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Growing global poverty

Growing global poverty

Poverty

By Chris Ajaero

Many delegates may find it strange that poverty level is also growing in the industrialised countries of the world.  Recent reports indicate that the poverty rate in the United States has stood at 15 percent for three consecutive years, the first time it has happened since the mid-1960s. The poverty rate in 1965 was 17.3 percent while it was 12.5 percent before the 2008 financial meltdown.

The US Census Bureau reported that 31.6 percent of Americans were in poverty for at least two months from 2009 to 2011, a 4.5 percentage point increase over the pre-recession period of 2005 to 2007. Currently, about 47 million Americans or 15 percent of the population live below poverty line, which the government defined in 2012 as an annual income of $23,492 for a family of four, a sign of deteriorating economic security and an elusive American dream.

Mark Rank, a professor at Washington University in St. Louis  and one of the foremost experts on the issues of poverty, inequality and social injustice had after a recent research confirmed  that “the percentage of the population (of Americans) that directly encounters poverty is exceedingly high.”

According to him, almost 40 percent of Americans aged between 25 and 60 will live at least one year below the poverty line. In his book, “One Nation, Underprivileged: Why American Poverty Affects Us All,” he says that for the first time, a majority of Americans will experience poverty and will use a social safety net programme at some point during their lives. “Poverty is no longer an issue of ‘them’, it’s an issue of ‘us’,” says Rank.

President Barack Obama is worried that despite his administration’s anti-poverty efforts, poverty rates have not changed significantly. He declared recently that the widening gap between the rich and poor in the United States has become ‘the defining challenge of our time.’

In Europe, the poverty rate has equally been on the rise. According to Eurostat, 124.4 million or 24 percent of the population in Europe were at the risk of poverty or social exclusion in 2012 compared with 24.3 percent in 2011 and 23.7 percent in 2008. The implication is that despite the first signs of recovery in Europe, there are disturbing levels of poverty and deprivation.

Indeed, a   report by an international agency known as Oxfam entitled ‘A Cautionary Tale’ put out in September 2013 paints a vivid picture of the growing poverty crisis in Europe. The report lays out the troubling details of the austerity programmes that have been rolled out across Europe in response to the financial crisis and how they are taking Europe two steps backward instead of ensuring the stability and security of both Europe’s economy and its citizens. Oxfam’s report states that by 2025, there will be upwards of 15 to 25 million additional Europeans threatened by the spectre of poverty if the measures that are currently in place are not seriously examined by the governments of Europe.

The report also notes that the amount of public spending that was cut from 2010 to 2014 will greatly decrease the amount of public sector jobs across Europe. Public spending as a proportion of GDP was cut by 40 percent in Ireland, 20 percent in the Baltic States, 12 percent in Spain and 11.5 percent in the U.K. The report adds that due to these public spending cuts, in the United Kingdom alone 1.1 million jobs will be cut between 2010 and 2018.

Natalia Alonso, Head of Oxfam’s EU Office, says: “Europe’s handling of the economic crisis threatens to roll-back decades of social rights. Aggressive cuts to social security, health and education, fewer rights for workers and unfair taxation are trapping millions of Europeans in a circle of poverty that could last for generations. It is moral and economic nonsense.”

The International Federation of Red Cross and Red Crescent Societies (IFRC),   cites France as an example of the growing poverty crisis in Europe. According to the IFRC, an additional 350,000 people in France have fallen below the poverty line since 2009.

Similarly, the latest edition of EU Employment and Social Situation Quarterly Review published by the EU Commission shows that the current fragile economic recovery in Europe points to an expected increase in poverty levels  as “the situation of many households and individuals is not yet improving, with ever growing numbers suffering from financial distress.”

According to the report, the population at risk of poverty increased in one-third of the EU Member States, including some countries where it was initially at a low level.

