Nigeria News

Poverty drops globally…there ‘re still challenges – World Bank

The World Bank, yesterday, disclosed that 1.2 billion persons are living under $1.2 a day of which sub-sahara Africa accounts for one-third of the world’s poor.

According to the multilateral institution, the number of people living on less than $1.25 per day has decreased dramatically in the past three decades, from half the citizens in the developing world in 1981 to 21 percent in 2010, despite a 59 percent increase in the developing world population.

However, a new analysis of extreme poverty released by the World Bank shows that there are still 1.2 billion people living in extreme poverty, and despite recent impressive progress, Sub-Saharan Africa still accounts for more than one-third of the world’s extreme poor.

“We have made remarkable progress in reducing the number of people living under $1.2 a day. We have made strides in cutting down poverty, but with nearly one-fifth of the world population still below the poverty line, not enough,” said Kaushik Basu, World Bank Senior Vice President and Chief Economist, adding that, “Directing investment towards the poor will require coordinated effort by the bank, our partners, and the international development community; and will, let’s face it, entail sacrifice on the part of those who are fortunate enough to be better off.”

Indicators show that extreme poverty headcount rates have fallen in every developing region between 1981 and 2010. And both Sub-Saharan Africa, SSA, and Latin America and the Caribbean, LAC, seem to have turned a corner entering the new millennium.

After steadily increasing from 51 percent in 1981 to 58 percent in 1999, the extreme poverty rate fell 10 percentage points in SSA between 1999 and 2010 and is now at 48 percent—an impressive 17 percent decline in one decade. In LAC, after remaining stable at approximately 12 percent for the last two decades of the 20th century, extreme poverty was cut in half between 1999 and 2010 and is now at 6 percent.

The report said “However, despite its falling poverty rates, Sub-Saharan Africa is the only region in the world for which the number of poor individuals has risen steadily and dramatically between 1981 and 2010. There are more than twice as many extremely poor people living in sub Sahara Africa today, 414 million than there were three decades.

As a result, while the extreme poor in Sub sahara Africa represented only 11 percent of the world’s total in 1981, they now accounted for more than a third of the world’s extreme poor. India contributes another third (up from 22 percent in 1981) and China comes next, contributing 13 percent (down from 43 percent in 1981″.

According to the World Bank “The note finds that the average income of the extremely poor in the developing world has been rising and steadily converging to the $1.25 per day poverty line. In 2010, the average income of the extremely poor in the developing world was 87 cents per capita per day, up from 74 cents in 1981 (in 2005 Purchasing Power Parity dollars).

This increase in incomes of the extreme poor is unfortunately not seen in Sub-Saharan Africa. Between 1981 and 2010, the average income of the extremely poor has remained essentially flat at approximately half of the $1.25 line in that region”.

It further said in addition that globally, as of 2010, the aggregate global extreme poverty gap was $169 billion in 2005 PPP terms, which represents approximately 0.25 percent of global GDP. This is less than half the gap in 1981 ($362 billion).

It is important to note that extreme poverty gap is the conceptual amount of direct additional income an average extremely poor person would need to get to $1.25 per day and is not indicative of the level of assistance required to close the gap.

….Developing countries advised to harness urbanization to achieve MDGs


The International Monetary Fund and the World Bank Group, yesterday, said urbanization helps pull people out of poverty and advances progress towards the Millennium Development Goals, MDGs.

In a joint report released, yesterday, the two multilateral institutions, however said, if urbanization is not managed well, it can also lead to burgeoning growth of slums, pollution, and crime.

The report is contained in the Global Monitoring Report, GMR, 2013, released by the World Bank and International Monetary Fund, IMF.

According to the report, urbanization has been a major force behind poverty reduction and progress towards other MDGs. With over 80 percent of global goods and services produced in cities, countries with relatively higher levels of urbanization, such as China, and many others in East Asia and Latin America, have played a major role in lowering extreme poverty worldwide.

In contrast, the two least urbanized regions, South Asia and Sub-Saharan Africa, have significantly higher rates of poverty and continue to lag behind on most MDGs.

