Global extreme poverty is expected to rise in 2020 for the first time in over 20 years due to the disruption of the Covid-19 pandemic, World Bank said in its latest report released on Wednesday.

The pandemic is estimated to push an additional 88 million to 115 million people into extreme poverty this year, with the total rising to 150 million by 2021, depending on the severity of the economic contraction.

Extreme poverty, defined as living on less than $1.90 a day, is likely to affect between 9.1 per cent and 9.4 per cent of the world’s population in 2020, according to the biennial report.

According to the World Bank Group, had the pandemic not shaken the globe the poverty rate was expected to drop to 7.9 per cent in 2020.

The Group’s President, David Malpass said the pandemic and global recession may cause over 1.4 per cent of the world’s population to fall into extreme poverty.

"In order to reverse this serious setback to development progress and poverty reduction, countries will need to prepare for a different economy post-Covid,” he noted.

Malpass said that will mean allowing capital, labour, skills, and innovation to move into new businesses and sectors.

The report finds that many of the new poor will be in countries that already have high poverty rates.

A number of middle-income countries will see significant numbers of people slip below the extreme poverty line – about 82 per cent in total will be in middle-income countries.

Rwanda, while not classified as a middle-income country, people living under extreme poverty was 16 per cent of the entire population, according to the Integrated Living Household Survey 2016-2017.

Among the factors that often contribute to poverty are unemployment and underemployment. This is simply put, many people live in poverty because they are unable to find a job that pays a living wage or to find a job at all.

A report by the National Institute of Statistics of Rwanda (NISR) released this year showed that Covid-19 had increased the unemployment rate from 13.1 per cent to 22.1 per cent between February and May.

Jean Claude Nyirimanzi, a statistician at NISR told The New Times that the poverty survey, which will partly determine the impact of Covid-19 in Rwanda’s poor, is underway.

Commenting on the World Bank report, he said it doesn’t necessarily mean Covid-19 will send more people in extreme poverty and that is because he thinks the level of response from leaders is different.

"I am hopeful the situation could even improve in Rwanda considering the social protection schemes that the government has put in place for the most vulnerable people,” he noted.

Beyond 2021

The report highlights that the pandemic coupled with pressures of conflict and climate change will put the goal of ending poverty by 2030 beyond reach without substantial policy action.

By 2030, the global poverty rate could be about 7 per cent.

At the same time, increasing numbers of urban dwellers are expected to fall into extreme poverty, which has traditionally affected people in rural areas.

Progress was slowing even before the Covid-19 crisis.

New global poverty data for 2017 show that 52 million people rose out of poverty between 2015 and 2017. Yet despite the progress, the rate of reduction slowed to less than half a percentage point per year between 2015 and 2017.

Global poverty had dropped at the rate of around 1 percentage point per year between 1990 and 2015.

In addition to the $1.90-per-day international poverty line, the World Bank measures poverty lines of $3.20 and $5.50, reflecting national poverty lines in lower-middle-income and upper-middle-income countries.

The report further measures poverty across a multidimensional spectrum that includes access to education and basic infrastructure. 

While less than a tenth of the world’s population lives on less than $1.90 a day, close to a quarter of the world’s population lives below the $3.20 line and more than 40 per cent of the world’s population – almost 3.3 billion people – live below the $5.50 line.

The World Bank calls for collective action to ensure years of progress in poverty reduction are not erased, and that efforts to confront poverty caused by Covid-19 also face threats that disproportionately impact the world’s poor.