1.3 Why does growth need to be more inclusive?

Nigeria was one of the four fastest-growing economies in Africa that was the focus for MIAG. It has been popularly referred to as the ‘Giant of Africa’. This is because of its population size, at the time of writing just over 206 million, but also because of the size of its economy.

Since oil was first discovered in Bayelsa State in 1956, it has consistently been the largest producer of crude oil on the continent. Despite being resource-rich, with an annual income from oil exports estimated at $20–40 billion (OPEC, 2017), according to the World Poverty Clock [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] , in 2018 Nigeria overtook India as the world’s poorest country, with 86.9 million people classified as living in ‘extreme poverty’ – nearly 50% of the total population (Kazeem, 2018). At the time of writing, India has regained the title but the margin between them is small.

With access to a wealth of resources, including oil, minerals and fertile land for agriculture, why would such a powerhouse of an economy be seeing these extreme levels of poverty and escalating inequalities?

Ranieri and Ramos (2013, p. 4) stress that there is little debate that IG emerged out of rethinking in the development literature calling for a reorientation of growth to benefit the poor: ‘growth is not inherently pro-poor; therefore, growth processes need to be calibrated for pro-poor growth to be obtained’. Their point reiterates there is agreement on the need for IG to be poverty-reducing. However, there is significant division between those who see IG as an exercise in benefiting and enabling the poorest and most marginalised/vulnerable sections only (that is, a pro-poor agenda), and those who see pro-poor poverty reduction as only one component within wider efforts to develop society more broadly.

For the latter, growth needs to be sustainable and broad-based across all sectors, and inclusive of the majority of the labour workforce (Ianchovichina and Lundstrom, 2009). Rather than just bringing the poorest into the growth equation to bridge the inequalities gap, growth is seen as a wider societal development goal so that all benefit, but with special attention and provision given to enable growth amongst the poorest (Sumner, 2017; Asian Development Bank, 2011).

Whichever side you stand on, the argument indicates a need to be clear about who the poor are, how they are being defined and whether those then deemed as living in poverty need to be considered separately from the rest of society in the process of IG.

Along with the realisation that conventional growth needed an overhaul came the awareness that existing models were outcome centric. The preoccupation with GDP, employment figures, inflation rates and productivity levels consider growth as more inclusive if the benefits are more evenly distributed.

Inclusion is therefore a by-product of growth without an explicit proviso of whether those who benefit are taking part in the growth-generation. Putting more emphasis on participation shifts thinking to a view of inclusion as a practice (Ranieri and Ramos, 2013), whereby broader sections of society once excluded become active agents of growth. IG then is more of a process, the quality of which is judged by those participating in growth.

Much of the IG literature speaks of the importance of gender-sensitising IG (ADB, 2008; Crush et al., 2017). The rationale rests on recognising that women are frequently the most vulnerable, marginalised and impoverished.

In many developing countries, their inclusion in the labour force is largely through informal sectors, so they are often overlooked. Video 1.3 estimated that if women can participate and play the same role as men in economies, they would add $28 trillion to the global economy in just five years.

The issue of women’s increased inclusion is also symptomatic of a wider need to target vulnerable and discriminated groups, such as marginalised ethnic or religious groups.

The difficulty in pinning down a definitive understanding of IG may rest on the complexity of the problem – the list of factors and conditions are multifaceted. Whatever mix a conceptualisation includes, there are likely to be conflicts and trade-offs between different dimensions of the equation that will impact on the growth-equity relationship.

IG is not likely to be a straightforward, simplistic and linear process (Anand et al., 2013). The link between political space and growth is one example, such as with the Arab Spring Uprising, which was preceded by an exceptional period of economic growth. The violence and unrest that emerged was a direct response to the inequity of the benefits reaching the majority, although the political unrest halted this growth.

Instability in a country due to political change can, in the short-term, reduce growth. How these different aspects of growth interrelate could be an important point in a conceptualisation, but it also indicates the possible need for factoring in short-, medium- and long-term conditions (Hakimian, 2013). So there is broad recognition that careful consideration needs to be given to how different policy areas combine, synergise and create trade-offs to generate IG.