The case is even worse in Africa. In fact, the greatest burden of extreme poverty is in sub-Saharan Africa. According to the World Bank poverty estimates, sub-Saharan Africa has not recorded large reductions in the absolute numbers of poor people. Compared to China, for instance, the number of poor Africans – those living on less than $1.25 a day – has even grown during the last decades. The number of poor Africans almost doubled from 289.7 million in 1990 to 413.7 million in 2010.  The poverty rate for Sub-Saharan Africa in 2010 was 48.5 percent.

According to 2014 edition of the United Nations’ Millennium Development Goals report, while the world has managed to slash the number of poor people by half in the last 20 years, more people in sub-Saharan Africa now live in extreme poverty and hunger than before. The report adds that the global target for reducing poverty by half between 1990 and 2015 was achieved five years ahead of schedule as it was reduced to 18 percent in 2010 from 36 percent of the population in 1990.  But in the sub-Saharan Africa, the number of those living in extreme poverty increased to 414 million in 2010 from 290 million in 1990.

The report emphasises that owing to an increase in the poverty level in the region, sub-Saharan Africa is unlikely to meet any of its MDG targets.

It is ironical that while economic growth in sub-Saharan Africa remains strong with growth rate of about 4.9 percent, poverty and inequality in the region remain persistently high and the pace of reduction too slow. Almost a third of countries in the region are growing at 6 percent and more, and African countries are now routinely among the fastest-growing countries in the world, according to the World Bank’s new Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects. But this has not reflected on Africa’s poverty level which has continued to increase.

Africa’s Pulse notes that one of the factors which had made poverty level persistently high in the region is that exports from Sub-Saharan Africa have remained concentrated in a few commodities such as oil, metals and minerals. “High dependence on one or a few commodities makes Africa’s resource-rich countries vulnerable to sharp movements in prices of these commodities,” says Punam Chuhan-Pole, Lead Economist of the World Bank’s Africa Region, and author of Africa’s Pulse. The report by Africa’s Pulse suggests that most of the world’s poor people by 2030 will live in Africa.

Makhtar Diop, the World Bank Group’s Vice President for Africa, says that “sustaining Africa’s strong growth over the longer term while significantly reducing poverty and strengthening people’s resilience to adversity may prove difficult because of the many internal and external uncertainties African countries face.”

Nevertheless, the growing poverty rate is no longer peculiar to Africa. Indeed, it is a global phenomenon. But it was not always like this. About a decade ago, poverty appeared to have been outsourced to Africa. Not anymore.  Poverty is now a global phenomenon, challenging communities in the North as well as the South.

Of the 7 billion people alive on the planet, 1.1 billion subsist below the internationally accepted extreme-poverty line of $1.25 a day. Recognising the urgency of the issue, world leaders have made poverty a top priority. In recent times, Ban Ki-Moon, the Secretary General of the United Nations and Jim Yong Kim, President of the World Bank Group, have been deeply committed towards ending extreme poverty globally.

Ki-Moon believes that to eliminate poverty, the Millennium Development Goals which the UN started 14 years ago must be accelerated.

On his part, Kim is passionate about mobilising the entire global community to achieve the twin goals of ending extreme poverty by 2030 and boosting shared prosperity.  He says although achieving these goals will not be easy, the World Bank decided to set an aggressive timeline for the elimination of extreme poverty because it has become imperative to maintain a sense of urgency.

He promises that the World Bank would use its financial resources, its staff, and extensive experience to help reduce poverty worldwide by promoting growth to create employment opportunities and helping poor people to take advantage of these opportunities. He is optimistic that these goals are achievable if pursued with vigour.

As Africa’s growth rates continues to surge while poverty and inequality remain persistently high, experts have suggested that the creation of employment opportunities, education and good governance are the principal mechanisms for distributing the benefits of economic growth workers, and reducing poverty.

For David Cameron, UK Prime Minister, free trade in Africa is the way out of poverty on the continent. “African countries, by and large, have not exploited opportunities to trade with each other. It is time for that to change. Trade and enterprise have the power to change people’s lives. As we are seeing now on every continent, what will lift tens of millions out of poverty in the long run is the dynamic engine of economic growth. And that means African countries buying from and selling to each other, doing business with one another and the world,” he says.

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