Since the mid-1980s, there has been little progress in poverty reduction in the MENA region although human development indicators have continued to improve. Accelerating poverty reduction and sustaining human development improvement are important challenges for the region in the future says a World Bank report "Sustaining Gains in Poverty Reduction and Human Development in MENA "released Thursday.
The report provides an overview of trends in poverty and human development indicators during the last two decades. It shows that the substantial progress in reducing poverty in earlier decades came to a halt in the latter half of the 1980s. Average poverty rates for the region, measured at the $2 per capita per day international poverty line, fell to around 25 percent by 1987, the lowest in the world at that time. But they stagnated thereafter, fluctuating between 20 and 25 percent. "This is the social cost of slow growth," says Mustapha Nabli, Chief Economist at the World Bank for the MENA region noting that "an additional 11 million people were added to the ranks of the poor between 1987 and 2001 because the region's population continued to grow but its economies didn't."
Knowledge about the causes and consequences of poverty in MENA is limited by the availability of data. This is a serious issue in MENA countries where, according to Farrukh Iqbal, the principal author of the report, "access to data is typically considered not a matter of public right but of bureaucratic discretion." Often, this results in a lack of accurate information even within government agencies, and hampers its ability to understand and analyze poverty, design effective anti-poverty programs, and learn from experience.
Data from this report shows that while poverty incidence rates did not improve during the period from 1985 to 2000, there were strong gains in human development: Literacy spread to 69 percent of the population, average schooling (for those above 15) rose to 5.2 years, child mortality rates plunged to around 46 per thousand births, and life expectancy continued to climb to reach 68 years. Indeed, the region improved its social indicators faster than middle-income comparators over this period.
The fact that little poverty reduction occurred during the 1990s despite remarkable gains in human development reflects a failure to translate rising human capital into higher productivity. The slow growth experienced by the region over this period was a consequence in part of deficiencies in macroeconomic and structural policies.
The report also notes that the region's social safety nets need considerable improvement. Parts of the safety net that are effective are not efficient and parts that are relatively efficient are not effective. For example, food and energy subsidies reach a large number of people and are effective in the sense that they also reach the poor. However, both food and energy subsidies are inefficient in that they involve a lot of resource leakage to the non-poor. On the other hand, cash handouts are often better targeted to the poor and the vulnerable but they are funded at such low levels (typically less than 1 percent of GDP) that they are not very effective. While acknowledging some improvements in the design of food subsidies in such countries as Tunisia and Egypt and the switch from a food subsidy system to a cash transfer system in Algeria and Jordan, the report notes that opportunities to make a more substantial difference through reforming fiscally-profligate energy subsidies have largely been missed.
