Policies towards poverty: Ghana and Tanzania in the 1990's

In depth

Questions

Did private wage employees suffer from the trade liberalisation policies that characterised both economies in the 1990s?  

In Tanzania it is clear that the answer to this question is no. Households headed by a private wage employee saw rises in excess of 30 per cent in household expenditure per capita and the proportion of households headed by a private wage employee rose.

In Ghana the answer is less clear cut. Household expenditure per capita for households headed by a private sector wage employee rose by 15 per cent but the proportion of households headed by such employees fell over the decade.

How did the reforms in the public sectors implemented over the period affect households headed by a public sector employee?  

In both Ghana and Tanzania the proportion of households headed by public sector employees fell - by 6 and 13 percentage points respectively. By this measure policy in Tanzania was much more successful at cutting back the size of the public sector than Ghana. In both countries expenditures per capita rose - by 15 per cent in Ghana and nearly 30 per cent in Tanzania. By this measure public sector headed households fared much better in Tanzania than Ghana.    

Did relatively poorer households benefit from growth?

For both countries the answer to that question is yes. There is an important qualification for Ghana. Most farming households, who are on average the poorest group, saw falls in expenditure per capita over the decade.

Where did new employment opportunities come from?

In Tanzania the answer is from the private sector generally. In Ghana the answer is urban self-employment.

What are the implications for policy towards poverty from the comparison between the two countries?

The impact of growth on poor households was much more uniform in Tanzania than Ghana because policy outcomes in Tanzania were far more pro-rural than was the case in Ghana. In both countries average expenditures per capita for rural households are about 60 per cent of those for urban ones.

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