack capital to invest in this sector (to improve the
soils and multiply the yields), because of this poor state, the sector has seriously been affected.
Considering the indiscriminate population explosion in Africa in relation to the shrinking food
production and the economy, there is a serious threat to food production and food security. The
policies to guarantee food security and eliminate hunger in Africa have remained all theories on
the lips of those who preach it to make political gains. Except these theories are transformed into
concrete action and realities, one will wonder how this issue of food security that has remained a
sing-song for the past decades will be guaranteed and hunger that takes away souls every hour in
Africa will be eradicated18.

Because of the poverty situation in Africa, the continent has been plunged into a feat of successive
political problems that has resulted to wars, coup detats, dictatorship, military rule and many
leaders clinging so long on to power. This is because they believe that nectar is found only on the
crown or around the crown. The glaring examples have been experienced in Liberia, Angola,
Sierra Leone, Democratic Republic of Congo, The Republic of Congo, Burundi, Rwanda, Nigeria,
Chad, etc. Most of the manpower is trained to use arms, the little finances used to purchase arms
and most of the time spent in fighting. Consequently leaving the feeble economy in the hands
of the women and the old. If the continent remains in perpetual political upheavals, little or nothing
can be expected of development and most of all sustainable development. It is because of this
reason today that we find a lot of massive emigration of Africans to Europe, America and other
parts of the world to seek for greener pastures. They use all unorthodox means to make sure that
they leave their homeland for good to a land where they are subjected to all forms of slavery. Yet

18
Tazoacha Franc, The Causes and Impact Of Poverty On Sustainable Development In Africa, 2001
the exodus continues despite all attempts to curb it. This only helps to reduce the economic
manpower of the continent, which ought to be nurtured19.

Due to this fact, poverty-related problems like malnutrition, diseases, HIV/AIDS, juvenile
delinquency, disillusionment, unemployment, social insecurity, fraud, acute corruption,
embezzlement, trauma have been the order of the day. It has resulted to the availability of very
few and poor medical facilities, personnel and infrastructure. Many African countries especially
South of the Sahara have very poor communication and transportation network such as telephone,
internet, fax, radio signals, television images etc. There are very few accessible road network.
Acute poverty in Africa has resulted in high rate of illiteracy. This is because, there are no
educational infrastructure, few and in experienced personnel. This has affected mostly the
elementary and post secondary levels20.

19
Tazoacha Franc, The Causes and Impact Of Poverty On Sustainable Development In Africa, 200
20
ibid
6.0 Causes and Consequence of Poverty in South Asia

The erroneous policies of the regional governments in South Asia have given poverty an
institutionalised form, as a result of which there is no proverbial light at the end of the tunnel for
the countless poor and the disadvantaged. Poverty is a major concern in South Asia where poverty
is not only all-encompassing, but also distributed disproportionately across regions and socio-
economic groups, with women, minorities, people belonging to lower castes, casual and migrant
labourers, youth and the unemployed as its main victims. It has been estimated that one-third of
the population of the South Asian region is chronically poor, which means that they face several
forms of deprivation throughout their lives and are most likely to pass it on to their future
generations.

In statistical terms the figures are astounding as the regions share in world population is 22 per
cent but it contains more than 40 per cent of the worlds poor. As it has been rightly pointed out in
the Development Report, In todays world, the issue of poverty is the major challenge to sustain
economic growth, fuel the globalisation process, promote progress towards democracy and reduce
social tension and turmoil among various groups within and among nations. Yet many developing
countries still wait for the trickle down to work as they focus on accelerated economic growth.
The report analyses the various dimensions of poverty, coming up with six broad findings.

Firstly, a serious commitment towards poverty alleviation is the primary requirement for
sustainable economic growth. Secondly, it has been estimated that South Asia would not be able
to meet the Millennium Development Goals regarding poverty alleviation even by 2016. Thirdly,
the patriarchal system works against the fair sex and makes them more vulnerable. Fourthly,
though the existing poverty alleviation programmes have provided some relief to the
underprivileged sectors, their effects are limited. Finally, the sine qua non of the poverty question
is poor governance, which has compromised the effectiveness of decentralisation to empower the
underprivileged.

