This is the sixth blog in a series about how countries can make progress on the interlinked objectives of poverty, shared prosperity and a livable planet. For more information on the topic, read the 2024 Poverty, Prosperity, and Planet Report.
Over the last three decades the world has made substantial progress in reducing extreme poverty—defined as the share of people living below the International Poverty Line of $2.15 a day in 2017 PPPs. The percentage of people in extreme poverty fell from 38 percent in 1990 to 8.5 percent in 2024. Yet, amid lower economic growth and multiple shocks—such as the COVID-19 pandemic, high inflation, and increased conflict and fragility—progress has recently stalled. From 2013 to 2018, the extreme poverty rate decreased by only 2.8 percentage points, and since then, the trend has even reversed.
There has been a drastic change in the geography of poverty over the past 30 years
To understand why poverty reduction has become increasingly challenging over the last decade, it is useful to understand the changing geography of extreme poverty. In 1990, over half of the world’s extreme poor were in East Asia and Pacific, 28 percent were in South Asia and only 14.1 percent were in Sub-Saharan Africa. Thanks to rapid economic growth, East Asia and Pacific experienced an unprecedented fall in extreme poverty (Figure 1). Between 1990 and 2024, extreme poverty fell by more than 800 million people in China and 210 million in the rest of East Asia and Pacific. South Asia also saw significant reductions in extreme poverty, though at a slower speed. Progress in these two regions—as well as Latin America and the Caribbean, and Europe and Central Asia—lies in stark contrast to what has happened in Sub-Saharan Africa. In fact, the number of people in Sub-Saharan Africa living in extreme poverty rose from 282 million in 1990 to 464 million in 2024. Today the region is home to two-thirds of people living in extreme poverty.
At current trends, IDA countries will comprise 82 percent of people in extreme poverty in 2030
In 2024, more than 70 percent of the people living in extreme poverty were in the 75 countries supported by the International Development Association (IDA), the part of the World Bank that provides grants and concessional loans to the world’s lowest-income countries. Almost two-thirds of the people living in extreme poverty are in the 39 countries in Sub-Saharan Africa that are part of IDA (Figure 2), which make up only 14 percent of the global population. Extreme poverty is furthermore concentrated in countries in fragile and conflict-affected situations (FCS). Of the 39 FCS countries, 33 are part of the IDA, and these contain half of people living in extreme poverty today. Projections show that over 80 percent of the people living in extreme poverty will be in IDA countries in 2030. Despite their diversity, these countries face shared challenges, including limited fiscal space, human capital and infrastructure deficiencies, and high levels of fragility (see this blog on the interrelation between poverty and fragility).
IDA countries have lacked economic growth, an essential foundation for poverty reduction
Poverty today is concentrated in settings that have had disappointing economic growth over the past decades. Today’s IDA countries, especially those in Sub-Saharan Africa and in FCS, have struggled to achieve the robust growth rates that lifted millions out of poverty in East Asia and Pacific and South Asia (Figure 2). In Sub-Saharan Africa in particular, economic growth has not been large or inclusive enough to significantly reduce poverty. Therefore, following historical growth paths cannot be expected to lead to substantive drops in global extreme poverty any time soon. In addition to low growth, inequality is high in low-income and fragile countries, as we will explore in more detail in a future blog. This constrains how much poverty reduction can be achieved from a given growth rate.
In addition to low growth, high debt servicing severely constrains the ability of IDA countries to act
The COVID-19 pandemic, inflation, and the global economic slowdown have exacerbated the already high debt levels in lower-income countries. These debt burdens further constrain the already limited fiscal space of these countries. Interest payments on the total external debt stock in IDA countries have quadrupled since 2012, reaching an all-time high of $23.6 billion, which diverts spending away from health, education, and other critical needs. Low-income countries are spending about 2 percent of GDP on interest payments to service debt in 2024, which is more than half of what they spend on education.
Big gaps in human capital and basic infrastructure and services hinder poverty reduction in IDA countries.
IDA countries are not only falling behind in terms of monetary poverty. For instance, approximately 600 million people in Sub-Saharan Africa lack access to electricity and about one-third of children drop out of primary school due to economic pressures, early marriage, and poor school facilities. Yet, investments in education in low-income countries remain very low. In 2021, the average low-income country spent only $54 per student per year, compared with more than $8,500 in the typical high-income country. This is reflected in high levels of deprivation in the World Bank’s Multidimensional Poverty Measure (MPM) in IDA countries and in Sub-Saharan Africa, as shown in Figure 3. Factors such as electricity, education and sanitation not only provide a broader picture of well-being but are also the fundamental basis for broader economic growth.
These deprivations have also increased people’s vulnerability to shocks in these countries
Between 2010 and 2019, the number of people exposed to extreme-weather events has grown both in both IDA and non-IDA countries, due to population growth. However, non-IDA countries were able to reduce the number of people at risk from climate-related hazards significantly over this period. This is not the case for IDA countries, where the number of people at risk rose almost one to one with the population exposed (Figure 3).
Promoting economic growth, basic investments, and insurance are fundamental to sustainably improve the lives of people in IDA countries who are living in extreme poverty
Continued support for IDA is critical to get back on track toward eradicating extreme poverty. Investments are direly needed to enable conditions for investment and job creation, and to bolster human capital, health outcomes and education, which are all fundamental to increasing incomes along the income distribution. The potential returns from such investment go beyond their development potential, as they not only bolster households’ productivity and income-generating capacities, but also enhance their resilience and ability to cope with risks from climate-related hazards. The key will be fostering peace and stability in these countries, to break the vicious cycle between poverty and fragility. At the same time, more data and evidence are needed to inform policies in IDA countries, which will be discussed in next week’s blog in this series. While data availability has improved in many countries, less than half of IDA countries had a household survey available in 2020 or later.
The authors gratefully acknowledge financial support from the UK Government through the Data and Evidence for Tackling Extreme Poverty (DEEP) Research Program.
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