Extreme poverty

Ending extreme poverty is possible, but it will be more difficult than it was to halve it and will require targeted resources.

MDG1a, to halve the proportion of people living in extreme poverty, was met early

The proportion of people living in extreme poverty (defined as living on less than $1.25 a day) fell from 43.5% of the population of developing countries in 1990 to 17.0% in 2011. By 2015 the number of people living in poverty is also likely to halve, from 1.9 billion in 1990 to a projected 836 million.[i]

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Source: Development Initiatives calculations based on World Bank data

[i] World Bank projections, 2014/15 Global Monitoring Report.

But ending extreme poverty will be more difficult than halving it

Economic growth alone will not be enough to end poverty in a reasonable timeframe. Many people who remain in extreme poverty today live in complex situations and face overlapping vulnerabilities: 96% live in countries that are politically fragile or environmentally vulnerable, or both.

Without targeting, poverty will persist – particularly in sub-Saharan Africa

The World Bank estimates that, without accelerated efforts, some 400 million people will still be living in extreme poverty in 2030. Over time, sub-Saharan Africa will account for an increasing proportion of these people, rising to 80% by 2030.[i]

[i] World Bank, 2014/15 Global Monitoring Report

The longer-term goal of ending poverty in all its forms sets a high level of ambition

Ending $1.25-a-day poverty by 2030 is the first step towards ending poverty in all its forms. Research suggests that a sustainable end to extreme poverty (with reduced risk of falling back into extreme poverty) requires much higher income levels, in the region of $10–15 a day.[i]

Estimates show that 1.1 billion people lived on less than $1.25 a day in 2010, while 2.3 billion lived on less than $2 a day, 3.8 billion on less than $4 a day and 5.2 billion on less than $10 a day.[ii]

[i] Birdsall, Nancy, Nora Lustig, and and Christian J. Meyer. The strugglers: the new poor in Latin America? Center for Global Development, 2013.

[ii] World Bank, Povcalnet

To target efforts effectively, we need much better information

Current poverty estimates are out of date, inconsistent and have a wide margin of error – this undermines efforts to prioritise resources effectively towards the poorest people.

A total of 42 developing countries have had no poverty survey since the MDGs were agreed in 2000; for another 42 the most recent survey is at least five years old. The most recent data from the World Bank, released in 2014, relates to 2011 estimates, which are extrapolated from these outdated household survey data. Revisions to the methodology used to calculate poverty estimates also have a significant bearing on our understanding. For example, we now believe that over 800 million people have been lifted out of extreme poverty in East Asia since the 1980s – yet in that decade it was thought that there were only around 280 million people living in extreme poverty in the region.[i] If we are going to realise the vision of ending poverty in all its forms, we need much better data on where poverty exists and how financial interventions impact on it.

[i] Development Initiatives (2013) ‘Investments to End Poverty’, p.113.