Poverty line raised in updated World Bank scale

Beggar

A beggar asks for alms from motorists on Uhuru Highway in Nairobi on March 23, 2021.

Photo credit: Francis Nderitu | Nation Media Group

What you need to know:

Prices of goods have continued to skyrocket with households spending more to meet their daily needs.

Kenya’s poverty rate is projected to drop to a five-year low in 2023 thanks to better weather and export growth.

The World Bank is set to raise the international poverty line for the first time in seven years, a move that could throw more Kenyans into the category of those living in extremely poor conditions.

World Bank has announced it is set to raise the global poverty line from the current $1.90 (Sh220) per day to $2.15 (Sh249) per day to reflect the rising cost of living across the globe that has seen individuals pay more for the same quantity of goods.

This means that individuals who will be spending Sh249 or less daily will now be classified as living in extreme poverty, up from the current Sh220 after the lender set new purchasing power parities (PPPs) using product prices collected in 2017.

This is the first adjustment of the key rate, which tracks the progress of the fight for the eradication of poverty across the globe, since 2015 when the current poverty line was set.

“In fall 2022, the World Bank will switch to using the 2017 PPPs for its global poverty numbers. This follows the 2020 release of a new set of PPPs based on prices collected in 2017 by the International Comparison Programme,” said World Bank.

“As a result, the international poverty line will be $2.15. This means that everyone living on less than this amount per day will be considered in extreme poverty,” it said.

Prices of goods have continued to skyrocket with households spending more to meet their daily needs.
Nonetheless, Kenya’s poverty rate is projected to drop to a five-year low in 2023 thanks to better weather and export growth, the World Bank said.

It said that with GDP growth projected to average 5.2 percent over the 2022-2024 window, growth in real per capita incomes will help reverse the rising poverty rates caused by the Covid-19 pandemic.

World Bank projects that Kenya’s poverty will fall to 33.4 percent in 2022, below the pre-crisis level of 34.4 percent in 2019.

“Kenya’s economy was severely disrupted by the Covid-19 shock but it has staged a strong recovery, and the poverty rate is projected to fall below its pre-pandemic level in 2022,” the World Bank said in its latest outlook report.