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.
