Download the  Poverty Brief [264k pdf] ; Also available in French and عربي New poverty figures for the region he World Bank has recently released the results of the eighth round of the International Comparison Program (ICP) which allow for new purchasing power parity (PPP) estimates. To assess global poverty on comparable terms, the World Bank uses an average of the national poverty lines of the world’s 15 poorest countries to determine the international poverty line at $ 1.25 per day; $2 a day in PPP terms is an average of national poverty lines in all developing countries, low and middle income. These new figures reveal higher global poverty than previously thought; however, poverty in MENA continues to remain among the lowest in the developing world at around 3.5 percent at the $1.25 and around 17 percent at the $2 poverty line in 2005 (see table 1). The poverty rate in MENA has been declining over the period 1990-2005, although at a slower rate than in LAC or ECA. The number of people in poverty, however, has not declined since 1990 (see table 1) due to rapid population growth, and by 2005 remained around 50 mln. (under $2 a day). Comparing number of poor under different poverty lines, $1.25, $2.00 and $2.50 per day at PPP, reveals very high concentration of population. Hence, as many as 17 percent of Egyptians, 15 percent of Yemenis and 10 percent of Moroccans have consumption levels which are no more than 50 cents per day above the international line of $2 a day, suggesting high vulnerability to economic shocks. Comparison between the international benchmarks (at $2 a day) and national poverty figures show that MENA countries choose their poverty lines close to $2 a day in PPP. Within countries, national poverty data show patterns that are consistent with those found elsewhere. Common features include poverty rates that are higher in rural areas than in urban areas. Urban areas also exhibit faster rates of poverty reduction, despite urbanization. Several countries also have regions (e.g., Upper Egypt) that have poverty rates that stay persistently above the average for the country. Country poverty updates in Jordan, Morocco, and Egypt show that with the acceleration of economic growth in the last 3-5 years poverty has been declining rapidly. The main channel of impact is the labor market and new jobs generated by the private sector firms. At the same time, the new figures stop before the onset of the food crisis (see next section) that is likely to have had an adverse impact on poverty. Global food and energy price volatility and their impact of region’s poor MENA countries have been affected by recent increases in food prices because they are large net food importers. According to FAO data countries in the region have to rely on imports to meet about 50% of their food needs (in terms of calories). Increases in fuel prices have affected oil-producing and oil-importing countries very differently. But in both groups of countries higher prices have put an additional burden on the poor. For example, in Yemen, prices for wheat and wheat products doubled in one year. This might have already increased national poverty by 6 percentage points. If no action is taken, this could reverse the gains in poverty reduction between 1998 and 2005 (see Table 2). Higher poverty and more expensive food are leading to increased prevalence of malnutrition and other long term health impacts. The most susceptible are children under 24 months of age, pregnant and lactating women and those already suffering from malnourishment. Two countries in MENA – Djibouti and Yemen - are among the most affected countries for both stunting and wasting indicators, and they are likely to suffer most from the on-going crisis. Although the typical household in MENA spends much less on energy and fuels than on food, people consume energy indirectly, especially via transportation. Thus, accumulated impact of fuel prices on the poor through higher inflation rates could be comparable to the effect of food prices. Moreover, higher prices may cause households to move down the ladder of fuels, especially from “cleaner” fuels to other sources, such as biomass, with harmful environmental and health consequences. Higher food and energy prices have had a fiscal cost, as subsidies to main food staples and energy products soared. Across countries in the region total food and energy subsidies account for between 3 and 15 percent of GDP. In Yemen the subsidies bill is 10 percent of GDP; it is close to 9 percent of GDP in Egypt and exceeds 5 percent in Morocco. Subsidies are badly targeted. A recent analysis of the incidence of subsidies in Egypt shows that a person in the poorest quintile receives 3 times less in terms of subsidies than someone from the top 20 percent of the distribution. In Morocco the poor are receiving only 10% of what the government spends on universal price subsidies, while 90% goes to subsidies goods consumed by the non-poor. The targeted programs which provide temporary but adequate relief to the needy, and which are increasingly used in other parts of the word, are rare. The gap between domestic and world market prices for the subsidized commodities creates distortions: in Egypt the price of subsidized bread is less than 5 percent of its cost based on world wheat prices, while