The Global Monitoring Report 2013 said rural-urban dynamics and the Millennium Development Goals, MGDs, starkly compares the well-being in the countryside versus the city. Urban infant mortality rates range from 8-9 percentage points lower than the rural rates in Latin America and Central Asia; to 10-16 percentage points in the Middle East and North Africa, South Asia, and Sub-Saharan Africa and highest in East Asia 21 percentage points.

It said: “In South Asia, 60 percent of urban dwellers have access to sanitation facilities, compared with 28 percent in rural areas. In Sub-Saharan Africa, 42 percent of the urban population has access, compared with 23 percent of rural residents. Access to safe water in urban areas in developing countries was almost complete in 2010, with 96 percent coverage, compared with 81 percent of the rural population having access.

“The rural-urban divide is quite evident. Megacities and large cities are the richest and have far better access to basic public services; smaller towns, secondary cities, and areas on the perimeter of urban centres are less rich; and rural areas are the poorest,” said Kaushik Basu, the World Bank’s Chief Economist and Senior Vice President for Development Economics.

“But this does not mean unfettered urbanization is a cure-all – the urban poor in many places urgently need better services, as well as infrastructure that will keep them connected to schools, jobs and decent health care.”

The Global Monitoring Report which is also an annual report card on MDG attainment, finds that progress continues to lag on reducing maternal and child mortality and providing sanitation facilities, targets which will not be met by the MDGs 2015 deadline.

However, progress has been stellar on reducing extreme poverty, providing access to safe drinking water and eliminating gender disparity in primary education, with these targets already achieved several years ahead of the MDGs deadline.

Though extreme poverty has declined rapidly in many countries, the World Bank estimates that by 2015 there will be 970 million people living on $1.25 a day. Therefore, continued concerted efforts to get extreme poverty as close to zero as possible are needed.

“Emerging market and developing countries are growing robustly notwithstanding slow growth in advanced economies. Sustaining this growth – by continuing to maintain prudent macro policies and strengthening the capacity to manage risks, including through a rebuilding of depleted policy buffers – is key to continued progress in poverty reduction as we approach 2015,” said Hugh Bredenkamp, Deputy Director of the IMF’s Strategy, Policy and Review Department.

As the report points out, the challenge of fighting poverty and improving the living conditions of the poor, lies in both urban and rural areas. Large cities and smaller towns are fast becoming home to the world’s largest slums with Asia home to 61 percent of the world’s 828 million slum dwellers, Africa 25.5 percent and Latin America 13.4 percent.

The developing world’s urban centers are expected to burgeon, drawing 96 percent of the additional 1.4 billion people by 2030. To cope with urban growth, a coordinated package of essential infrastructure and services is needed. Only by meeting essential needs related to transportation, housing, water and sanitation as well as education and healthcare can cities avoid becoming hubs of poverty and squalor, the report says.

“Agglomeration, or the clustering of people and economic activity, is an important driver of development and evidence suggests that it can have high pay offs, particularly for countries on the lower rungs of development,” said Lynge Nielsen, Senior Economist in IMF’s Strategy, Policy and Review Department and co-author of the GMR.

At the same time, stepped up efforts are also needed to improve development in rural areas, where 76 percent of the developing world’s 1.2 billion poor live, with inadequate access to the basic amenities defined by the MDGs.

Rural poverty rates far exceed those of urban areas across all regions of the world. The report further finds that rural women are hurt the most by poor infrastructure, because they perform most of the domestic chores and often walk long distances to have access to clean water, and lower levels of education attainment.

Although tackling rural development challenges will not be easy, it can be done with complementary rural-urban development policies and actions by governments to facilitate a healthy move toward cities without short-changing rural areas, says the report.

“Urbanization does matter. However, in order to harness the economic and social benefits of urbanization, policy-makers must plan for efficient land-use, match population densities with the required needs for transport, housing and other infrastructure, and arrange the financing needed for such urban development programs,” said Jos Verbeek, Lead Economist at the World Bank and lead author of the GMR.

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