Poverty Overview

Overview

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The World Bank Group’s goals are to end extreme poverty and promote shared prosperity. This mission underpins all of our analytical, operational, and convening work in more than 145 client countries. There has been marked progress on reducing poverty – the first of the world’s Sustainable Development Goals – over the past decades. According to the most recent estimates, in 2015, 10 percent of the world’s population or 734 million people lived on less than $1.90 a day. That’s down from nearly 36 percent or 1.9 billion people in 1990.

However, due to the COVID-19 crisis as well as the oil price drop, this trend probably will reverse in 2020. The COVID-19 crisis will have a disproportionate impact on the poor, through job loss, loss of remittances, rising prices, and disruptions in services such as education and health care.

For the first time since 1998, poverty rates will go up as the global economy falls into recession and there is a sharp drop in GDP per capita. The ongoing crisis will erase almost all the progress made in the last five years. The World Bank estimates that 40 million to 60 million people will fall into extreme poverty (under $1.90/day) in 2020, compared to 2019, as a result of COVID-19, depending on assumptions on the magnitude of the economic shock. The global extreme poverty rate could rise by 0.3 to 0.7 percentage points, to around 9 percent in 2020.

Additionally, the percentage of people living on less than $3.20 a day could rise by 0.3 to 1.7 percentage points, to 23 percent or higher, an increase of some 40 million to 150 million people. Finally, the percentage of people living on less than $5.50 a day could rise by 0.4 to 1.9 percentage points, to 42 percent or higher, an increase of around 70 million to 180 million people. It is important to note that these poverty projections are highly volatile and could differ greatly across countries.

Due to global shocks such as COVID-19 and because it is becoming increasingly difficult to reach those remaining in extreme poverty, who often live in fragile countries and remote areas, poverty reduction may not be fast enough to reach the goal of ending extreme poverty by 2030.

New research estimates that by 2030 up to two-thirds of the global extreme poor may be living in fragile and conflict-affected economies, making it evident that without intensified action, the global poverty goals will not be met.

The majority of the global poor live in rural areas and are poorly educated, employed in the agricultural sector, and under 18 years of age. The work to end extreme poverty is far from over, and many challenges remain. In most parts of the world, growth rates are too slow, and investment is too subdued to increase median incomes. For many nations, poverty reduction has slowed or even reversed.

The 43 countries in the world with the highest poverty rates are fragile or conflict-affected situations (FCS) and/or in Sub-Saharan Africa. Economies facing chronic fragility and conflict have had poverty rates stuck at over 40 percent in the past decade, while countries that have escaped FCS have cut their poverty rates by more than half.

Data deprivation makes it harder to accurately gauge the extent of the problem. 500 million people live in FCS economies with no or outdated poverty data. To overcome critical data shortages and generate timely international poverty estimates, the Bank’s recent research used statistical assumptions and imputations that result in 33 million additional people estimated to live in extreme poverty.

Access to good schools, health care, electricity, safe water, and other critical services remains elusive for many people, often determined by socioeconomic status, gender, ethnicity, and geography. The multidimensional view – wherein other aspects such as education, access to basic utilities, health care, and security are included – reveals a world in which poverty is a much broader, more entrenched problem. The share of poor according to a multidimensional definition that includes consumption, education, and access to basic utilities is approximately 50 percent higher than when relying solely on monetary poverty.

Moreover, for those who have been able to move out of poverty, progress is often temporary: Economic shocks, food insecurity and climate change threaten to rob them of their hard-won gains and force them back into poverty. It will be critical to find ways to tackle these issues as we make progress toward 2030.

Last Updated: Apr 16, 2020
There is no silver bullet to ending poverty, and strategies to reach the least well-off must be tailored to each country’s context, taking into account the latest data and analysis and the needs of the people.

To immediately help tackle the COVID-19 crisis, the World Bank Group is deploying up to $160 billion by working with governments in developing countries on policy options to compensate for income losses, mitigate food price increases and service delivery disruptions, and support firms and workers to protect jobs and facilitate recovery. Some examples include:

Expanding and increasing the coverage of safety net programs.

Scaling up health diagnostics and core capabilities in underserved areas.

Adopting measures to compensate for school closures by expanding distance education, training teachers on distance education, and providing equipment and connections for children without access to ICT.

Providing wage subsidies to firms to minimize layoffs, and supporting micro and small enterprises through tax exemptions, delays, or waivers.

Over the last few decades, the fact that there has been such progress in the world in reducing extreme poverty, tells us that a few things are working. Experience shows that to sustainably reduce poverty, countries need to:

Grow in an inclusive, labor-intensive way.

Invest in the human capital of people, especially those who are unable to benefit from basic services due to circumstances beyond their control.

