African Welfare Programs Boost Economic Growth, Unicef SaysFranz Wild
African governments are increasing spending on social welfare, helping reduce inequality and drive economic growth in the poorest continent, the United Nations Children’s Fund said.
Over the past five years African states have started 123 cash transfer programs to support the poor as stronger democratic traditions encourage political parties to pay more attention to social policy, Sudhanshu Handa, the head of social and economic policy at Unicef’s Florence, Italy-based Innocenti research office, said in a phone interview yesterday.
“Just in the last few years there’s been a mushrooming of activity,” Handa said. “This can be a critical part of an inclusive growth strategy: There’s less inequality and less social instability.”
The economy of sub-Saharan Africa is expected to grow 5.4 percent his year, according to the International Monetary Fund. Kenya, Zambia, and Ghana are among the countries benefiting the most economically by making the biggest advances in strengthening their safety nets through welfare grants, according to Handa.
Donors have often helped initiate the schemes to encourage building buffers against humanitarian crises created by food shortages or conflict, Handa said. Most of the funding is now domestic, which makes the programs more sustainable and means they are aligned closer to a government’s objectives, he said.
While Unicef and the African Union, which will debate the subject at a ministerial meeting between May 26-30, argue the spending supports economic growth, the IMF on April 24 warned about of risks of rising fiscal deficits in sub-Saharan Africa.
The trend also runs counter to that of some of the richest countries, including the U.S., Japan, France, Germany and the U.K., which have reined in welfare spending as they try and bring down their budget deficits.
South Africa, the continent’s most developed economy, brought its poverty rate down 11 percentage points in the two years through 2011 as the government expanded welfare payments, according to its statistics agency. The government spends about 13 percent of gross domestic product on social programs including health but not education, more than Mexico and South Korea.
Since the African National Congress came to power in 1994, the government has expanded the provision of welfare grants to 16 million people, or almost a third of the population of 53 million.