Covid-19 economic backlash to set back poverty reduction efforts

 

The economic crisis unleashed by the coronavirus pandemic could set back poverty reduction efforts by around three years, a report by the World Bank shows.

The report called 'Poverty and Shared Prosperity 2020' says the Covid-19 pandemic pushed between 88 and 115 million people into extreme poverty in 2020.

In a previous report, the international lender had estimated that Covid-19 was responsible for 71 million to 100 million additional people falling into extreme poverty in 2020.

However since the time of this analysis, the World Bank integrated new data on poverty statistics into an online tool, PovcalNet, for estimating global poverty, which led the firm to revise both the estimated number of poor pre-Covid 19 and the estimated number of poor who have fallen into extreme poverty due to Covid-19.

In Kenya, the share of the population living below the international poverty line decreased from 44 per cent to 37 per cent between 2005 and 2015; in Namibia, it dropped from 23 per cent to 13 per cent between 2009 and 2015.

The economic crisis unleashed by Covid-19 where millions lost jobs while others closed down their businesses could reverse such hard-won gains.

Although the decline in economic growth is projected to be more modest in sub-Saharan Africa than in advanced economies, it will likely spur one of the largest increases in extreme poverty, reflecting the large number of people in the region living on the edge of poverty.

The nowcasts in this report of the pandemic’s global poverty impacts through 2021 suggest that sub-Saharan Africa will be the second most severely affected region (after South Asia), with 26 million to 40 million more of its people falling into extreme poverty.

Global economic growth on the other hand was predicted to fall by 5.2 per cent in 2020, the largest drop in eight decades.

The shock may leave lasting scars on investment levels, remittances flows, the skills and health of the millions now unemployed, learning outcomes (through school closures), and supply chains according to World Bank.

The apex lender noted that with this, new insights to protect households from the impacts of Covid-19 will require policies and programmes that reach both the existing and the new poor.

Safety net programmes will need to adopt innovative targeting and delivery mechanisms, in particular to reach people in the informal sector in both rural and urban areas.  BY THE STAR