AFRICANGLOBE – The World Bank has urged developing-world countries to fund social security programmes to lift the incomes of their poorest people, ending a reliance on growth to end poverty.
In a report the bank said that while economic growth remains vital for reducing poverty, it has its limits.
“Countries need to complement efforts to enhance growth with policies that allocate more resources to the extreme poor,” it said.
“These resources can be distributed through the growth process itself, by promoting more inclusive growth, or through government programmes, such as conditional and direct cash transfers.”
The World Bank has spent billions of dollars attempting to improve the infrastructure and education systems of low-income countries to promote growth and tackle poverty. Its support for large-scale, expensive projects has long come under fire from anti-poverty groups, which have accused the bank of forcing poor countries to borrow heavily to adopt expensive solutions designed in the west. And the bank’s latest initiative was quickly criticised for lacking action on the ground.
The Bretton Woods Project, which monitors the work of the bank, said: “While it is welcome to have the World Bank talking about ‘inequality’ instead of fuzzy language on ‘shared prosperity’, the bank is putting more of its money into the financial sector than any other sector.
“The private sector arm’s biggest investment destination is Russian banks, hardly a way to reach the 33% of the world’s poor that live in India.”
Earlier this week Oxfam reacted angrily to comments by International Monetary Fund boss Christine Lagarde that inequality should be a central issue for policymakers. She said the social and political problems caused by extreme inequality of wealth and incomes was beginning to cause economic problems and hindering growth.
Max Lawson, head of policy at Oxfam, accused the World Bank and IMF of promoting policies that make people poorer. He cited support by the bank for private education and health, which become unaffordable for poorer people and force them to borrow or forgo the service.
“Economic growth has been vital for reducing extreme poverty and improving the lives of many poor people,” said World Bank Group president Jim Yong Kim. “Yet even if all countries grow at the same rates as over the past 20 years, and if the income distribution remains unchanged, world poverty will only fall by 10% by 2030, from 17.7% in 2010. This is simply not enough, and we need a laser-like focus on making growth more inclusive and targeting more programmes to assist the poor directly if we’re going to end extreme poverty.”
Kim added: “To end extreme poverty, the vast numbers of the poorest – those earning less than $1.25 a day – will have to decrease by 50 million people each year until 2030. This means that 1 million people each week will have to lift themselves out of poverty for the next 16 years. This will be extraordinarily difficult, but I believe we can do it. This can be the generation that ends extreme poverty.”
The bank said the top five countries, in terms of numbers of poor, are India (with 33% of the world’s poor), China (13%), Nigeria (7%), Bangladesh (6%) and the Democratic Republic of the Congo (5%), which together are home to nearly 760m of the world’s poor.
Adding another five countries – Indonesia, Pakistan, Tanzania, Ethiopia, and Kenya – would encompass almost 80% of the extreme poor, the bank said. “Hence, a sharp emphasis on these countries will be central to ending extreme poverty,” says the paper.
The top five countries in terms of poverty density are the Democratic Republic of the Congo (where 88% of the population is below the poverty line), Liberia (84%), Burundi and Madagascar (81% each), and Zambia (75%).
“Reducing poverty in these places is as important as making progress in countries where the absolute number of poor people is much bigger,” it said.
By: Phillip Inman
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