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Zimbabweans living in extreme poverty increase to 6 million in 2019

by Staff reporter
27 Nov 2020 at 17:31hrs | Views
The number of poor people in the country increased to 8.9 million in 2019 - more than half of its estimated population - from 8 million in 2017 while those living in extreme poverty increased to 6 million from 4.5 million according to the latest Poverty report by Zimstat and the World Bank.  
 
The report updates the Poverty, Income, Consumption and Expenditure Survey (PICES) conducted in 2017, which had to be revised due to the rapid economic changes that occurred in the Zimbabwean economy from 2017 to 2019. It shows that shows that extreme poverty rose to 38% in 2019 (April-May) and general poverty as measured by the lower bound poverty line rose to 51% from 43% during the same period.
 
Extreme poverty is defined by the World Bank as leaving on less than US$1.90 per day and the lower bound poverty line (moderate poverty) as living on US$3.20 per day. Lower-middle-income countries like Zimbabwe use the lower-bound poverty line for policy information and planning.
 
Although extreme poverty increased in both urban and rural areas, in relative terms, extreme poverty rose more in urban areas. The general poverty rate based on the lower bound poverty line remained high. It changed marginally for the rural population, but in urban areas it rose sharply to 24% from 16% during the same period.
 
The number of extremely poor people in urban areas increased by about 327,000 and rose by 1.1 million in rural areas. The increase in poverty rates and the number of extremely poor and poor people during the period under review can be attributed to high inflation coupled with the contraction of the economy and a poor 2018/19 rainfall season. These negative changes in the economy are likely to have stressed the livelihoods of many Zimbabweans, thereby affecting households in urban areas more in relative terms compared to households in rural areas.
 
The report captures data between April-May 2019. However, simulations show that the rapid price increases that affected Zimbabwe between April– May 2019 and December 2019 may have increased extreme poverty to 52% from 38%.
 
The continued economic instability, coupled with the COVID-19 pandemic, is likely to have further worsened the poverty situation in 2020 and demonstrates the need for even more rapid data collection on poverty changes. This comes as the United Nations Development Programme is pushing for countries to look beyond GDP growth as a measure of economic development but to look at all areas that affect the quality of life with particular emphasis on poverty and inequality.
 
Consumption expenditure fell for all welfare groups except the richest 10%, or decile. The welfare groups in the lower end of the income distribution had the largest proportional declines in consumption expenditure. Consequently, inequality rose as the Gini index increased to 50.4% in 2019 from 44.7 in 2017. The increase in inequality was driven by a rise in inequality within urban and within rural areas rather than between urban and rural areas.
 
According to the report, the price increases of maize, bread, and cereals had the largest impact on poverty. According to the PICES 2017 data, the share of maize meal in total household consumption is three times higher in urban areas (1.8%) than in rural areas (0.3%). Maize meal subsidies therefore benefitted urban households more than rural ones.
 
The report also notes that within urban areas, maize meal subsidies were more likely to benefit the middle groups than the poorest groups. Rural households were unlikely to benefit from maize meal subsidies because they rely on their own produced maize grain, which forms 11% of their total consumption expenditure. However, this is unlikely to be the case in a poor rainfall year such as 2018/19, when rural households had to purchase maize grain and maize meal.
 
The urban population spends much more on transport fuels than the rural population, even when measured as a proportion of their total consumption. Zimstat noted that efforts to moderate fuel prices benefitted the richest segment of the population more than the poorest segment. For transport fares, differences in relative spending among welfare quintiles in urban areas are small, with households in the poorest quintile spending only a little less than the richest urban quintile.
 
In 2017, households in the poorest urban quintile spent, on average, 1.5% of their consumption expenditure on electricity, compared to 4.5% for the richest quintile. This implies that the richer urban households benefit most from any effort to keep electricity prices low.
 
The proportion of the urban working-age population that worked informally rose to 43% from 34% in 2017 The percentage of the working-age population with a formal job dropped to 26% from 29% and those not working for pay or for an income fell to 31% from 37% during the same period. "This implies that as the availability of formal jobs dropped and economic hardship worsened, household members were forced to take jobs in the informal sector to earn some income." It was also shown that between 2017 and April–May 2019, the proportion of children between the ages of 14 and 17 working for pay rose to 7% from 4% in urban areas and to 7% from 3% in the rural areas.
 
Access to health care worsened. During April–May 2019, a quarter of rural households and a little more than a quarter of urban households were unable to obtain medicine prescribed for an illness. In rural areas, the main reason for failing to obtain medication when ill was due to a lack of availability; in urban.

During April–May of the Mini-PICES 2019, 50% of rural households were either moderately or severely food insecure, whereas close to 52% were so during March–June 2017 according to data gathered through the PICES Agricultural Productivity Module.  Despite this slight drop in rural food insecurity, extreme poverty in April–May 2019 was much higher than the average for 2017. The high increase in extreme poverty, compared to a relatively stable (albeit high) level of food insecurity, reflects the deterioration of the nonagricultural economy between 2017 and April–May 2019. This affected household consumption expenditure more broadly, but the food security situation in April–May 2019 was at a similar level as March–June 2017.
 
The data also shows that richer households are more likely to have a household member living abroad compared to poorer ones. Among households with a member abroad, poorer households received fewer remittances. The monthly amount of remittances received per capita dropped to US$21 from US$29 for those households that received remittances.

Source - finx

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