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Integrated rural landscape best way to draw results from big picture of poverty

A market in Ecuador where the local Indian population sells produce in bulk to merchants for transporting to coastal areas. ©FAO/Rhodri Jones
20/12/2018

New poverty figures released by the World Bank are something of a watershed moment in calculating just how many poor people there are in the world. For the first time, measurements take into account poverty at different monetary levels – those earning less than $1.90, $3.20 and $5.50 a day (2011 purchasing power parity) – while also addressing multi-dimensional poverty.

The foreword to the report, Piecing together the poverty puzzle, states: “If we hope to tackle poverty ‘in all its forms everywhere’ as the Sustainable Development Goals call for, we must understand and measure poverty in all of its manifestations. This report presents results of the World Bank’s first exercise in multidimensional global poverty measurement to account for multiple and overlapping components of poverty”.

In the first of a series of stories tackling key SDG issues, we spoke to Benjamin Davis, FAO’s strategic programme leader dealing with rural poverty, to find out what the figures reveal about poverty trends in rural areas, and to learn what they tell us about the policies needed to achieve the world’s ambition of making poverty history by 2030. 

What do the new poverty figures released by the World Bank (October 2018) tell us about the state of rural poverty in the world? 

They tell us a great deal. The report shows that the percentage of people living in extreme poverty globally, on less than $1.90 a day, fell to a new low of 10 percent in 2015 — the latest number available — down from 11 percent in 2013. The number of people living in extreme poverty fell by 68 million, to 736 million in 2015. This reflects continued, but slowing, progress in reducing extreme poverty. However, rates remain high in low-income countries and those affected by conflict and political upheaval.  In fact, the total number of poor in Sub-Saharan Africa continues to increase, and in 2015, more extreme poor lived in that region than in the rest of the world combined.

The new poverty figures reiterate previous data on the greater share of poverty in rural areas.  The extreme poverty rate in rural areas (17.2 percent) continues to be more than three times as high as that in urban areas (5.3 percent). With approximately 54 percent of the world’s population, rural areas account for 79 percent of the total poor. 

This year the World Bank used three monetary poverty indicators, at $1.90, $3.20 and $5.50 a day, as well as an indicator on multi-dimensional poverty. How will the information alter the way we tackle rural poverty?

In half of the countries in the world, extreme poverty measured at $1.90 a day is at or below 3 percent, but that doesn’t mean the fight to eradicate poverty is over in these countries. The use of poverty lines creates the illusion that poverty is a yes or no condition, but poverty is a more complex phenomenon which can’t be reduced to a monetary minimum. Many or most of those who exit extreme poverty still have inadequate standards of living, and live in poverty across a range of dimensions of well being. The World Bank has now introduced two higher poverty lines: $3.20 and $5.50 per day. These new monetary lines, which are typical of poverty-line standards in lower- and upper-middle-income countries, respectively, complement the $1.90 international poverty line. Figures show that the steep reductions in extreme poverty have not been matched by reductions in the number of people living below these higher levels of income. In 2015, over a quarter of the world’s population survived on $3.20 per day and nearly half of the world still lived on less than $5.50 per day.   

We also see that when using a multidimensional indicator of poverty (based on a smaller set of countries), which incorporates dimensions of well-being such as access to education, sanitation, safe drinking water and electricity, the share of the world’s population in extreme poverty is almost double the monetary indicator, at 18 percent. Multidimensional poverty is particularly present in Sub-Sahara Africa and South Asia. Adding a multidimensional indicator is important because it clearly indicates deficiencies in public goods that should be prioritized in the policies of national governments and actions of development partners.

Given that poverty is predominantly rural and Sub-Sahara African (projected to be near 90 percent by 2030),oes that mean that urbanization in Africa is the best solution, or can rural areas still prosper under the right conditions?

Experience shows that urbanization is not the answer in Sub-Sahara Africa, which is today the home of the largest number of extreme poor. One big difference with the process of urbanization in most countries of Sub-Sahara Africa as compared to other regions is that it has not been driven by a structural transformation of the economy which produces formal sector jobs. Most new jobs are informal in the services sector, meaning that, in part, urbanization implies the transfer of precarious employment from rural to urban areas. And despite rapid processes of urbanization, projections show that in Sub-Sahara Africa over the next 30 years the majority of available employment will be in agriculture. So agriculture must, and can, play a central role in reducing rural poverty. Numerous studies have shown that agricultural growth in Sub-Sahara Africa is two to three times more effective in reducing poverty than growth in other sectors. Rural areas can prosper - if they receive the attention they merit. A first start is for Sub-Sahara Africa countries to meet the Malabo Declaration commitments to increase investment in agriculture.

Poverty is falling while hunger is rising. There are now, officially, more people in the world who count as extremely poor (736m) than there are hungry (821m).

While poverty and hunger are clearly related, and each influences the other, they are not the same phenomena. Poverty is a direct determinant of hunger through food access—access to adequate resources for acquiring appropriate foods for a nutritious diet, one of the four dimensions of food security. Hunger, particularly amongst the youngest, has severe long-lasting consequences, affecting their future economic prospects. Hunger also forces families to focus on immediate survival rather than longer-term income generation. These factors perpetuate the intergenerational transmission of poverty.

There is sometimes a negative association of rurality and poverty, but the World Bank figures also reveal that over 80 percent of rural people do not live in extreme poverty. To what extent is this negative image counter-productive to investment and resource allocation decisions?  

Indeed, rural areas are also a source of great dynamism in most low-income countries. With changing diets and modernizing dynamic food systems, towns and secondary cities in rural areas play a crucial role in economic development, as well as serving as the location for the natural resource wealth that will serve as the basis for sustainable growth in coming decades. The focus needs to be on the great potential that lies in the rural areas of most countries.  A shift in policy focus from agriculture to food systems in how we look at rural areas is one important step.

Find out more about FAO’s work in tackling poverty: Ending extreme poverty in rural areas

 

 

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