in Morocco subsidized butane costs to consumer only 1/3 of its world market price. The increased spending has different effects: in some countries it slowed down necessary reform. But in some countries, such as Jordan, higher prices provided also a motivation for reform of the subsidies system. Morocco, Egypt, Syria and Yemen are developing plans for energy subsidies reform. Other part of the response to the higher prices was an increased attention to rural and agricultural development. Over the longer run, some rural poor will benefit form the increased prices on their outputs. These positive effects can be fostered and enhanced by policy reforms promoting small productivity of farmers, their better access to technology, markets and credit. World Bank Operational Strategy The World Bank’s operational strategy for the region broadly supports policies, investments and institutions that encourage the creation of jobs through private-sector led growth, that promote universal access to basic health care and to primary and secondary education, that help governments design better targeted social protection. To withstand the effect of global food and energy price shocks well-designed social protection, education, and nutrition programs are critical for helping households minimize adverse effects and to preserve their longer-term welfare and human capital. The Bank is pursuing these objectives through analytic and advisory work as well as through lending operations. Analytic and advisory activities have focused on generating and analyzing data on household living standards, and on poverty and social impact analysis of the on-going reforms and options to deal with higher food and energy prices. Poverty assessments are carried out for borrowing countries to improve their data capabilities and poverty analysis methodologies. Such analytical and capacity building work has been carried out or is on-going for Algeria, Bahrain, Djibouti, Egypt, Jordan, Iran, Iraq, Lebanon, Libya, Morocco, Tunisia, West Bank-Gaza and Yemen. New poverty assessments have been initiated for Iraq and Lebanon and, when completed, will be the first ever such assessments carried out with the help of household surveys. Several countries produced poverty maps with the technical assistance from the World Bank. Most of these activities are carried out jointly with national statistical agencies and involve significant transfer of knowledge to local counterparts. Poverty and social impact analysis assesses ways to improve targeting of assistance programs to the poor and assessments of the impact of policy reforms on households. Such work is being carried out by multi-sector teams in Egypt, Djibouti, Jordan, Lebanon, Morocco, Syria and Yemen. Detailed analyses of the incidence of food and energy subsidies to inform reform has been prepared or is on-going for Egypt, Syria, Morocco, Iraq, Jordan and Yemen. To assist countries in response to price shocks, the countries to use the Global Crisis Facility (GFPR), and the teams help the countries to benefit form the facility by doing supportive analysis in Djibouti, West bank and Gaza and Yemen. The work on nutritional mapping in Morocco will help to improve the targeting of social protection. A regional perspective on the effects of energy and fuel crisis in the region and the analysis of policy responses will be provided in two position papers “Food Security Challenges in the MENA Region” (prepared MNSSD) and “Social Protection Response to Rising Food Prices” (prepared MNSHD), to which PREM team contributes. The country dialogues are supported by the regional activity on subsidies reform (analysis, impact assessment and monitoring). Lending activities of the region cover a broad range of anti-poverty interventions including: private sector development programs to foster job creation, infrastructure sectors reform to provide enabling environment and protect the poor (for example, DPLs on energy and water in Morocco), social funds and community-driven development projects (for example, in Yemen, Morocco and Egypt); vocational training (in Algeria, Jordan, Iran, Lebanon and Tunisia), targeted health and education programs (in Egypt, Iran, Jordan, Lebanon, Morocco and Yemen), and rural development and natural resource management programs (in Algeria, Tunisia, Egypt and Morocco). The response to the emergency of food and energy prices focused on helping the countries to avoid detrimental long-term effects of the crisis, protecting human capital and strengthening safety net system to withstand a period of increased volatility. In Djibouti, $5 million DPG from GFPR fund provided budget support to fill in the gap due to the reduction of taxes on food, and supported the development of a safety net reform. In Yemen, $10 million grant from GFPR focus on increasing cash-for-work through Social Fund for Development and on TA to improve targeting. In Egypt, the Bank is providing assistance on improving safety net design in the Ministry of Social Solidarity, including the potential for a proxy means test and eventual conditional cash transfer. In Iraq the Bank is being asked to deepen involvement in social safety nets, particularly improving targeting and effectiveness of cash transfer program (Ministry of Labor and Social Affairs). In West Bank and Gaza, a