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World Bank: Nigerians, others account for 60% in extreme poverty

Nigeria and other sub-Saharan African countries now account for 60 per cent of people in extreme poverty, the World Bank has said. The World Bank stated this in its “Poverty and Shared Prosperity Report,” which was released yesterday. According to the report, without history-defying rates of economic growth over the remainder of this decade, the world is unlikely to meet the goal of ending extreme poverty by 2030. It noted that COVID-19 dealt the biggest setback to global poverty-reduction efforts since 1990 and that the war in Ukraine threatens to make matters worse.

Furthermore, it estimates that the pandemic pushed about 70 million people into extreme poverty in 2020, the largest one-year increase since global poverty monitoring began in 1990 and that as a result, an estimated 719 million people subsisted on less than $2.15 a day by the end of 2020. Specifically, the report said: “Sub-Saharan Africa now accounts for 60 per cent of all people in extreme poverty—389 million, more than any other region.

The region’s poverty rate is about 35 per cent, the world’s highest. To achieve the 2030 poverty goal, each country in the region would need to achieve per-capita GDP growth of nine per cent per year for the remainder of this decade. That’s an exceptionally high hurdle for countries whose per-capita GDP growth averaged 1.2 per cent in the decade before COVID-19.”

The report also said that 2020 marked a historic turning point—when the era of global income convergence yielded to divergence, adding that the poorestpeopleborethesteepest costs of the pandemic: income lossesaveragedfourpercentfor the poorest 40 per cent, double the losses of the wealthiest 20 percentof theincomedistribution, thusleading toan increase in global inequality for the first time in decades. It pointed out that strong fiscal policy measures made a notable difference in reducing COVID-19’s impact on poverty as the average poverty rate in developing economies would have been 2.4 percentage points higher without a fiscal response.

The report, however, noted that government spending proved far more beneficial to poverty reduction in the wealthiest countries, which generally managed to fully offset COVID-19’s impact on poverty through fiscal policy and other emergency support measures. On the other hand, “developing economies had fewer resources and therefore spent less and achieved less: uppermiddle- income economies offset just 50 per cent of the poverty impact, and low- and lower-middle income economies offset barely a quarter of the impact,” the report said.

To help restart progress in reducing poverty, the report said that in terms of fiscal policy, governments should avoid broad subsidies and increase targeted cash transfers. “Half of all spending on energy subsidies in low- and middle- income economies go to the richest 20 percent of the populationwhoconsumemore energy. Cash transfers are a far more effective mechanism for supporting poor and vulnerable groups,” it said. It added: “Focus on longterm growth: High-return investments in education, research and development, and infrastructure projects need to be made today. In a time of scarceresources, moreefficient spending and improved preparation for the next crisis will be key. “Mobilise domestic revenues without hurting the poor. Property taxes and carbon taxes can help raise revenue without hurting the poorest. So can broadening the base of personal and corporate income taxes. If sales and excise taxes do need to be raised, governments should minimize economic distortions and negative distributional impacts by simultaneously using targeted cash transfers to offset their effects on the most vulnerable households.” Commenting on the report, World Bank Group President, David Malpass, said: “Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth. Of concern to our mission is the rise in extremepovertyanddecline of shared prosperity brought byinflation, currencydepreciations, and broader overlapping crises facing development.

 

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