Insure poor and vulnerable people against the shocks that can push them deeper into poverty—things such as severe weather, pandemics, food price variability, and economic crises.

The goal of World Bank Group to end extreme poverty within a generation has the specific target of decreasing the global extreme poverty rate to no more than 3 percent by 2030, since a small amount of frictional poverty is likely to persist. Key national and global challenges are standing in the way of progress and are keeping large pockets of people trapped in poverty. Slow growth, macroeconomic imbalances, escalating trade tensions, high levels of inequality in income and opportunities, climate change, and increasing fragility and conflict pose obstacles to further poverty reduction and inclusive growth.

It will be crucial to promote growth that is sustained and inclusive; to create more and better jobs; to invest in people’s health, education, nutrition, and sanitation; and to develop effective safety net programs to ensure that the most vulnerable can persevere in the face of shocks. While economic growth is vital, the quality of that growth also matters.

With more than 60 percent of the world’s extreme poor living in middle-income countries, we cannot focus solely on low-income countries if we want to end extreme poverty by 2030. We need to focus on the poorest people, regardless of where they live, and work with countries at all income levels to invest in their well-being and their future.

This goal to end poverty works hand in hand with the World Bank Group’s goal to promote shared prosperity, focused on increasing the income growth among the bottom 40 percent in every country. Boosting shared prosperity broadly translates into improving the welfare of the least well-off in each country, and includes a strong emphasis on tackling persistent inequalities that keep people in poverty from generation to generation.

Our work at the World Bank Group is based on strong country-led programs to improve living conditions – to drive growth, raise median incomes, create jobs, fully incorporate women and young people into economies, address environmental and climate challenges, and support a stronger, more stable economy for everyone.

This is no easy task, and the road ahead will not be simple or straightforward, but this is at the core of what we do every day at the World Bank Group, and we will continue to work closely with countries to help them find the best ways to improve the lives of their least advantaged citizens.

Last Updated: Apr 16, 2020
The World Bank Group works to end poverty in several ways:

Funding projects that can have transformational impacts on communities

Collecting and analyzing the critical data and evidence needed to target these programs to reach the poorest and most vulnerable

Helping governments create more inclusive, effective policies that can benefit entire populations and lay the groundwork for prosperity for future generations.

Some examples:

Grow

Cambodia has achieved remarkable progress in reducing poverty and boosting shared prosperity, but key reforms are needed to sustain pro-poor growth. The World Bank is supporting Cambodia to help address the country’s challenges of limited economic diversification, rapidly increasing urbanization, human capital deficiencies, and infrastructure gaps.

Mexico has experienced high income inequality and concentration of poverty in a few states. The World Bank Group has supported Mexico’s efforts to develop a more inclusive, effective, and integrated social protection system including relaunching a conditional cash transfer program to help improve access to higher education and formal employment.

In one of India’s poorest states, Bihar, a program financed by the World Bank has transformed livelihoods by mobilizing almost 10 million rural women into self-help groups and granting them access to finance and markets to start and expand their businesses.

Invest

A pilot program in Ecuador used text messages to relay information and encouragement to caregivers in an impoverished region of the country and saw a significant improvement in the nutrition and health of children.

Since 2007, a team of experts from the World Bank has been helping Kenya strengthen statistical capacity by reshaping its National Bureau of Statistics. With World Bank’s support, the bureau implemented a range of surveys to update key indicators of official statistics and improved the data ecosystem. The project is funded by $50 million from the World Bank’s International Development Association (IDA).

In-depth maps in countries such as Afghanistan, Bangladesh, Croatia, Republic of Serbia, and Vietnam show where economic diversity and gaps in services exist within a country. This, as part of the poverty assessment process, helps policymakers better target policies and programs to reach and benefit the poor.

Insure

Cash transfers are a small yet effective way to help women take charge of their lives and empower them to make financial decisions. Egypt’s ‘Takaful and Karama’ cash transfer program has covered 2.26 million households or approximately 10 percent of the population. The program is helping women increase their financial-decision making power to improve their household consumption, quality of diet and meet their family needs.

Conflict-affected communities in Mindanao are among the poorest in the Philippines, suffering from poor infrastructure and lack of basic services. The World Bank along with other partners have aimed to enhance access to services and economic opportunities and build social cohesion. These projects have help build water systems, community centers, sanitation facilities, access roads, post-harvest facilities, and farming and fishing equipment, benefiting 650,000 people in 284 villages in a decade.

An innovative series of rapid survey methodologies were pioneered in Somalia, one of the poorest countries in Sub-Saharan Africa. The surveys overcame significant security and implementation obstacles to yield the most comprehensive analysis of the welfare of the Somali people in decades and is now being used in other countries.

Last Updated: Apr 16, 2020