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The bank versus the time machine

The bank versus the time machine

8th September 2014

By: ISS, Institute for Security Studies

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‘You get three kinds of lies: lies, damned lies and statistics,’ Mark Twain is reputed to have said. That was possibly a bit harsh, although in the hands of politicians and salesmen, statistics have of course too often been manipulated to serve nefarious ends.

But even with the best intentions, statistics can be very slippery. Particularly in forecasting. It is difficult enough trying to figure out what's going to happen in the future. It's that much harder trying to quantify it – as the authors of a new African Futures Paper published by the Institute for Security Studies (ISS) readily acknowledge.

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In the paper entitled Reducing poverty in Africa: Realistic targets for the post-2015 MDGs and Agenda 2063, authors Sara Turner, Jakkie Cilliers and Barry Hughes apply the sophisticated International Futures forecasting system to test the World Bank’s ambitious goal of ending extreme poverty by 2030; and the African Union’s (AU) much more aggressive target of doing so by 2025 through its Agenda 2063 initiative. Both goals were set last year.

Cilliers is the Executive Director of the ISS, Turner is a research associate at the Frederick S. Pardee Center for International Futures at the University of Denver and Hughes is the Director of the centre. ‘Thinking about the future is an inherently uncertain task,’ they acknowledge. Nevertheless, ‘that doesn’t mean that it is impossible to think about many future possibilities in a structured manner.’

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The paper makes clear just how difficult it is to make such predictions, elaborating an extraordinary range of differing forecasts, assumptions and methodologies. The authors note that the deadline of the Millennium Development Goals (MDGs) expires next year, and the United Nations and international community have for some time been intensively negotiating a new post-2015 Development Agenda.At the heart of the eight basic MDGs – or 21, if you count sub-divisions – was the aim to halve the number of people living in extreme poverty, which is defined as an income of less than US$1,25 a day. The authors note that as a global average, that goal was achieved in 2010. But many countries, particularly in Africa, will meet neither this MDG, nor most of the others.

Meanwhile the World Bank announced last year that it had set a new goal of ending extreme poverty and sharing prosperity by 2030. And the ISS report says that the international community seems to be coalescing around this as a new post-2015 goal in effect.

World Bank President Jim Yong Kim has explained that ‘ending’ extreme poverty means in practice reducing it to 3% of the world’s population in each country, while ‘shared prosperity’ means fostering the incomes of the bottom 40% of the population of every country.

He told the Spring Meetings of the Bretton Woods institutions last year that on current trends, the percentage of people living in extreme poverty would drop to about 8% by 2030. More than two-thirds will, by then, be in Africa.

If the goal of 3% were to be reached by 2030, global extreme poverty – now 14% – would have to be halved by 2020. He explained, somewhat cryptically, that the basic strategy to achieve those goals was for every country to replicate what it did to achieve its highest growth rates over the last 20 years.

But after crunching very big numbers in their International Futures forecasting machine, Turner, Cilliers and Hughes conclude that the World Bank et al are being too ambitious by some 33 years, at least for Africa. They calculate that, even after a wide range of quite aggressive interventions to attack poverty, Africa will only reach the target of 3% extreme poverty by 2063, a date coinciding with the Agenda 2063 horizon.

The paper says setting aggressive targets is admirable, but they should also be realistic – presumably to avoid discouragement. And so they propose that Africa sets itself more modest deadlines to eradicate extreme poverty: namely to get it below 20% by 2030, below 10% by 2045 and below 3% by 2063.One of the most remarkable features of this report is just how much intervention it proposes for African countries to eradicate poverty, for them in the end only to achieve such apparently meagre gains.

The three authors note that rapid and sustained economic growth lifted 566 million Chinese people out of extreme poverty between 1990 and 2010 – reducing the extreme poverty rate from above 60% to below 10%. They argue, though, that Africa is unlikely to achieve the same relentless high-growth rates for each of its 55 countries for such a duration of time, particularly since the continent suffers from much higher levels of inequality.

And so they propose instead for Africa four categories of intervention as part of a ‘micro-dynamic, chronic poverty-centred approach to poverty reduction.’ These are social assistance (basically a big increase in welfare); pro-poor economic growth; ‘human development for the hard to reach’ (mainly good education aimed at market needs and free universal health care); and progressive social change (mainly measures to empower women).

And yet all of this intervention would only end poverty in 50 years' time! This looks like a bit of a cold bath for the Africa Rising narrative.

On the other hand, as the authors point out, Africa’s challenge is that its population will, in the meantime, probably more than double from its current estimate of 1,1 billion. So while progress might appear to be slow, if Africa were able to reduce extreme poverty in both absolute numbers as well as in percentage terms, even by these more modest deadlines, that would be quite a remarkable achievement.

It is also true that, by 2063, only nine countries will each have more than 10 million people in extreme poverty, according to this report’s forecast.

But it is important to remember that, for all these powerful calculations, we are of course still in the realms of hypothesis here. This is not a prediction but a forecast, which is based on certain assumptions. And when we step back from the world of mathematics and rely instead on intuition, educated by experience, who would confidently assume that most African governments will implement the measures that are proposed here to eradicate poverty, even by far-off 2063?

So, if, like Twain, we are sceptical about statistics, it is better to err, if at all, on the side of caution, as this report does.

Written by Peter Fabricius, Foreign Editor, Independent Newspapers, South Africa

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