Saturday, 12 October 2013

Growing unemployment raises risk of political, social upheavals in EA

The high cost of living forces the poor go without basic necessities. Photo/FILE
The high cost of living forces the poor go without basic necessities.


In Summary
  • While East African economies are growing adequately by global standards, they are not creating enough jobs or making life significantly better for the region’s poor.
  • In East Africa, the survey reveals that Kenya, Tanzania and Uganda — which have all sustained high levels of growth in the past decade, especially Tanzania (7.0 per cent) and Uganda (6.9 per cent) — are among the five countries with some of the worst dissatisfaction levels in Africa.
  • While 57 per cent of Africans interviewed expect the economy to be better in a year, at the regional level, East Africans are consistently the most negative, and the least optimistic about the future.

East Africa is one of the regions in Africa most vulnerable to political and social upheaval due to the rising unemployment that has defied impressive economic growth, a new study shows.
While East African economies are growing adequately by global standards, they are not creating enough jobs or making life significantly better for the region’s poor, the data shows, calling into question the effectiveness of the bloc’s economic policies.
Hence the level of risk in East Africa is high due to the surging dissatisfaction among households and business people, a situation made worse by the rapid population growth, high levels of inequality, and widespread poverty, says the latest Afrobarometer study titled Africa Rising? Popular Dissatisfaction with Economic Management Despite a Decade of Growth.
The study was based on surveys in 34 African countries between October 2011 and June 2013 by a team of social scientists from more than 30 African countries.
In East Africa, the survey reveals that Kenya, Tanzania and Uganda — which have all sustained high levels of growth in the past decade, especially Tanzania (7.0 per cent) and Uganda (6.9 per cent) — are among the five countries with some of the worst dissatisfaction levels in Africa.
A majority of households and business people in these countries said they were deeply dissatisfied with the current economic conditions despite a decade of strong growth. The other two — Egypt and Tunisia — recently experienced an overthrow of government as a part of the Arab Spring.
“The growing protest trend in South Africa may be one example of just such causes and effects. This is a lesson that many fast-growing African economies will do well to learn. If the proceeds of growth are not shared equitably through society, the impact of rapid economic expansion may ultimately become more destructive for a society,” says the study.
Economists also said inflation remained the biggest threat to growth in the region, as high prices were denying households money for savings and new investments. The region has been battling relatively high inflation rates in recent months.
Kenya’s year-on-year inflation rose for the fourth straight month to 8.29 per cent in September from 6.67 per cent the previous month. In Uganda, inflation rose to its highest in more than a year in September to 8 per cent from 7.3 per cent the previous month while Burundi’s inflation rate rose slightly to 10.4 per cent in August from 10.1 per cent in July. Rwanda’s August inflation increased to 4.04 per cent from 3.52 per cent  in July. Tanzania saw its inflation fall to 6.1 per cent from 6.7 per cent in August while Rwanda’s urban inflation was 4.04 per cent in the year to August.
Negative responses in excess of 60 per cent were also reported in fast-growing West African states like Nigeria and Ghana, both of which also enjoyed high annual growth rates over the past decade (6.8 per cent in Ghana, 8.8 per cent in Nigeria).
“One of the key issues has been jobless growth — the growth has not been sufficiently translated into productive jobs, especially for the youth. A lot of work is needed to create productive jobs given that the some of those employed are also under employed with low paid jobs,” said Dickson Malunda, a senior research fellow at the Institute of Policy Analysis & Research-Rwanda (IPAR).
If economic growth is being driven by sectors that create limited employment, and the benefits of growth accrue only to a few, then glowing GDP growth figures will offer little solace to those that want to escape poverty, according to the study.
“Africans overwhelmingly reject their governments’ management of their economies, giving failing marks for job creation, improving the living standards of the poor, and narrowing the gaps between the rich and poor,” said Jan Hofmeyr, head of programmes for policy and analysis at the Institute for Justice and Reconciliation based in South Africa which is part of the consortium of the Africa-based think tanks that publish the study.
While 57 per cent of Africans interviewed expect the economy to be better in a year, at the regional level, East Africans are consistently the most negative, and the least optimistic about the future.