Coronavirus could drive half a billion people into poverty worldwide, warns Oxfam

Nearly half of all jobs in Africa could be lost without urgent action, says charity

More than half a billion more people could be pushed into poverty unless urgent action is taken to bail out poor countries affected by the economic fallout from the Covid-19 pandemic, Oxfam has warned.

Oxfam’s new report ‘Dignity Not Destitution’ presents fresh analysis which suggests between six and eight per cent of the global population could be forced into poverty as governments shut down entire economies to manage the spread of the virus.

This could set back the fight against poverty by a decade, and as much as 30 years in some regions such as sub-Saharan Africa and the Middle East and North Africa. Over half the global population could be living in poverty in the aftermath of the pandemic. 

The report released by the Nairobi-based charity ahead of next week’s International Monetary Fund (IMF)/World Bank annual meeting calculated the impact of the crisis on global poverty due to shrinking household incomes or consumption.

“The economic crisis that is rapidly unfolding is deeper than the 2008 global financial crisis,” the report found.

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After the fallout from the 2008 economic crash brought about from greed, wealth transferred hands from the poorest to the richest creating a financial elite that in comparison the World’s 26 richest people own as much as poorest 50%, says Oxfam

The data, released ahead of the 2019 World Economic Forum (WEF) meeting in Davos, Switzerland, showed the gap between richest and poorest continues to widen.

In 2015 it required the combined wealth of the world’s 80 richest people to match the wealth of the poorest half of the population. In 2010 that figure was at 388.

While the number of people living in extreme poverty halved between 1990 and 2010, Oxfam argued that had inequality not increased during that period an extra 200 million people would have escaped extreme poverty. That number could have increased to 700 million had the world’s poorest benefited more than the rich from economic growth, according to the charity’s research.

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“The estimates show that, regardless of the scenario, global poverty could increase for the first time since 1990,” it said, adding that this could throw some countries back to poverty levels last seen some three decades ago.

The report authors played through a number of scenarios, taking into account the World Bank’s various poverty lines – from extreme poverty, defined as living on $1.90 a day or less, to higher poverty lines of living on less than $5.50 a day.

Under the most serious scenario – a 20% contraction in income – the number of people living in extreme poverty would rise by 434 million people to 922 million worldwide. The same scenario would see the number of people living below the $5.50 a day threshold rise by 548 million people to nearly 4 billion.

Women are at more risk than men, as they are more likely to work in the informal economy with little or no employment rights.

“Living day to day, the poorest people do not have the ability to take time off work, or to stockpile provisions,” the report warned, adding that more than 2 billion informal sector workers worldwide had no access to sick pay.

The World Bank last week said poverty in East Asia and the Pacific region alone could increase by 11 million people if conditions worsened.

To help mitigate the impact, Oxfam proposed a six point action plan that would deliver cash grants and bailouts to people and businesses in need, and also called for debt cancellation, more IMF support, and increased aid. Taxing wealth, extraordinary profits, and speculative financial products would help raise the funds needed, Oxfam added.

Calls for debt relief have increased in recent weeks as the fallout from the COVID-19 pandemic has roiled developing nations around the world.

In total, governments around the world would need to mobilise at least $2.5 trillion to support developing nations.

“Rich countries have shown that at this time of crisis they can mobilise trillions of dollars to support their own economies,” the report said.

“Yet unless developing countries are also able to fight the health and economic impacts the crisis will continue and it will inflict even greater harm on all countries, rich and poor.”

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