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Ghana: Wealthiest now consume nearly 7 times more than poorest

By Dasmani Laary
Posted on Wednesday, 11 May 2016 14:39

While around a third of all national consumption is attributed to the wealthiest 10 per cent in the West African country, the poorest 10 per cent consume just 1.72 per cent, according to the Ghana Poverty and Inequality report produced this year.

We estimate that in Ghana, a child is almost 40 per cent more likely to live in poverty than an adult

The growth rate among the two groups has witnessed positive trends since 1990s, but the poor’s growth rate has been lower than the wealthiest groups, Professor Andy Mckay from the economics department of University of Sussex, in England said during a presentation of the report last Friday.

The address covered, poverty and inequality in Ghana over 20 years and was organised by the United Nations International Children Emergency Fund.

Those in attendance included policymakers, economists, civil society groups and a host of development partners.

“Looking at consumption levels, we see that the gap between the poorest 10 per cent and the richest 10 per cent of the population has been on the rise and has also increased since 2006,” Mackay said.

“We also found that the average consumption of this wealthiest group increased by 27 per cent between 2006 and 20013, whereas for the poorest it only increased by 19 per cent, meaning growth for the richest group was over 1.4 times greater than for the poorest in this period.”

According to the research, the poorest have started catching up – albeit very slowly – with better off groups in terms of consumption levels.

The slowdown in disparity from 2006 to 2013 has been ascribed to targeted programmes such as the livelihood empowerment against poverty cash transfer for the extreme poor. While this might have contributed to the effect, researchers cautioned that multiple factors related to the economy’s transformation and urbanisation could have been responsible.

The increase in inequality, the report said, has dampened poverty reduction efforts and while growth has driven poverty reduction, rising inequality has reduced poverty reduction.

They report says since 2006, the rise in inequality cut down poverty reduction by 1.1 percentage points, equivalent to maintaining around 289,822 people in poverty since that period who could have otherwise exited it. Between 1992 and 2006 the effect also shrank poverty reduction by 2.5 percentage points, translating into 555,422 people.

The report also says child poverty is higher than the overall poverty and is also greater among farming households than any other group. This implied many rural children lacked access to good diet, education, health services and good drinking water.

“We estimate that in Ghana, a child is almost 40 per cent more likely to live in poverty than an adult,” McKay said, and “this inequality has risen substantially from the 1990s when children were only 15 per cent more likely to be poorer than adults.”

“[It is] always the question of extent to which growth translates into better living conditions for ordinary people, so they feel growth in their pockets,” he said.

The three regions in north of the country – northern, upper east and upper west – now have the highest levels of poverty, even though they are reported to have received heaviest social and economic interventions in recent years compared to other regions.

The upper west has the highest level of inequality and largest increase in inequality since the 1990s, while the lowest level of inequality is found in the greater Accra region.

Of great interest to policymakers is the northern region, which saw its high level of poverty drop marginally from 55.7 percent to 50.4 percent.

Since the 1990s, the northern region has seen the smallest progress in poverty reduction, raising major concerns for policymakers given that the region now makes up the largest number of poor people compared to other regions – 1.3 million.

Poverty reduction in the country had been driven largely by high gross domestic product growth rate buoyed by enhanced government development expenditure, debt relief and increased foreign investment outlays.

Last week, the United Kingdom announced £14.8 million investment plan to implement pro-poor programmes intended to galvanise rural smallholder farmers and small scale entrepreneurs in the savannah ecological zone where poverty is endemic.

Ghana has experienced steadily increasing growth of over 7 per cent annually since 2005 and its per capita growth has remained relatively high following the attainment of middle income status in 2010 and discovery of offshore oil reserves.

McKay said “a policy will need to address this phenomenon and ensure that the poorest benefit more equitably”.