The extreme poor are not the same as the moderate poor.
First, they cannot easily connect with the mainstream economy, because they lack assets (physical, financial, and human) or because they lack voice and/or social capital.
Second, the trap-centric view of extreme poverty implies that certain threshold levels of assets are needed to overcome the chronic extreme poverty trap.
Third, the real economic world of the extreme poor resembles more a game of “snakes and ladders,” whereby they periodically make efforts to climb up the income ladder and are periodically pushed back by various shocks originating in poor health, natural disasters, and personal insecurities.
The state of the poor
Most extreme poor households are landless. Majority of the heads of the extreme poor households are also illiterate.
A large proportion of extreme poor households are female headed households. Housing conditions of a large proportion of extreme poor households are also very shabby, and about half of the extreme poor households still practise open defecation.
They do not have any savings. Many of them have no or only one source of income, and suffer from food insecurity as well.
Six major extreme poverty programs have been reviewed here to have an understanding of them: Target beneficiaries, and delivery of assets, transfers, and services.
They include: Char Livelihoods Program (CLP), Rural Employment Generation for Public Assets (REOPA), Strengthening Household Abilities for Responding to Development Opportunities (SHOUHARDO), BRAC’s Targeting the Ultra-Poor (TUP) Program, Urban Partnerships for Poverty Reduction (UPPR), and Economic Empowerment of the Poorest Program (EEP/Shiree).
Evidence shows all the programs have been successful in reaching out to respective target beneficiaries, and the lives and livelihoods of beneficiary households have been improved.
A good proportion of them have been able to move themselves out of extreme poverty due to the interventions of the programs. We have estimated the total as well as average annual costs of the interventions per beneficiary household, which is found to be reasonable.
Still, a question remains about how effective the extreme poverty programs are in making actual significant positive impact in the lives and livelihoods of the extreme poor beneficiaries, and helping them to graduate from extreme poverty in a sustainable manner.
The ones not making it
Three factors, among other, came up as correlates of non-graduation among the extreme poor beneficiary households: Elderly, female headedness, and illiteracy of the heads of the households.
This is certainly not an exhaustive list, but this can give some ideas about the households that cannot make progress.
Addressing inequality in human development includes things like making vocational training accessible to the poorest, abolishing of the dowry practice
The cost of graduating the extreme poor out of poverty based on these programs comes to less than an average of $500. If we plan to spend this amount over the period of five years, then it comes down to $100 per beneficiary household (each year) to achieve the desired target of “zero extreme poverty.”
Financing “Zero Extreme Poverty” is thus feasible without jeopardising high growth. This is because the mobilisation of aggregate resources needed to eradicate extreme poverty is affordable, feasible, and doable.
End to extreme poverty by 2021
There are five ingredients in the making of a successful strategy for ending extreme poverty by 2021.
First, the overall importance of the favourable macro context that underpinned decline in extreme and chronic poverty. It is “easier to pull a boat when wind is in your favour,” as any boat-puller in rural Bangladesh would corroborate.
It is, therefore, crucial to maintain this favourable macroeconomic context for sustaining decline in extreme and chronic poverty in the next decade.
This would mean sustaining the five major drivers of growth -- agriculture, rural non-farm sector, exports, remittances, and urbanisation -- in the days ahead.
Micro successes need to be nationally replicated on a wider scale. Some have been in the area of poverty reduction, while others have taken place in the area of human development (as in the case of female stipend schemes and immunisation programs).
A defining marker of many of these programs is that they aimed to provide consequential transfer of resources (assets or financial savings) to the extreme poor clients.
Shocked into poverty
Shocks play a decisive role in shaping the pace of extreme poverty reduction. For every two people that climb out of poverty, one falls in. If there were no slippages into poverty due to preventable shocks, Bangladesh would have experienced much faster decline in poverty and extreme poverty.
Since health shock is found to be single most important explanatory factor underlying fall into extreme poverty, effective health protection for the poor and the poorest should be the given top policy priority. Other shocks include natural disasters, evictions and death, or disability in the family.
Addressing inequality in human development includes things like making education and vocational skills training accessible to the poorest, reducing the incidence of child marriage, addressing child nutrition needs, and abolishing of the dowry practice.
High prevalence of dowry, for instance, leads to early marriage “age at first marriage” for girls in 70% of cases in rural Bangladesh tend to be below the legally permissible age of 18.
This leads to a vicious cycle of early marriage, low maternal nutrition, low birth-weight, high stunting rates for children, affecting future schooling, occupational choice, and productivity.
And finally, the renewed emphasis on social protection is a welcome move, but it needs to ensure that it is not side-lining the extreme and chronic poverty agenda.
Not a dream
The central message regarding financing “zero extreme poverty” is that eradicating extreme poverty is not only desirable, but also a fiscally feasible plan-target.
However, financing is not just about finding the right amount of resources, it is also about fostering the right kind of institutions and approaches. The GoB-donor compact can lead to the replication of already successful pilots to deepen interventions designed to support the extreme poor.
NGOs can play a crucial role. To prevent the poor from slipping into extreme poverty, the government must play a lead role to address health shocks, mitigate adverse effects of natural disasters, and improve governance conditions to reduce law-and-order shocks.
Identifying the extreme poor and maintaining an extreme poor database is important, but it is equally important to install machinery for realtime data collection through a decentralised information system, given the fast-changing poverty dynamic in the country.
Decentralisation is also needed for attaining other virtues of development – broad-based and timely access to service delivery, increased beneficiary satisfaction, and deepening local democracy.
This article is based on the Background Paper for the Seventh Five Year Plan prepared by Binayak Sen and Zulfiqar Ali, for the General Economics Division (GED) Planning Commission, Government of Bangladesh. Shazia Omar is a poverty activist and a writer, currently working as a consultant at the Social Security Policy Support Project. www.shaziaomar.com