World poverty falls below 10%

By Independent Team & Agencies

Uganda rates improve but hurdles remain in goal to end poverty in Sub-Sahara by 2030 – World Bank

As the world celebrates the decline in the number of people living in extreme poverty, there is growing concern about the growing concentration of global poverty in Sub-Saharan Africa. According to World Bank projections released on Oct. 4, the number of people living in extreme poverty around the world is likely to fall to under 10 percent of the global population in 2015.

But while some African countries have seen significant successes in reducing poverty, the region as a whole lags the rest of the world in the pace of lessening poverty.

The World Bank forecasts show a reversal of fortunes for East Asia and Pacific, South Asia, and Sub-Saharan Africa, the three regions which have since the 1980s accounted for some 95 percent of global poverty.

In 1990, East Asia accounted for half of the global poor, whereas some 15 percent lived in Sub-Saharan Africa.

Poverty is declining in all regions but it is becoming deeper and more entrenched in countries that are either conflict ridden or overly dependent on commodity exports.

Sub-Saharan poverty fell from an estimated 56 percent in 1990 to a projected 35 percent in 2015.

But rapid population growth remains a key factor blunting progress in many countries—as this year’s Global Monitoring Report shows.

But by 2015 forecasts, this is almost exactly reversed dramatically: Sub-Saharan Africa today accounts for half of the global poor, with some 12 percent living in East Asia.

The new figures were released on the eve of the World Bank’s annual meetings which this year takes place in the Peruvian capital, Lima.

The World Bank Group President Jim Yong Kim has praised the achievement but also cautioned on what needs to be done to ensure a more shared prosperity.

“This is the best story in the world today – these projections show us that we are the first generation in human history that can end extreme poverty,” he said.

The figures show the number of people living in extreme poverty around the world is likely to fall to under 10 percent of the global population in 2015

According to the World Bank, the new figures are fresh evidence that a quarter-century-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030.

To arrive at the new figures, the Bank updated the international poverty line to US$1.90 a day from the US$1.25 a day that has been in use.

The new poverty line incorporates new information on differences in the cost of living across countries, also called Purchasing Power Parity (PPP) exchange rates and preserves the real purchasing power of the previous line.

As a result of using the changes and new country-level data on living standards, the World Bank projects that global poverty will have fallen from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people, or 9.6 per cent of the global population, by 2015.

In Uganda, years of relative peace matched by prudent macro-economic and social inclusive policies have seen poverty levels drop from around 50% in the 1980s to about 20% today.

Uganda rates better

Uganda’s performance could possibly have been better but, analysts say, it has been hampered by the depth of poverty inherited from the 1970s era of economic decay, couple with one of the fastest population growth rates in the world, poor data quality, and high levels of income inequality between the rich and the poor.

The number of people living below the old poverty line of US$1.25 a day stood at about 19.7% according to 2013 figures, the latest available. Actual poverty data in Uganda, as in many other low income countries, come with a considerable lag. Comparable data in the forecast for Sub-Saharan Africa shows that poverty is expected to decline to 35.2 per cent in 2015.

Generally, Uganda has been posting good GDP growth rates of over 7% since the 1990s but it has also had population growth rates of over 3% per year.

The Ugandan situation is similar to others captured by World Bank boss, Kim.

He said the continued major reductions in poverty were due to strong growth rates in developing countries in recent years, investments in people’s education, health, and social safety nets that helped keep people from falling back into poverty. He cautioned, however, that with slowing global economic growth, and with many of the world’s remaining poor people living in fragile and conflict-affected states, and the considerable depth and breadth of remaining poverty, the goal to end extreme poverty remained a highly ambitious target.

He said: “This new forecast of poverty falling into the single digits should give us new momentum and help us focus even more clearly on the most effective strategies to end extreme poverty. It will be extraordinarily hard, especially in a period of slower global growth, volatile financial markets, conflicts, high youth unemployment, and the growing impact of climate change. But it remains within our grasp, as long as our high aspirations are matched by country-led plans that help the still millions of people living in extreme poverty.”

Kim said that further reductions in poverty rates would come from evidence-based approaches, including:  broad-based growth that generates sufficient income-earning opportunities, investing in people’s development prospects through improving the coverage and quality of  education, health, sanitation, and protecting the poor and vulnerable against sudden risks of unemployment, hunger, illness, drought and other calamities. These measures, he said, would also greatly boost shared prosperity, improving the welfare of the least well-off in every country.

“With these strategies in place, the world stands a vastly better chance of ending extreme poverty by 2030 and raising the life prospects of low-income families,” said Kim.

In its regional forecasts for 2015, the World Bank says that poverty in East Asia and the Pacific would fall to 4.1 per cent of its population, down from 7.2 per cent in 2012; Latin America and the Caribbean would fall to 5.6 per cent from 6.2 in 2012; South Asia would fall to 13.5 per cent in 2015, compared to 18.8 per cent in 2012; Sub-Saharan Africa declines to 35.2 per cent in 2015, compared to 42.6 per cent in 2012. Reliable current poverty data is not available for the Middle East and North Africa because of conflict and fragility in key countries in the region.

“Development has been robust over the last two decades but the protracted global slowdown since the financial crisis of 2008, is beginning to cast its shadow on emerging economies,” said World Bank Chief Economist Kaushik Basu, a former Chief Economic Adviser to the Indian Government. “There is some turbulence ahead.

The economic growth outlook is less impressive for emerging economies in the near future, which will create new challenges in the fight to end poverty and attend to the needs of the vulnerable, especially those living at the bottom 40 percent of their societies.”

Important measures

The updated global poverty line and rate are based on newly-available price data from across the world- impacting not only where the global poverty line is drawn, but the cost of the basic food, clothing, and shelter needs of the poorest around the world. However, this global measure is only one of many important measures to track in order to better reach the poor and vulnerable.

“When global organisations set global goals, we have to be able to compare progress across countries using a common measure, treating the absolute poor in one country the same as in another,” said Ana Revenga, Senior Director of the World Bank’s Poverty and Equity Global Practice. “But just as important are the national poverty lines set by each country, reflecting their own standard of living. These are crucial for governments and policy makers when they are planning the programs that will improve lives, or the policies that will help bring the poorest in their country out of destitution.”

Revenga said the World Bank Group would continue to work with its country clients and partners to improve how it measures and tracks poverty, to build country statistical capacity and fill persistent data gaps, and to integrate solid data and analysis into its development work to better reach people and their families who live in entrenched poverty.