Global extreme poverty is expected to rise for the first time in 20 years because of the disruption caused by COVID-19, exacerbating the impact of conflict and climate change, which were already slowing down poverty reduction, according to the World Bank. The pandemic may push another 88 million to 115 million into extreme poverty or having to live on less than $1.50 per day, resulting in a total of 150 million such individuals, the Bank said in its biennial Poverty and Shared Prosperity Report.
Some 9.1% to 9.4% of the world will be affected by extreme poverty in 2020, the Bank said, compared to 7.9% in the counterfactual scenario where the pandemic had not raged across the world. Many of the newly poor individuals will be from countries that already have high poverty rates while many in middle income countries (MICs) will slip below the poverty line, as per the report. Some 82% of the total will be in MICs.
Sub-Saharan Africa, with 27-40 million new poor, and South Asia, with 49-57 million new poor, will be badly hit as per the Bank’s projections. According to it, 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, labour, skills, and innovation to move into new businesses and sectors.
As the Indian government decided not to release the 2017-18 All India Household Consumer Expenditure Survey data from the 75th Round, there is an “important gap in understanding poverty in South Asia”, the report said. Consequently, the Bank has estimated India’s poverty numbers for 2017 based on “strong assumptions”, resulting in “considerable uncertainties”. In fact, a number of results in the report are incomplete, or uncertain because of the lack of data from India which, as per the report, accounted for 139 million of the 689 million people living in poverty in 2017.
Consequently, there’s also a clear need for a range of social safety-net policies. These already exist in many developing countries, but their coverage and funding needs to be expanded substantially. Such policies include cash transfer programmes, universal one-off cash payments, in-kind food/vouchers, school feeding schemes and public works programmes.
In middle-income developing countries, these are funded by the national government, whereas in low-income countries, these are often co-funded by donors. Any set of policies should also incorporate “pay to stay home” or “pay to get tested” schemes.
Looking further ahead, the poverty impacts beyond 2020 are closely related to if or when an effective vaccine is developed. Even if we take the best-case scenario and a vaccine is discovered later this year, it’s uncertain how long it would take to reach the entire global population. It could take years.
There is no guarantee developing countries would get access to the vaccine at a reasonable cost, or if everyone in developing countries would get the vaccine for free. We could end up living in a new COVID-19 apartheid, with the vaccinated and non-vaccinated residing in separate areas and working in different labour markets. This is a startling but very real possibility that no one is talking about much yet.
While this might sound far off, there are already some countries — such as Chile — issuing “immunity passports”. Such passports might determine what work people can do by determining where they can go. This could leave the poorest without access to earning opportunities or only with lower-income opportunities if their movement is restricted. The crisis is increasingly looking like a long crisis. If so, it will have repercussions on global poverty for years to come.
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