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Poverty reduction at the forefront of development

Punam Chuhan-Pole's picture

The Millennium Development Goals (MDGs) put the fight against poverty at the center of the international development agenda.  And progress has been noteworthy - so much so that it is now fueling more ambitious goals on poverty reduction. But this also brings new demands for better data to measure progress.

 UN Secretary General Ban Ki-moon recently called the MDGs “the most successful global anti-poverty push in history.” With their mutually reinforcing linkages, they committed the world to reducing extreme poverty to historically low levels, while also improving education, health, nutrition, and other development prospects for hundreds of millions of the world’s poorest people. There is no doubt that since their announcement in 2000, the MDGs have raised the profile of poverty reduction in national development strategies, aid discussions and allocation, and the international development discourse. Systematic cross-country monitoring of simple to understand targets proved to be an effective tool in raising this profile.

Monitoring and related analyses of the progress on the MDGs brought to the forefront the link between growth and poverty reduction, and what hinders the conversion of growth into faster poverty reduction. Results from studies also showed that all growth is not equal in terms of reducing poverty and improving human development outcomes, thereby drawing attention to the issue of equity in opportunities and the need for more inclusive growth processes to accelerate poverty reduction. Africa’s Pulse, for example, shows that for the same growth rate, countries with low initial levels of inequality would see vastly better poverty reduction outcomes than those with high inequality levels.

Raising aspirations

Global progress on the poverty reduction goal has been notable. The overall incidence of extreme poverty declined from 43% in 1990 to 21% in 2010, with the downward trend accelerating in the 2000s. Thus, the target of halving the poverty rate has been achieved well ahead of 2015.  However, progress on other MDGs has been mixed.  For example, despite a ramping up of progress in recent years, the attainment of child and maternal mortality goals is lagging.

The substantial progress in reducing poverty - especially the remarkable performance in China, where the poverty rate fell from 60% in 1990 to 12% in 2010 - has raised aspirations. As President Kim of the World Bank has said, “it is time to bend the arc of history” and virtually eliminate extreme poverty worldwide.  One way to get to the 3%-by-2030 target rate that this goal implies is by having GDP per capita in all countries grow with 4.2% a year, and having inequality within countries remain unchanged. This is about the rate at which household incomes in the developing world have been growing during the last decade, and which has been the basis for setting the target at this level. Though it is ambitious, the goal is not out of reach. And yet, analysis in Africa’s Pulse shows that under these optimistic assumptions, the poverty rate in Sub-Saharan Africa would be above 16% in 2030 – that is, one in six Africans would still be living in extreme poverty. In other words, faster reduction in poverty will require growth with equity.

Promoting a data revolution

Another important contribution of the MDGs is the focus they provided to measuring and monitoring progress on key socioeconomic indicators. Regular, reliable statistics are central for measuring progress and informing and analyzing policies. In his 2013 annual letter, Bill Gates underscores the importance of innovations in measurement in improving outcomes. Yet Africa, the region with the highest incidence of poverty, has serious gaps in its development statistics. From lack of data to inconsistency in measurement to outdated methodologies, the challenges are many. [These problems are documented in Shanta Devarajan’s “Africa’s Statistical Tragedy,” 2012, and Morton Jerven’s Poor Numbers – How We Are Misled by African Development Statistics and What To Do About It, 2013.] For example, more than one-third of countries in Sub-Saharan Africa have not had a household expenditure survey in the past five years, which greatly complicates measuring and monitoring the extent of and evolution of intra-country and regional poverty. Also, many African countries are using outdated base years for measuring GDP, leading to the omission or underestimation of new parts of the economy.

Fortunately, there is also good news, as the importance of accurately measuring progress on poverty and other development priorities is gaining support. Indeed, the Report by the High-level Panel of Eminent Persons on the Post-2015 Development Agenda has called for a data revolution to improve the quality of statistics available to policy-makers and citizens. Within countries, increasing attention to results in development and national policy debates, and the rise of bottom-up accountability in assessing government performance are driving local demand for better data. And while new technologies can help address data gaps, Africa will also want to strengthen its statistical systems in collaboration with development partners, like the World Bank Group.

This blog post first appeared on The Broker.