Government economic policies paying off

The Fourth Household Suvey for 2001 and 2014 has been published with figures indicating that poverty reduced by 2.4 points in percentage between 2007 and 2014. What explains this drop?

Before getting to the explanation of this drop, let's first understand the meaning of this figure. The figure represents the decrease of the poverty rate or the incidence of poverty between 2007 and 2014. By definition the poverty incidence or poverty rate is the ratio between the number of poor individuals (living under the poverty line) and the whole population. The survey indicates that this ratio reached 37.5% in 2014 down from 39.9% in 2007, which means that the proportion of poor individuals in Cameroon relatively to the whole population experienced a drop of 2.4 between 2007 and 2014. This should not be equated to the drop in the number of poor individuals in Cameroon during the period. This number actually increased during the same period!

Having said this, the drop in the incidence of poverty could be explained either by the government economic policies outcome or a difference between the growth rate of the number of poor individuals and that of the whole population. In the final analysis, the drop is explained by both. That is, the contribution of government policies to poverty reduction has kept the growth rate of the number of poor persons (1.4%) below that of the whole population (2.5%). Thus, the denominator (whole population) has grown faster than the numerator (number of poor), leading to the drop of the ratio.

What are the prospects of reducing the poverty index from the current 37.5 per cent to 28.7 per cent by 2020 as prescribed by the Growth and Employment Strategy Paper (GESP)?

The prospects are not good enough although the situation is not totally desperate. The government can still salvage the situation and manage to reach the 28.7 percent prescribed by the Growth and Employment Strategy Paper by 2020 provided that it changes radically the course and be resilient all through the period. The difference between the poverty rate of 2014 and the expected one in 2020 is 8.8%. If the government simply stays the course and everything else stays the same, only a drop of nearly 2.4% in the poverty rate will be achieved during the 2014-2020 period; which will take the poverty rate to 35.1% in 2020. A good 6.4 points shy of the 2020 GESP target!

Again, the prospects of hitting the 28,7% targeted by the GESP in 2020 is not quite impossible considering that, according to the survey, a performance of nearly 13 points drop was achieved in a similar timeframe when the poverty rate went from 53% to 40.2% between 1996 and 2001.

The survey notes that the economy generated numerous employments but did not succeed to scale down under-employment. What could have accounted for this?

The fact that most of the employments generated by the economy were in the public sector and urban areas is one of the main reasons why the economy failed to scale down the under-employment. This spells out the failure of the private sector to create enough decent jobs. Another main reason is the inappropriate targeting of job creation policies. In fact, there are no job creation policies designed specifically for those working in the informal sector, the agriculture and the rural areas where the majority of under-employment lies. Last but not the least is the fact that the agriculture sector of activity has lost quite a good number of employments, moving from 57% to 45%, due in part to the migration of individuals towards other sectors of activities for probably more under-employments.

What best practices should be employed to turn the tides and most especially, reduce poverty in the rural areas where about 60 per cent of the total population with 90 per cent lives under the poverty line?

The government should continue with the expansionary economic policy that it has been implementing for quite some time while putting in place incentives for the private sector and local councils to create decent jobs. In the meantime, the measures of social protection put in place in 2008 following the social unrest resulting from a high inflation rate (5.3%) should be refocused to target the intended population which is the poor persons.

These policies, based on the subsidies of petroleum products and basic consumables, were ill targeted and only a marginal number of the poor persons, to which they were intended, actually benefited from it. These policies have contributed to widen the gap between the rich and the poor, the urban dwellers and the villagers. There are a number of economic instruments that can be used to make sure that these subsidies benefit solely the poor persons. They include food stamps, vouchers, etc...

There is a need to put in place poverty alleviation policies designed specifically for rural areas in general and gear towards creating decent jobs in the agriculture sector in particular. There is also a need to come out with measures aimed at improving the working conditions and revenues of the workers in the informal sector and a path to move them into the formal economy.

All in all, the lack of health coverage has proven to be one of the main problems plaguing the poor and vulnerable persons across the globe. Therefore I strongly recommend the provision by the government of health coverage including free preventive care and coverage for prescription drugs for the poor and vulnerable persons in urban and rural areas all around the country.