Growing unemployment raises risk of political, social upheavals in EA

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.

READ: Tanzania’s inflation falls to one-year low, Rwanda’s edges up

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.

Data used in the study is based on popular perceptions about the condition of national economies, and the effectiveness of governments’ efforts to manage them.
Economic growth appears to benefit only a few, according to the ordinary people who participated in Afrobarometer studies.

Across 34 countries, a majority (53 per cent) rate the current condition of their national economy as “fair” or “very bad”, while just 29 per cent offer a positive assessment.

“The Afrobarometer findings seem to confirm what a lot of people are already saying… that there seems to be a disjuncture across the region between the economic growth figures, which are generally very good, and the perceptions of citizens about their own welfare, which are often more pessimistic,” said Andrew Mold, a senior economic affairs officer at the United Nations Economic Commission for Africa, Sub-Regional Office for Eastern Africa (UNECA) in Kigali.

“The marked negative perceptions among Kenyans — a country with one of the highest income levels in the region — are notable. East Africans in general seem to be more pessimistic than their counterparts in the rest of Africa. This implies a number of things for government including more policies to enhance job creation, greater attention to inequality and faster poverty reduction,” he said.

ALSO READ: EA countries revise economic growth projections upwards

Negative assessments outnumber positive reviews in 26 of 34 countries. The only notable exceptions are Namibia, Zambia and Algeria.

Just one in three Africans (31 per cent) thinks the condition of their national economies has improved in the past year, compared with 38 per cent who say things have become worse.

Similarly, 32 per cent say their own personal living conditions have improved in the past year, compared with 33 per cent who say they have become worse (34 per cent saw no change).

In addition, many individuals still experience regular shortages of basic necessities; these rates of “lived poverty” remain essentially unchanged.

But they likewise generate more negative responses from their citizens than positive ones: 43 per cent of Botswana and 47 per cent of South Africans consider their economies to be in a bad state, compared with just 22 per cent and 32 per cent, respectively, who are more positive.

When asked to compare their country’s present economic condition to a year previously, only one third (31 per cent) report improvements consistent with the “Africa rising” narrative. A plurality (38 per cent) instead report that their country is doing “worse” or “much worse” than a year ago, while 29 per cent report no change. In no country did a majority report improving economic conditions.

Respondents in Mozambique, Sierra Leone, Mali, Benin, and Ghana expressed greater satisfaction with the economy than people in other countries, with more than 40 per cent indicating that the country’s economic circumstances were “better” or “much better” than they had been 12 months earlier.

With the exception of Benin and Mali, these countries had all achieved growth rates in excess of 5 per cent between 2002 and 2011.

But the five countries most likely to report decline again included two countries in the region —Uganda and Kenya, Egypt and Tunisia now joined by Sudan — and several of these have enjoyed similar growth rates (4.8 per cent in Egypt, 3.9 per cent in Tunisia, 6.9 per cent in Uganda, 4.2 per cent in Kenya, and 6.5 per cent in Sudan).

In South Africa, the public is roughly evenly divided: One-third of respondents (33 per cent) indicate that the economy has gotten worse, and 30 per cent say it has improved, while 36 per cent see no change.

Many are optimistic about the future, however: 60 per cent expect their own situation to be “better” or “much better” in a year’s time. The 10 most optimistic countries, where large majorities expect a brighter future, are all located in West and North Africa, including Benin (87 per cent positive), Nigeria (85 per cent), and Mali (82 per cent).

In sharp contrast, all four East African countries (Burundi (41 per cent), Kenya (36 per cent), Uganda (30 per cent) and Tanzania (23 per cent) are among the most negative, joined by Egypt (33 per cent).

ALSO READ: World Bank cautions Uganda on future unemployment

These findings are consistent with related results on levels of “lived poverty” across Africa.

In 16 countries where the extent of lived poverty has been tracked for a decade (2002-2012), there is little overall change; although a few countries have recorded improvements, a similar number have witnessed declines.