Posted: Wed May 03, 2017 6:47 pm Post subject: POVERTY ERADICATION
Why the war on poverty is about to get harder
The world has been remarkably successful at eliminating poverty, but progress is slowing
IN THE past few decades something amazing has happened. The share and the number of extremely poor people in the world (on the current definition, people who consume less than $1.90 a day at purchasing-power parity) has plunged. This is hugely welcome. People who live on less than $1.90 a day are very poor indeed—poor, in fact, even by the standards of the world’s poorest countries. So it is regrettable that the steep decline in poverty is unlikely to continue. Extreme poverty will probably not fall as quickly in the next few years as it has done for the past few decades. Why?
The World Bank, which tracks poverty, estimates that 1.9bn people were extremely poor in 1981. In that year, the poor accounted for 42% of the world’s population. In 2013, by contrast, only 767m people were poor. Because the world’s population has grown so much in the interim, the share of poor people in the population has fallen even faster, to just below 11%. The single biggest reason for this delightful trend is China. In 1981, almost unbelievably, 88% of Chinese (and 96% of rural Chinese) seem to have lived below the poverty line. In 2013 only 2% of Chinese were extremely poor.
That cannot continue. China will soon eradicate extreme poverty, if it has not done so already. So will countries like Indonesia and Vietnam, which have been almost as good at cutting poverty. That leaves a rump of poverty in South Asia and, especially, sub-Saharan Africa. In 2013, for the first time, more than half of the paupers in the world were African. Poverty will be much harder to root out in those places. South Asian countries like Bangladesh and India have decent economic growth but feeble welfare systems. Africa doesn’t even have the former, especially considering how quickly its population is increasing. Besides, poor Africans often live on much less than $1.90 a day. It is hard to pull exceptionally poor people (sometimes called the “ultra-poor”) over the line. Even African countries that are growing fairly well, like Ethiopia and Rwanda, will have huge poor populations for many years even if incomes rise across the board.
The most obvious but least important consequence of this change is that the world is likely to miss a target. The first of the UN’s “sustainable development goals” has the world cutting poverty to 3% by 2030. That probably will not happen. More important will be a broad loss of confidence. The war on want has gone so well over the years that a sudden slowdown will come as a shock. But at least deep poverty is contained. It is no longer a global scourge, just a South Asian and African one. That is some cause for celebration.
In Africa the mobile phone is ubiquitous — the continent has skipped over landlines and gone straight to mobile. Smartphones are becoming more popular, but a vast majority of phones are basic $25 models. All apps with wide reach in Africa work via SMS.
Nearly all Kenyan households have a mobile phone, and in nearly all those households, at least one person has an M-Pesa account.
This has made a difference. Access to M-Pesa “increased per capita consumption levels and lifted 194,000 households, or 2 percent of Kenyan households, out of poverty,” a recent study estimated. Almost all the affected households were female-headed — and therefore, the most vulnerable.
M-Pesa is available to any Safaricom customer. But it’s only useful if there’s a nearby agent who can accept or disburse cash.
The network has grown to 150,000 agents. Tavneet Suri and William Jack, researchers who work with Innovations for Poverty Action, took advantage of its uneven growth by tracking Kenyans’ incomes in areas that added agents between 2008 and 2010. They also studied incomes in areas with no agent growth.
They followed both groups through 2014. Places that went from zero to six M-Pesa agents ended up with 22 percent fewer female-headed households living in extreme poverty than areas of the same size where no new agents came in.
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