Last week, the World Bank released its latest “State of the Poor” report, an in-depth analysis of poverty trends over the last 30 years. The report answers important questions about how fast poverty is declining in different groups of countries and what it would take to raise everyone’s income above $1.25 a day. It also provides the first truly “global profile” of the characteristics of the world’s extreme poor.
The findings of the report – three of which I outline below – are a stark reminder of why we do what we do here at ONE. They illustrate why focusing development assistance on the very poorest must be our top priority – especially as we look ahead to development goals for 2030.
1. Poverty rates are falling much slower on average in low-income countries, (those with income per person of less than $1,035 in 2012). We know that global extreme poverty was halved (from 43 percent to 21 percent) between 1990 and 2010, and our 2013 DATA Report shows that this is due to progress in every region of the world, including sub-Saharan Africa. But across low-income countries, the rate of extreme poverty fell by less than a third, from 63 percent to 44 percent.
2. The depth of poverty, (which describes how far people are below the $1.25 line) has barely improved in low-income countries. In 1981, the average income of someone living in extreme poverty was the same in low-income countries as the whole developing world: 74 cents. Fast forward a generation to 2010 and the average income of an extremely poor person had risen by 25 percent, but in low-income countries, it had risen by only 5 percent to a meagre 78 cents.
3. Low-income countries face a double whammy of less overall wealth and much higher poverty levels, which means that their ‘Aggregate Poverty Gap’ relative to GDP is much higher. The “Aggregate Poverty Gap” (APG) tells us how much it would take to raise every individual in extreme poverty above the $1.25 line over a year. Globally this figure is $169 billion; a lot of money, but less than half of what it was in 1981. As a share of GDP in the whole developing world it is just 0.5 percent. But in low-income countries, the APG as a share of GDP is 16 times higher at 8 percent.
While some of these figures might look disheartening, they actually offer us some valuable lessons for galvanizing and targeting our efforts in the fight against extreme poverty.
First, the international community should prioritize financial assistance to low-income countries. Unfortunately, there are signs that it’s doing the exact opposite. In 2012, aid to sub-Saharan Africa, (in which the majority of countries are LICs) dropped by 6 percent, whereas total aid fell by just 3 percent and the OECD projects further cuts to core aid to the poorest countries over the next few years.
But as we blogged about recently, aid remains the largest incoming resource for 43 of the world’s poorest countries, many of which are in sub-Saharan Africa. These countries need strong and sustained support from donors in order to boost the pace of progress to 2030.
Second, financial resources alone are not enough. Tackling poverty, especially in middle-income countries, will increasingly boil down to the political and social challenges of ensuring that growing wealth is distributed fairly. That’s where transparent and accountable governance, and effective cooperation between governments, the private sector and civil society, have a critical role to play.
What do you think? How can governments and citizens work together to ensure that progress against poverty is accelerated in the very poorest countries?