The COVID-19 Poverty Tsunami

April 27, 2020

By Prof. Father Michael J. Kelly
Guest Writer Contributing to the Key Correspondent Programme
Luwisha House, Lusaka, Zambia

The earliest laboratory-confirmed case of what has developed into the COVID-19 pandemic was in an elderly man in Wuhan city, central China, whose symptoms began on 1st December 2019. Today (20th April), less than five months later, the world has experienced more than 160,000 deaths from the disease, is home to almost 2.5 million confirmed cases in more than 185 countries, and has taken unprecedented measures to prevent its spread[i]. At the same time, public health experts acknowledge that the volume of infections, especially in parts of the developing world, may be far greater than current official estimates.

In response to the escalating spread of the disease, many countries have adopted lockdown measures – emergency response procedures that prohibit people from entering or leaving designated areas. In some form or other these are now almost universal. These lockdown measures require people to stay at home, allowing them to leave for only a few very specific reasons, such as to attend to food or health needs. They have also closed businesses, shops, bars, sports facilities, schools and churches and have seriously disrupted trade and commerce as well as the ways of working of many businesses, individuals and government agencies. According to the International Labour Organization (ILO), “Full or partial lockdown measures are now affecting almost 2.7 billion workers, representing around 81 per cent of the world’s workforce”.[ii]

The medical pandemic and the lockdown and other measures being taken to curtail its spread are both leading to contractions in the global economy. As recently as January 2020 the forecast from the IMF had been that the global GDP would expand by 3.3% during the current year. In contrast, the Fund stated in mid-April that not only would the global economy not expand, but that as governments worldwide grapple with the global COVID-19 pandemic the worldwide economy could be expected to contract by 3% in 2020 This would be the outcome of what the IMF calls the “Great Lockdown” which has ushered the world into its most serious financial crisis since the Great Depression of the 1930s. Within this context, the IMF’s chief economist has warned that “(w)hen you have a deep recession of this kind, there is always unfortunately tremendous loss of income for people at the lower end of the income scale, so poverty can go up, inequality can go up.”[iii]

This spectre of an increase in poverty and inequality constitutes a real challenge for the United Nations Sustainable Development Goals of ending poverty and eliminating hunger by the year 2030. The economic consequences of the COVID-19 pandemic are generating whole new levels of poverty, bringing the world back to where it was many years ago and wiping out decades of progress. Estimates by the United Nations University (UNU)[iv], the International Labour Organization (ILO) and the International Food Policy Research Institute (IFPRI)[v] are that globally the numbers living in poverty are set to increase for the first time in the last thirty years and that the increases will be substantial.

One measure of poverty is the international poverty line, the income that a person needs in order to satisfy his or her minimum nutritional, clothing and shelter needs. In October 2015, the World Bank set this standard at $1.90 per day. Anybody living on less than this is considered to be living in extreme poverty. It has been estimated that in 2018 just over 10% of the world’s population or 759 million people were living in such extreme poverty. According to UNU projections, a COVID-19 induced decline of 5% in per capita incomes or consumption would result in an increase of 85 million in the number living in poverty; if the decline reached 10%, the number living in poverty would increase by more than 180 million; while a decline of 20%, which seems to be the most likely scenario, would result in there being an additional 419 million extremely poor people in the world. This means that across the world there would be a total of 1,178 million poor people, 15.7% of the world’s total population, something almost unprecedented in world history.

The prospects for Sub-Saharan Africa are equally grim. In 2018 this part of the world was home to an estimated 1,075 million people of whom 447 million (41.6% of the total), were living below the internationally accepted poverty line of $1.90 a day. A COVID-19 induced decline of 5% in per capita incomes or consumption would see this number increasing by almost 28 million to nearly 475 million, which would be 44.2% of the region’s population. A decline of 10% would see the increase grow to 57.4 million, while a global economic decline of 20% would result in Sub-Saharan Africa’s population of poor people increasing by more than 120 million (see Table). In such a case the number of poor people living in the sub-continent would be 567 million, or 52.8% of the total population of the region. Instead of progressing out of poverty, Sub-Saharan Africa would see a reversal of decades of progress, becoming poorer than ever before. It would share this calamitous state with South Asia, with the two regions accounting for some 80% of the total poverty in the world.

