By Oafor Joseph Afam
December 5, 2024

A new World Bank report has projected that Africa could host 87 percent of the world’s extremely poor population by 2030, a sharp rise from the current 60 percent, if significant reforms are not implemented.

The report, titled Leveling the Playing Field: Addressing Structural Inequalities to Accelerate Poverty Reduction in Africa, attributes this trend to unequal access to jobs, finance, and public services such as education and healthcare. These disparities have deepened inequality and hindered poverty alleviation across the region.

According to the report, structural inequalities stemming from birthplace, ethnicity, gender, and parental background, combined with market and institutional distortions, perpetuate advantages for a select few while disadvantaging many. This has positioned Africa as the world’s second most unequal region, trailing only Latin America, and as the sole continent where extreme poverty reduction has stalled in recent years.

Despite a global decline in extreme poverty to single digits, Africa’s rate of extreme poverty, defined as living on less than $2.15 a day, stood at 38 percent in 2022—the highest globally. The report warns that this figure could escalate, with Africa potentially hosting 87 percent of the world’s extremely poor population by the end of the decade if transformative reforms are not undertaken.

Reforms That Work

The report highlights several successful poverty-reduction initiatives within the region. In Ethiopia, expanded land user rights encouraged investment in agriculture. Kenya’s introduction of mobile money and market-friendly financial products enhanced financial inclusion and resilience to economic shocks. Ghana’s investments in primary education and partial liberalization of its cocoa sector boosted school completion rates and agricultural incomes.

“There is nothing inevitable about structural inequalities,” said Nistha Sinha, co-author of the report. “As successful country examples show, barriers to opportunities can be removed and replaced with well-designed policies that allow people to build their productive capacities and open access to jobs and markets.”

Challenges and Recommendations

The report acknowledges that Sub-Saharan Africa has struggled to translate economic growth into poverty reduction due to entrenched inequality. It highlights that children from the poorest 20 percent of households are less likely to complete school on time. Additionally, only 32 percent of poor households have access to electricity, compared to nearly 70 percent of non-poor households. These disparities limit economic potential and trap young people in low-paying, insecure jobs in the informal sector.

To address these challenges, the report outlines four priority areas:

1. Strengthening economic and institutional foundations to eliminate barriers to competition and secure property rights.
2. Investing in education, healthcare, and infrastructure to enhance productive capacity.
3. Facilitating job creation by improving access to capital, technology, and markets.
4. Ensuring equitable use of government resources through progressive taxation and efficient public spending.

“These policy priorities should not be seen in isolation but as overlapping and mutually reinforcing—creating a level playing field while enhancing the region’s productive capacity,” said Gabriela Inchauste, another co-author of the report.

By tackling structural inequalities, Sub-Saharan Africa has the potential to unlock inclusive growth, reduce poverty, and create