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One of the key goals outlined in the Agenda for Sustainable Development is “eradicating extreme poverty for all people everywhere by 2030.” Extreme poverty – defined as those who live on less than $2.15 per person per day – was in historical decline for over 25 years and dropped further between 2015-2018 from 10.1 percent to 8.6 percent. However, recent humanitarian and environmental shocks have set back global poverty reduction. The World Bank’s Poverty and Shared Prosperity 2022 report titled “Correcting Course” warns that without fiscal policy interventions, it is unlikely the world will meet its goal of poverty reaching 3% by 2030.
The World Bank’s Poverty and Shared Prosperity report analyses the factors contributing to increased poverty rate, the largest shock being the COVID-19 pandemic. The pandemic contributed to the first increase in extreme poverty since 1998 and the largest increase since 1990; in 2020, the global poverty rate increased from 8.3 percent in 2019 to 9.2 percent equating to over 70 million additional people living in extreme poverty. Coupled with impacts of the war in Ukraine including higher food and energy prices, poverty reduction has been set back about three years, compared to pre-pandemic projections, equating to an estimated 75-95 million more people living in extreme poverty in 2022.
While the pandemic and the war in Ukraine were the biggest shocks explored by the World Bank report, other overlapping environmental and humanitarian crises also continue to give rise to an increase in extreme poverty. For example, in 2022 Pakistan experienced an abnormal monsoon season, with three times the amount of rainfall compared to the past 30-year average for the season; linked to global climate change, the monsoons caused flash floods and landslides across the country impacting over 33 million people and displacing entire villages and towns of people. The United Nations Development Programme estimated the scale of the environmental disaster could push an additional nine million people into poverty, on top of the 33 million affected.
More recently, the earthquakes in Syria and Turkey are likely to worsen issues in an already vulnerable region, including increased displacement of people, food insecurity, lack of economic growth and stretching already under-resourced healthcare systems. In Syria alone, around 90% of Syrians live below the poverty line, and this figure is likely to be compounded further due to the recent events while exposing new, unpredictable issues as both countries aim to recover from the catastrophe.
The shocks of the past couple of years have cast doubts as to whether the 2030 global goal of eradicating poverty can be met, particularly in low-income countries where poverty reduction has been set back an estimated eight to nine years. Not only did the world’s poorest people lose twice as much income as the world’s richest, but they also faced setbacks in health and education which can affect lifetime income prospects. At the time of release, the Poverty and Shared Prosperity report highlighted that while the poverty rate has begun to decrease again, based on current trends, 7% of the world’s population – about 574 million people – will still be living on less than $2.15 a day in 2030. A large concentration of people impacted by extreme poverty will be in sub-Saharan Africa, which accounts for 60% of all people in extreme poverty, as well as in conflict-affected and rural areas. Without major intervention including policy action, this sits well above the 3% goal set out by the first of the UN’s Sustainable Development Goals (SDGs).
While swift governmental policy responses addressed immediate economic needs during the pandemic, they also amplified other economic fragilities. As such, new fiscal policy will be key in offsetting the impacts of shocks felt over the past couple of years. World Bank President, David Malpass, highlighted the need for major policy to be enacted targeted at eradicating poverty and boosting growth. These policy solutions must promote inclusive growth including boosting incomes while reducing inequalities – another social issue that was exacerbated by the pandemic.
These policy solutions must promote inclusive growth including boosting incomes while reducing inequalities – another social issue that was exacerbated by the pandemic. The report outlines action points for governments and countries to tackle poverty including:
A combination of public-private capital in blended finance models has long been at the forefront of discussions for funding the Sustainable Development Goals, including tackling poverty. The 2022 World Development Report highlights the pairing of government action with a “well-functioning financial system and vigorous private sector” as “important drivers of growth and poverty reduction” particularly through social inclusion and boosting access to finance and shared prosperity.
However, at the recent World Economic Forum Annual Meeting another “P” was added to the discussions on public-private partnerships: philanthropy. Several speakers at the conference highlighted how philanthropic financing sits beside government and private capital to catalyse change, and often can be mobilised more quickly and boldly. As such, there was increased focus on elevating the role that philanthropy can play in addressing key global challenges. Badr Jafr, the COP28 Presidency’s business and philanthropy representative, highlighted the historic opportunity to “engage not just with philanthropists and philanthropies but also family offices and other innovative capital actors to help move ahead at speed and scale” on key global issues and finding interconnected solutions. These discussions make clear that leading families and family offices hold an important role in ensuring progress towards achieving the 17 Sustainable Development Goals.
Alizah Beg is a Sustainability Consultant in Itriom’s London Office.
Itriom is the global impact platform helping leading families shape a better world. Itriom’s platform enables families to refresh and redesign their values, aligns them with the right UN Sustainable Development Goals, combining them in an agreed purpose and a Family Impact Charter. Itriom’s platform supports the development of impact initiatives and whilst providing discrete and secure spaces for peer-to-peer messaging and collaboration. Itriom’s core practices in Leadership, Geostrategy, and Sustainability benefit clients by developing strategies to engage and support the Next Generation in building a lasting legacy of which families can be proud.
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