grant of $5 million under preparation is aimed at scaling up targeted social assistance. In 2004, the incidence of poverty in MENA was estimated to be 1.5 percent (at the $1 international poverty line) and 20 percent (at the $2 poverty line). These are among the lowest poverty rates in the world (see Table 1), comparing very favorably with other middle income regions. Furthermore, poverty trends in the MENA region appear to be improving whether measured at the $1 level or the $2 level, or indeed by national poverty lines (see Table 2). The biggest remaining poverty challenge, in terms of both numbers and incidence rates, is to be found in Egypt and Yemen. Within countries, national poverty data show patterns that are consistent with those found elsewhere. Common features include poverty rates that are higher in rural areas than in urban areas and that are inversely correlated with education levels and directly correlated with family size. Several countries also have regions (e.g., Upper Egypt) that have poverty rates that stay persistently above the average for the country. Trends in key social indicators Social or human development indicators for MENA show marked improvement over time. Figure 1 shows trends in selected indicators between 1990 and 2005. It is clear that there has been improvement in each of the indicators shown: life expectancy, infant mortality, secondary school enrolment and female secondary school enrolment. This performance is especially notable in view of the fact that the region stagnated in terms of economic growth for most of the decade of the 1990s. Comparative data show that MENA has done well in terms of social indicator trends relative to most other regions of the world. While the human development data reported above are averages for the region, they are likely to reflect disproportionate gains among the poorer segments of the population. This is particularly true of such indicators as primary enrolment, where the non-poor tend to have high enrolment rates to begin with, and infant mortality, where the non-poor tend to have low rates to begin with. So the strong gains in human development indicators experienced by MENA most likely reflect pro-poor trends in access to education and health in recent decades. World Bank Operational Strategy The World Bank’s operational strategy for the region broadly supports policies, investments and institutions that encourage the creation of jobs through private-sector led growth, that promote universal access to basic health care and to primary and secondary education, that help governments design pro-poor social insurance schemes, and that enhance the ability of the poor to articulate and achieve their economic objectives. The Bank is pursuing these objectives through analytic and advisory work as well as through lending operations. Analytic and advisory activities have focused on generating and analyzing better and better data on household living standards. Towards this end, poverty assessments are routinely carried out for borrowing countries which have adequate data and technical assistance is provided when requested by countries seeking to improve their poverty-related data capabilities and poverty analysis methodologies, such as poverty mapping. Thus, poverty assessments or updates have been carried out for Algeria, Egypt, Jordan, Iran, Morocco, Tunisia, West Bank-Gaza and Yemen in recent years. New poverty assessments have been initiated for Iraq and Lebanon and, when completed, will be the first ever such assessments carried out with the help of household surveys. Most of these assessments are carried out jointly with national statistical agencies and involve significant transfer of knowledge to local counterparts. Help is also provided through stand-alone technical assistance exercises, as is the case, for example, with Iraq. In some cases, analytic work has gone beyond the calculation of levels and trends in poverty to developing tools which enable finer targeting of assistance programs to the poor and assessments of the impact of policy reforms on households. Poverty maps at sub-province levels have been developed for Egypt, Jordan and Morocco and are being used to design targeting programs in the latter two countries. Detailed analyses of the incidence of food and energy subsidies have been prepared for Egypt, Morocco, Jordan and Yemen in recent years. A regional perspective on poverty data, trends and policies was provided through a 2006 report entitled Sustaining Gains in Poverty Reduction and Human Development in the Middle East and North Africa. Lending activities cover a broad range of anti-poverty interventions including: social funds and community-driven development projects (for example, in Yemen, Morocco and Egypt); vocational training (in Algeria, Jordan, Iran, Lebanon and Tunisia), targeted health and education programs (in Egypt, Iran, Jordan, Lebanon, Morocco and Yemen), and rural development and natural resource management programs (in Algeria, Egypt and Morocco). See: Poverty Data Tables (.pdf) All dollar figures are in US dollar equivalents. September 2008 For more information, please contact:
In Washington: Dina El Naggar, Phone: 1 (202) 473-3245; Fax: 1 (202) 522-0003; Email: delnaggar@worldbank.org |
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