 

Incidence of poverty globally and in Sub-Saharan Africa under scenarios of COVID-19-induced contraction in per capita incomes or consumption
 
  World Sub-Saharan Africa
Population (2018) 7,525.8 million 1,074.9 million
Number living below the $1.90 poverty line (2018)  

759.2 million

 

447 million

Percent living below the $1.90 poverty line (2018)  

10.1%

 

41.6%

     
If the COVID-19 leads to a 5% decline in incomes/consumption
Number living below the $1.90 poverty line  

844.1 million

 

474.6 million

Percent living below the $1.90 poverty line  

11.2%

 

44.2%

Number of additional poor compared to 2018  

84.9 million

 

27.6 million

     
If the COVID-19 leads to a 10% decline in incomes/consumption
Number living below the $1.90 poverty line  

940.8 million

 

504.4 million

Percent living below the $1.90 poverty line  

12.5%

 

46.9%

Number of additional poor compared to 2018  

181.6 million

 

57.4 million

     
If the COVID-19 leads to a 20% decline in incomes/consumption
Number living below the $1.90 poverty line  

1,178.1 million

 

567.3 million

Percent living below the $1.90 poverty line  

15.7%

 

52.8%

Number of additional poor compared to 2018  

418.9 million

 

120.3 million

Source: Derived from Table A1 “Estimates of poverty by region, 2018 and estimates under scenarios of contraction in per capita incomes or consumption” in Estimates of the impact of COVID-19 on global poverty, Sumner et al., UNU WIDER Working Paper 2020/43.

 

The figures that have been presented give the poverty situation of those living below the international poverty line of $1.90 a day. This is focusing on poverty in terms of the monetary indicator provided by a cash income. But there are other dimensions to poverty which will also be adversely affected by COVID-19 and the measures taken to prevent its spread. Thus the COVID-19 pandemic-induced recession can be expected to lead to increases in infant and maternal mortality rates, to more fragile health systems, to an increasing incidence and depth of undernutrition and undernourishment, and to lower school attendance, progression and completion rates. It also seems probable that declines in school participation and educational attainment would affect girls more than boys because once they have stopped schooling for any reason girls are known to be less likely to begin again when opportunities for resumption occur.

 

The Ongoing and New Poor

Who are these millions newly plunged into poverty by the tsunami-like impacts of COVID-19? They are the ones who belong to the untaxed and unregulated informal economy that is estimated to make up 55% of the economy in Sub-Saharan Africa[vi]: casual labourers, street vendors of everything from razors through talk-time to roasted maize cobs, petty traders, clothing and garment workers, hairdressers and barbers, minibus drivers, conductors and call-boys, newspaper sellers, wheel-barrow pushers. They are the thousands who have lost their jobs because of the virtual collapse of the tourist industry and the closure of hotels. They are the construction workers who, for fear of virus infection, are no longer permitted to work on building sites. They are the workers in all aspects of the struggling aviation industry, from pilots to baggage-checkers, whose services are no longer being utilised. They are the service workers from closed banks, offices and shops, abruptly set adrift in the world of the jobless and absence of income. They are all those engaged in the world of mining and oil production which is offering minerals and oils to a world that no longer wants so much of them and is paying less for what it is getting. They are those who belong to the small and medium enterprises that create 80% of the employment across Africa. They are the ones who, like the men in the Gospel parable of the Labourers in the Vineyard, are standing idle all the day because no one will hire them (Matt., 20:7). They are the weak and marginalised members of society.

They have been told to observe a social distance of at least two metres from other persons, to stay indoors, to stay at home, to go outside only when necessary for food or health reasons, to avoid meeting others, and where possible to work from home. But for very many their homes are so small and crowded that the recommended social distancing is impossible. And even though the chance of their getting some casual but paid employment is very low, they know that there is absolutely no such chance if they stay indoors at home. Their way of life doesn’t know the meaning of working from home. They prefer to take the risk of contracting (or spreading) the COVID-19 disease than to face the even greater risk of sickness from hunger and possibly starvation in their families[vii]. They have been told to wash their hands frequently with soap and clean water, but they have to draw water from the common public water-tap and this they can do only once or twice in the day – and they haven’t got the money to buy soap for frequent hand-washing. They are the ones who need to work so that they can live. They are the long-standing poor, the poor that the Gospel says will always be with us (John 12:8), the poor whose numbers are being increased every day by the COVID-19 pandemic as it throws millions more into poverty.

But way beyond all of this, they are God’s children. They are our sisters and brothers. Are we doing anything to help them? Or are all our COVID-19 pandemic concerns focused on ourselves and on manoeuvring ourselves successfully through this crisis?

 

[i] https://www.covidvisualizer.com/

[ii] ILO Monitor: COVID-19 and the world of work. Second edition. Updated estimates and analysis. 7 April 2020.

[iii] IMF says World will ‘very likely’ experience worst recession since the 1930s. CNBC, April 14, 2020.

[iv] Estimates of the impact of COVID-19 on global poverty. WIDER Working Paper 2020/43. United Nations University World Institute for Development Economics Research, April 2020 (Andy Sumner, Chris Hoy & Eduardo Ortiz-Juarez).

[v] How much will global poverty increase because of COVID-19? International Food Policy Research Institute, March 20th, 2020 (Rob Vos, Will Martin & David Laborde).

[vi] Tackling COVID-19 in Africa. An unfolding health and economic crisis that demands bold action. Kartik Jayaram, Acha Leke, Amandla Ooko-Ombaka & Ying Sunny Sun. McKinsey & Company, April 2020.

[vii] Living the UAPs in the light of the challenges presented by COVID-19. Jesuit Father General Arturo Sosa, 2nd April 2020.

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