Discussing poverty and human development, the report reveals that undue attention has been paid
to economic growth and increasing GNP, instead of an equitable distribution of income or
resources. When the concerns for production and distribution are not dealt with simultaneously,
it is not possible for even an impressive GNP growth to filter down automatically. Also included
in the book are a variety of definitions and concepts of and regarding poverty measurements, such
as the international poverty line, the capability poverty measure (CPM), the human poverty index
(HPI), the human deprivation measure (HDM) and the poverty of opportunity index (POPI).
Perhaps among all these deprivations the most severe is the poverty of opportunities which hinders
healthy growth and makes the poor susceptible to other forms of deficiencies and injustices as
well. The report also explores the different dimensions and manifestations of poverty as it is not
merely a lack of income but a denial of opportunities for living a decent life. In the region, an
estimated 460 to 480 million people are capability/opportunity poor.

Human poverty manifests itself in several different forms as premature deaths, poor health,
illiteracy, poor living conditions and a lack of personal security. Explaining the gender dimension
of poverty, the report states that poverty and gender inequality are interlinked in numerous ways
to form a vicious circle that pushes them into a trap of constant denial of rights and extreme
discriminations, which is certainly injurious for them and makes them vulnerable to trafficking,
early marriages, physical and domestic violence, prostitution, etc. As it has been mentioned in the
report, Poverty has been feminised in most parts of the world, but in South Asia it truly has a
womans face. Discussing the issues of growth, poverty and inequality, the report mentions that
income inequality and social exclusion based upon gender, ethnicity and geographical regions is
increasing in South Asia. It has mentioned four major reasons for it: first, economic growth is
mostly concentrated in urban areas; second, it has followed patterns and favoured those sectors
which are traditionally not pro-poor. Third, economic growth is marked by the low employment
generation, and lastly, economic policies are usually antipoor. This issue is particularly relevant to
Pakistan as inequality and poverty have made a comeback in a big way where the poor are getting
poorer and the rich are getting richer.

There are three distinct forms of governance that influence the level of poverty i.e. economic,
political and civic governance. Again the running theme is pro-poor public policies, especially
macro-economic policies and a democratic system. Concluding the debate, the report asserts that
the fundamental goal of governments should be alleviating poverty and not just achieving
economic growth. They should concentrate on promoting equality of opportunity because its denial
could negate basic human rights21.

21
Moniza Inam, Poverty in South Asia, tp://www.cuts-citee.org/tdp/pdf/article-poverty_in_south_asia.pdf,
Retrieved 27 November, 2016.
In addition, the literature identifies the following main channels through which trade liberalization
affects poverty in south Asia22,23;
(i) Prices of tradeable goods: Trade liberalisation leads to a change in prices of imports and
exports. These price changes affect the poor.
(ii)Factor prices, income and employment: Trade liberalisation gives rise to a change in the relative
prices of factors of production such as skilled and unskilled labor and capital. These changes affect
the income and the employment of the poor.
(iii) Government income and expenditure: Trade liberalisation may lead to a decline in government
revenue affecting government expenditure, with direct transfers to the poor.
(iv)Incentives for investment and innovation: Trade liberalisation can affect the long-run economic
growth through its incentive effect.
(v) External shocks: Integration through trade liberalisation makes an economy vulnerable to
external shocks which will have impact on the poor.
(vi) Short-run risk and adjustment costs: During the liberalisation process economies face certain
adjustment costs which h will create effects on the poor.
(vii) Flow of information: Trade liberalisation facilitates the flow of information and knowledge
globally, impacting on the poor.
(viii) Institutions: Institutions at global, national, regional and local levels mediate various
channels and mechanisms linking liberalisation and poverty, creating effects on the poor.

22
Bannister, J. and Thugge, K, International trade and poverty alleviation, IMF Working Paper No. WP/01/54,
(Washington, D.C: IMF, 2001)
23
Nissanke, M. and Thorbecke, E. (eds), The impact of globalization on the worlds poor, (New York: Palgrave
Macmillan in Association with UNU-WIDER, 2007)