According to the World Bank, 389 million more people live in extreme poverty in Sub-Saharan Africa (SSA) than in any other area, accounting for 60% of the global total.
The Bank states that the area has the highest poverty rate in the world, at roughly 35%.
The Bretton Woods institution stated that each nation in the region would need to achieve per-capita GDP growth of 9% annually for the rest of this decade in order to meet the 2030 poverty objective. For nations whose per-capita GDP growth averaged 1.2% in the ten years before to COVID-19, that is a remarkably high bar.
In the wake of the extraordinary series of shocks to the global economy over the past several years, the bank’s most recent “Poverty and Shared Prosperity Report” offers the first thorough examination of the global poverty situation.
According to the bank, by 2030, close to 600 million people will live in poverty on less than $2.15 a day.
It emphasized that national policy changes can aid in resuming the reduction of poverty, adding that increased global collaboration will also be required. Governments should take fast action in three areas of fiscal policy:
The report urged nations to expand focused cash transfers rather than make wide subsidies.
“Half of all spending on energy subsidies in low- and middle-income economies goes to the richest 20 per cent of the population who consume more energy. Cash transfers are a far more effective mechanism for supporting poor and vulnerable groups,” it said.
The World Bank advised nations to concentrate on long-term growth, stating that “high-return investments in infrastructure projects, research and development, and education need to be made now. More effective expenditure and better crisis planning will be crucial in a period of limited resources.
It further stated that it is crucial to raise domestic revenue without harming the poor.
“Property taxes and carbon taxes can help raise revenue without hurting the poorest. So can broaden 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.”
It stated in a solemn pronouncement that it is doubtful that the world would overcome severe poverty by the year 2030.
According to the analysis, COVID-19 caused the worst setback to global efforts to reduce poverty since 1990, and the Ukrainian crisis poses a threat to make matters worse.
According to the projection, the epidemic caused the highest one-year increase in extreme poverty since global poverty tracking started in 1990, pushing roughly 70 million people into poverty in 2020.
As a result, by the end of 2020, an estimated 719 million people will be surviving on less than $2.15 per day.
In his response to the findings, World Bank President, David Malpass noted: “Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth. Of concern to our mission is the rise in extreme poverty and the decline of shared prosperity brought by inflation, currency depreciations, and broader overlapping crises facing development. It means a grim outlook for billions of people globally. Adjustments to macroeconomic policies are needed to improve the allocation of global capital, foster currency stability, reduce inflation, and restart growth in median income. The alternative is the status quo—slowing global growth, higher interest rates, greater risk aversion, and fragility in many developing countries.”
According to the survey, the poorest people paid the highest costs of the pandemic: the bottom 40% of the income distribution experienced income losses of an average of 4%, which is twice as much as the richest 20%.