Policies towards poverty: Ghana and Tanzania in the 1990's
Summary
In this section we summarise the main findings from the comparisons we have carried out between Ghana and Tanzania. The most striking similarity across the countries is that the average growth rate was almost identical at about 10 per cent per decade. This compares with an average growth rate in China over the same period of 5 per cent per annum. Ghana and Tanzania have in common very low growth rates in household expenditure per capita over the 1990s. Clearly such growth rates make any substantial reduction in poverty difficult and as the Reports show the declines in the poverty measures have been very modest.
In seeking to understand how this average growth rates was achieved we took two steps. The first was to look at the expenditure per capita of four types of households: farmers, the urban self-employed and private and public wage employees. The second was to ask if the growth was the result of growth within these categories or of changed proportions across the types of household. While there was some change in proportions this was not an important source of growth, by far the most important sources of growth were within the types of household and this was a common finding for both countries.
While the overall average growth rates were very similar there were very marked differences across the two countries in the growth rates within types of household. In Tanzania growth was driven by the growth of expenditure in households headed by a wage employee who are the richest households. In Ghana the highest growth rates in expenditure were among the urban self-employed who while richer than farmers were not, even at the end of the decade, as well off as households headed by a wage employee.
In Ghana the average expenditure per capita for farmers fell over the decade while in Tanzania all classes of households saw rises in per capita expenditure. The Growth Incidence Curve (GIC) analysis shows that for Ghanaian farmers all households below the 65 th percentile saw falls in expenditure per capita. In contrast the GIC analysis for Tanzania shows that all percentiles of the distribution (we abstract from the figures for the top percentiles which are not reliable) for all types of households saw increases.
In summary in Ghana many farming households must have entered poverty over the decade while for all except wage earners in Tanzania exits would have been very modest.