One of the important covariates of poverty is economic growth, particularly one that benefits the percentiles of the population through expenditure growth.
Unfortunately, growth in the last decade has not had marked impact on the poor in general, and also in areas where poverty lingers most, to wit, the rural agrarian belt.
Data from GLSS7 suggests that economic growth in the last 13 years has been poverty inelastic – meaning 1% growth in average per capita income led to less than proportionate reduction in poverty incidence.
Between 2006 and 2013 (as reported in GLSS6), 1% growth in mean income per capita led to a reduction in poverty by 0.17%, compared to 0.07 for period 2014-2017.
Matters are even worse for households with heads that are farmers; such household is likely to be poor, i.e. having per capita consumption of less than GH¢4.8 per day or GH¢1,760.80 per annum.
Not particularly surprising, considering the relative dwindling contribution of agriculture to GDP ever since hydrocarbons showed up at Cape Three Points (See Figure1).
This is in spite of the year-on-year growth of the sector, registering 6.1% for 2017.
Also, fiscal policy can’t be faulted much, as governments past and present have tried their budgetary best to allocate resources to the sector.
Figure 2 shows an increasing percentage allocation of MDA expenditure to Ministry of Food and Agriculture. In 2017 alone 27.9% of MDA expenditure allocation to the economic sectors (GH¢2,721,569,222) went to MOFA. This compares to 6% in 2008, and 9% in 2010.
What about Social Protection? How is it, that in spite of the much vaunted pro-poor programs such as Livelihood Empowerment against Poverty (LEAP) and Labour-Intensive Public Works (LIPW), reduction in poverty headcount decelerated from 7.7% (recorded in 2005/2006 per GLSS6) to 0.8% in 2012/2013? What accounted for this? Undoubtedly, the impact of LEAP and LIPW is well attested by monitoring and evaluation studies done by DFID and ISSER. Also, government spending on health (CHPS Compounds), education (School feeding) and others have contributed to building capacity.
What is unknown is whether welfare improvements in such study respondents are sustained over the medium to long-term. That, in my view, is a yawning gap in the literature that requires immediate scholarly attention.
All said and done however, it’s reasonable, I reckon, to argue, that the current model driving poverty reduction strategy has revealed weakness in terms of its capacity to deliver policy outcomes as we head towards 2030. So what should a more robust model look like?
It is my contention, that a workable poverty reduction approach should have these features:
- Must optimize government social spending by providing infrastructure that supports productive inclusion of the poor and marginalized.
- Programmatic interventions must increasingly be market-based, and not rely on government fiscal support ad infinitum.
- Must achieve cross-sector linkages between, finance, agriculture and healthcare – all covariates of poverty.
I recommend the following policy alternatives
- Provide fiscal support to micro-creditors for on-lending. Compliance with predetermined evaluation rubrics (such as prudential reporting) could be set as eligibility threshold.
- Fiscal support must discriminate in favor of micro-creditors located within rural and peri-urban areas where district poverty headcount exceeds the national average of 23.4%.
- Encourage preventive healthcare practices to influence public choice in the area of food and nutrition. This will increase demand for farm products and in turn draw outputs through the supply chain from the farm gate to markets.
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By: Nkunimdini Asante-Antwi (Director of credit & market risk at YieldRock, a sustainable finance outfit that has footprints in the micro-credit space | Email: nkunimdini.asante-antwi@yieldrockgh.com)