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Covid to send millions into extreme poverty - World Bank

Kenya, a middle income country, is among those to be affected

In Summary

•Eight out of 10 ‘new poor’ will be in middle-income countries.

•Extreme poverty, defined as living on less than $1.90 a day, is likely to affect between 9.1 per cent and 9.4 per cent of the world’s population in 2020.

Nyalenda slum in Kisumu town. More than 60 per cent of Kisumu residents live in abject poverty/FILE
Nyalenda slum in Kisumu town. More than 60 per cent of Kisumu residents live in abject poverty/FILE

Global extreme poverty is expected to rise in 2020 for the first time in over 20 years, global lender-World Bank has warned.

It said the Covid-19 pandemic will compound the forces of conflict and climate change, which were already slowing poverty reduction progress.

The pandemic is estimated to push an additional 88 million to 115 million people into extreme poverty this year, with the total hitting as many as 150 million by 2021, depending on the severity of the economic contraction.

 

Extreme poverty, defined as living on less than $1.90 a day, is likely to affect between 9.1 per cent and 9.4 per cent of the world’s population in 2020, according to the biennial Poverty and Shared Prosperity Report.

This would represent a regression to the rate of 9.2n per cent in 2017.

Had the pandemic not hit the globe, the poverty rate was expected to drop to 7.9 per cent in 2020.

“The pandemic and global recession may cause over 1.4 per cent of the world’s population to fall into extreme poverty,” said World Bank Group President David Malpass. 

“In order to reverse this serious setback to development progress and poverty reduction, countries will need to prepare for a different economy post-Covid, by allowing capital, labor, skills, and innovation to move into new businesses and sectors,” Malpass added.

The report also finds that many of the new poor will be in countries that already have high poverty rates.

Kenya is among countries with citizens living in absolute poverty.

 
 

According to the World Bank, a number of middle-income countries will see significant numbers of people slip below the extreme poverty line.

About 82 per cent of the total will be in middle-income countries, where Kenya belongs, the report estimates.

The convergence of the Covid-19 pandemic with the pressures of conflict and climate change will put the goal of ending poverty by 2030 beyond reach without swift, significant and substantial policy action, the World Bank said.

By 2030, the global poverty rate could be about seven per cent.

Increasing numbers of urban dwellers are expected to fall into extreme poverty, which has traditionally affected people in rural areas.

Progress was slowing even before the Covid-19 crisis.

New global poverty data for 2017 show that 52 million people rose out of poverty between 2015 and 2017.

Yet despite this progress, the rate of reduction slowed to less than half a percentage point per year between 2015 and 2017.

Global poverty had dropped at the rate of around one percentage point per year between 1990 and 2015.

In addition to the $1.90-per-day international poverty line, the World Bank measures poverty lines of $3.20 and $5.50, reflecting national poverty lines in lower-middle-income and upper-middle-income countries.

The World Bank id among entities that are helping developing countries strengthen their pandemic response, among them Kenya which has received billions so far. 

World Bank will be deploying up to $160 billion ( Sh17.63 trillion) in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. 

This includes $50 billion (Sh5.42 trillion) of new IDA (International Development Association) resources through grants and highly concessional loans.