SPECIAL FEATURE
Sub-Saharan Africa ccounts for 60% of people living in extreme poverty
Available data points to an increase in poverty that is large by historic standards. The incomes of the poorest 40 percent of the world’s population fell by 4 percent in 2020. The World Bank speaks of the “largest shock since 1945”. The pandemic also increased global inequality. In terms of lost income, the world’s poor paid the highest price: The percentage income losses of the poorest were estimated to be double those of the richest. The global Gini coefficient representing income inequality (from 0 for complete equality to 1 for complete inequality) increased by a little over 0.5 points during the pandemic, from 62 points in 2019 to an estimated 62.6 points in 2020. By contrast, earlier years had seen a shrinking gap between the global poor and others. The pathways countries have followed since the pandemic have exacerbated global inequality, with richer countries recovering more quickly than poorer countries. Extreme poverty is projected to become increasingly concentrated in sub-Saharan Africa, where high population growth is coupled with stubbornly high extreme poverty rates. Eight of the 10 countries with the highest number of people living in extreme poverty are in sub-Saharan Africa, accounting for 389 million people or 60 percent of the world’s poor. Delivering the World Bank’s 3 percent goal by 2030 would require the regionto achieve growth rates about eight times higher than historical
rates between 2010 and 2019. While the available data makes for grim reading, projections do not provide much respite. Especially the war in Ukraine has enormous repercussions. The country was one of the biggest exporters of grain, fertilizers, sunflower oil and other essential commodities in the world. Shipments have resumed but only after prices skyrocketed – leaving 345 million people in 82 countries facing acute food insecurity, according to the World Food Programme. The situation is equally precarious when it comes to energy supplies. A recent scientific paper by researchers from the University of Groningen, Netherlands, says that the war has triggered an energy crisis that directly affected household energy costs for heating, cooling and mobility and indirectly pushed up the costs of other goods and services throughout global supply chains. Calculations by the research team show that the increase in household energy costs will result in cost-of-living pressures that could push an additional 78-141 million people into extreme poverty. Can the world still attain SDG 1 or at least reverse the recent setbacks and return to a path of progressive poverty reduction? The World Bank report does not provide much comfort: “The target [is] nearly out of reach – and there is an urgent need to correct course.” UN Secretary-General António Guterres in February 2023 called for a massive
increase of US$500 billion each year in extra financing from the world’s most developed nations to meet the 2030 Sustainability Agenda. The World Bank argues that strong fiscal measures can make a noticeable difference. Yet while this has allowed wealthy nations to weather the shock of the COVID-19 pandemic, developing economies have fewer resources and can spend less: Low- and lower-middle income countries were able to offset barely a quarter of the impact of the pandemic. To make the most efficient use of limited resources the World Bank recommends targeted cash transfers instead of broad subsidies, the prioritization of public spending for long-term growth and the mobilization of tax revenues without hurting the poor. Have recent developments buried the hope that countries can grow their way out of poverty? Stefan Dercon, Professor of Economic Policy at Oxford University, says: “It is hard to think of escaping from extreme high levels of poverty in a country unless we actually get the economy to grow. Economic growth is a part of it, but that doesn’t define the escape from poverty. So you also talk about progress in health, progress in education, progress in a number of different indicators. And I would say take-off means that you get your country to grow, but you also make sure that what happens to the poorest groups in your society, their lot is actually improving as well.”
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