- Negotiations are underway to determine the size and scale of COVID-19 relief to help the world's poorest countries recover from the pandemic.
- The World Bank estimates that nearly 100 million more people in 2020 were pushed into the deepest states of poverty owing to the pandemic.
- COVID-19 relief programmes must intentionally include people living in extreme poverty to ensure a resilient and equitable economic recovery.
Global leaders are on the cusp of striking a historic and unprecedented financing deal to spur pandemic recovery. A whopping $90-100 billion is on the World Bank’s International Development Association‘s (IDA) negotiating table in 2021 to help the world’s poorest countries rebuild from the pandemic over the next three years.
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The negotiations around how this money is spent will have critical implications for our global landscape, determining not only which strategies will be pursued to support our recovery, but also whether global problems like extreme poverty will inadvertently be allowed to grow. It should be of great concern to all of us that government funding for the IDA is spent as effectively as possible on the crucial problems that threaten global progress and growth far beyond the COVID-19 crisis. We need urgent and strategic action as the World Bank estimates that nearly 100 million more people entered the deepest states of poverty following pandemic-induced economic shocks.
Economic inclusion and extreme poverty
The expansion of economic inclusion programmes can make a tremendous impact on extreme poverty worldwide. To date, they have enabled millions of people around the world to escape cycles of extreme poverty in the long term. These interventions focus on empowering people who have been socially and economically excluded to build sustainable livelihoods and often involve providing support for their basic needs alongside asset transfers, skills training and ongoing coaching.
The evidence base for these programmes is broad and growing: in research from the London School of Economics, 93% of participants in BRAC’s Ultra-Poor Graduation programme in Bangladesh have seen a continued increase in income, savings, consumption and self-esteem for years after programme interventions have ended. According to the World Bank, these interventions have been a tool of choice for governments in the pandemic, with 219 programmes now reaching nearly 92 million people across 75 countries.
Civil society members with deep experience working with people in the most severe states of poverty are calling for additions to current funding proposals to ensure they aren’t left behind. In a letter in September 2021 to officials from the 50-plus donor governments to the IDA, 35 organizations and allies affiliated with the World Bank’s Leadership Collaborative on Ending Ultra-Poverty, a group of Northern and Southern NGOs, researchers and practitioners dedicated to achieving SDG 1, outlined concrete proposals to address the most severe forms of poverty.
The proposals hinge on our experience and rigorous research that suggests without specifically-dedicated efforts, funds will fail to reach those below the World Bank’s extreme poverty line of $1.90 a day, who experience multidimensional, structural vulnerabilities. The World Bank has already accepted that the IDA programmes supporting the expansion of adaptive social protection and building resilience to shocks must intentionally prioritize and include targeting mechanisms to reach those deeper in poverty to more fully expedite upward social and economic mobility. However, the latest draft of the IDA package lacks concrete targets and indicators for reaching this critical population.
There is an opportunity to include a focus on people living in extreme poverty in the system used to measure the impacts of IDA funding, fostering greater accountability for the goals of reaching those living in extreme poverty. Current systems for distributing support to the world’s poorest, through which IDA funds would flow, have considerable leakage that weakens their impact. The World Bank Aspire database indicates that between 25% to 60% of cash transfer and social assistance payments went to people in the upper three poverty quintiles in 2018 in Africa, largely missing the poorest people. To avoid repeating history, when reporting on safety net coverage, the IDA needs to both measure and report on the flow of funding to the lowest poverty quintile.
A more ambitious COVID-19 relief plan
The proposed target numbers of people in poverty reached by the plan can be more ambitious and specific to reaching people experiencing extreme poverty. Given the projected growth of the numbers of people living in poverty due to the combined factors of COVID-19, climate change and demographic growth, we recommend a substantial increase in IDA targets. The previous 2019 IDA funding package set a target for 30 to 40 million people reached by safety nets in all quintiles of poverty. We believe that the IDA 20 package should go beyond this, aiming to reach at least 44-54 million people (accounting for demographic growth and excluding COVID-19 temporary coverage), for all quintiles, with the majority of these being people in extreme poverty. The newly released IDA draft is encouraging in that it sets a minimum level of 75 million people reached, but unfortunately, this number includes the numerous recipients of temporary pandemic benefits and lacks a focus on people in the lowest quintiles.
If accepted, these changes could go a long way to facilitating the inclusion of more people who struggle daily to make ends meet. Given the staggering numbers of people who have fallen into extreme poverty as a result of the COVID-19 pandemic, the intentional inclusion in programmes of people living in extreme poverty is critical to ensuring a resilient and equitable economic recovery.
IDA financing will be an unprecedented moment of collective action from donor governments at a time of high deficits and strong competition for scarce resources. To build support and fully meet this moment of crisis a “business as usual” approach will not work. We must be able to demonstrate clear efforts to effectively reach those who are most marginalized.
This article is also published on BRAC's website.