Poverty Declined but Inequality Remains, Study Shows

ADDIS ABEBA – Ethiopia has registered fast economic growth which has led to significant national poverty reduction over the past ten years, reveals a new world bank rural poverty assessment study.

However, it says there were significant differences in the pace and nature of poverty reduction across Ethiopia’s regions.

The study, entitled Ethiopia Regional Poverty Report – Promoting Equitable Growth for All Regions, across Ethiopia’s regions, says the overall national poverty rate has declined from 30% to 24%.

Inequality remains

The document, released today, provides the poverty profiles for each region and sheds some light on why some regions registered fast poverty reduction between 2011 and 2016, while others did not.

According to the study, inequality, measured by the Gini coefficient, increased in almost all regions from 2011 to 2016 generally as a result of stronger growth for relatively better-off households.

This inequality has hampered overall progress in poverty reduction, according to the World Bank.

Poverty in urban areas fell from 26% in 2011 to 15% in 2016, said Arden Finn, an economist in the World Bank’s Poverty and Equity Global Practice, and co-author of the study.

On the other hand, he said there was limited progress in rural areas, “where poverty decreased from 30% to 26% over the same period”.

Progress varies

The study says, among the mainly rural regions, Gambella fares better when it comes to indicators such as education and preventing child stunting.

Tigray, on the other hand, has better health indicators, including reductions in infant and under-five mortality, increased immunization and improved health facility delivery.

Despite strong reduction in monetary poverty, the report says predominantly pastoral regions of Afar and Somali lag in non-monetary welfare, according to World Bank’s report.

“If we look at non-monetary measures of welfare, on average urban areas performed far better than those that are more rural,” said Berhe Mekonnen, an economist with the World Bank’s Poverty and Equity Global Practice, and co-author of the study.

“In the predominantly pastoralist regions of Afar and Somali, non-monetary indicators are particularly low,” he said, “For instance, in Addis Abeba primary school completion for youth is 56%, but only 24%in the Somali region”.

Within each region, the location of households generally explains these differences, indicates the study which aims to evaluate regional patterns and inequalities in non-monetary welfare.

“In order to accelerate poverty reduction and reduce inequalities more investment is needed in rural areas, especially in key areas such as agriculture, human capital and jobs,” said Co-author of the sdudy Finn.

Pandemic Impact

The study also looked into the economic consequences of the COVID-19 pandemic which the World Bank said could undo much of the gains that were experienced in urban areas.

Job losses in urban areas since the onset of the pandemic have been far higher than in rural areas, and have been particularly high for those working odd jobs and for the self-employed.

World Bank said employment seems to be picking up gradually, but is yet to reach the pre-pandemic levels. Its effects will continue to be felt predominantly in urban areas, according to the Bank.

In Rural areas, the claims, while the magnitude of the virus’ impact on employment is relatively minimal, “vulnerability to poverty in rural areas is higher”.

This means that since a large share of the population in rural areas are barely making ends meet and live just above the poverty line, even a small decrease in average income could lead to significant increases in poverty.

The COVID-19 pandemic could also further exacerbate existing inequalities in schooling outcomes, the report says, particularly in regions that are already lagging behind in human capital indicators such as in Somali and Afar.

‘Key Study’

The World Bank has prepared the report in partnership with the Planning and Development Commission of Ethiopia (PDC), and, officials say complements the National Poverty Assessment produced earlier this year.

“This is a very important study as it seeks to create regional poverty profiles and help to better understand why some regions registered fast poverty reduction while others did not and why living standards across regions vary,” said Ousmane Dione, World Bank Country Director for Ethiopia.

“Identifying the key factors which contribute to fast and sustainable poverty reduction can provide useful insights on how to accelerate it for lagging regions,” he added.

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