MONTREAL — Ending poverty is an elusive goal at the best of times, let alone when the global economy is fragile and governments everywhere are cutting back on spending.
But World Bank president Jim Yong Kim says a lot of progress has already been made. The share of the world’s population living in extreme poverty has declined to 20 per cent from 40 per cent over the last 20 years.
That momentum will be hard to slow down, Kim said Tuesday at the Conférence de Montreal, an international economic forum being held this week.
“We have a target of ending poverty by 2030 and boosting the share of prosperity, which means we will be tracking the income growth of the bottom 40 per cent of the population,” he told a news conference.
The World Bank defines extreme poverty as income below $1.25 a day. Some have argued that the threshold is too low but Kim said: “The fact is that 1.2 billion people still live on $1.25 per day.
“It’s not that we’re going to celebrate if every one starts making $1.26. But if we do the right things, they are going to have not just jobs but health care. There are so many things we can do to lift them out of poverty.”
Kim is a physician by training and an international activist who has worked to improve health care in some of the world’s poorest nations. His experience has helped him understand the crucial role of the private sector.
Around the world, governments are devoting about $125 billion a year to official development assistance but that figure pales against the enormous need for jobs, energy and infrastructure.
“If you look at India, it still has 400 million people living in extreme poverty. It projects it will have a $1-billion infrastructure deficit over the next five years. So all the official development assistance in the world won’t even meet India’s needs.”
If you add in the other big developing countries, the total infrastructure deficit is $4.5 billion dollars and growing.
“In order to get there we are going to be extremely realistic about the sources of income growth and job creation,” Kim said. “Our studies show that 70 per cent of poverty reduction comes from economic growth.”
Kim said his goal is to make sure that official development assistance is used “in the most efficient and strategic way” to leverage private dollars. And he sees an extraordinary opportunity right now. “There is so much private cash sitting on the sidelines.”
Half of global growth currently comes from the developing world so the profit opportunities are clear.
For proof that the private sector can make a key difference, he cited Haiti, where a group of entrepreneurs used an investment from an arm of the World Bank to build an electric company called E-Power on the outskirts of the notorious slum known as Cité Soleil.
Electricity supply was spotty at best and costs were much higher than in North America. But E-Power used the investment to scale up. And despite the devastating earthquake that struck Haiti, it managed to increase the supply of electricity in the capital Port-au-Prince by 35 per cent while cutting electric costs by 50 per cent.
“We understand that these are very difficult times for our donor countries,” Kim said. “On the other hand we are trying to make the point that an investment in our concessional loans for the poorest will help because we are doing so much right now to leverage it.”
One of the places where such funding goes is Afghanistan, another Mali. He makes the point that aid is going to trouble spots that can affect global political stability.
“We have been great promoters of what are called conditional cash transfer programs where money is given directly to the poorest people. But it’s linked so that if you want to get next month’s tranche you have to keep your kids in school and there has to be some public health training.
“You can have GDP growth but if young people and women and the marginalized groups are not participating ... you are building instability into your society.
“We want to send the message that the best kind of growth is inclusive growth.”