The world is off-track to reduce poverty – World Bank in its review of 2024 key development challenges
By Amos Oladele
The World Bank has disclosed that despite decades of progress, ending extreme poverty everywhere by 2030 is out of reach.
The Bank makes the disclosure in its review of key development challenges in the outgoing year, 2024 published in its recent newsletter.
Opening words:
How the World is off-track to reduce poverty:
After several years of multiple, continuous shocks, the global economy is finally showing signs of stabilizing. Despite the grimmest predictions, the world managed to avoid a global recession this year.
However, while advanced economies have largely recovered, developing countries have yet to catch up. Low-income countries risk being left even further behind.
The world faces a harsh reality: despite decades of progress, ending extreme poverty everywhere by 2030 is out of reach. Amid anemic economic growth, the lasting effects of the COVID-19 pandemic, crushing debt burdens, and rising fragility and conflict, the pace of reducing global poverty has effectively stalled. Devastating climate shocks, and extreme weather threaten to slow or reverse progress even more.
As we close out the year, here are some of the most pressing development issues countries faced in 202 and how the World Bank Group is working with them to overcome these challenges.
Eradicating extreme poverty is decades out of reach:
Today, about 700 million people—or 8.5 percent of the global population—live in extreme poverty on less than $2.15 a day.
Around 3.5 billion people live on less than $6.85 a day, the poverty line more relevant for middle-income countries, which are home to three-quarters of the world’s population. Without drastic action, it could take decades to eradicate extreme poverty and more than a century to eliminate poverty as it is defined for nearly half of the world.
Global extreme poverty reduction has slowed to a near standstill, with 2020-30 set to be a lost decade.
Multidimensional poverty concentrated in lowest-income countries:
Poverty goes beyond a lack of income. It can also include insufficient access to education, health, electricity, or basic services such as safe drinking water or sanitation.
As of 2024, over one-third of people in countries eligible for support from the World Bank’s IDA and more than half of those in Sub-Saharan Africa are experiencing multidimensional poverty, highlighting how persistent development challenges remain.
Earlier this month, the global community came together to reaffirm their commitment to IDA, which offers concessional lending to 78 low-income countries.
The 21st replenishment of IDA raised $23.7 billion to boost development for these countries for 2025-28. Thanks to IDA’s unique leveraging model, this will generate $100 billion in affordable financing to help countries spur job growth, deliver better quality health care, improve education, expand electricity access, enhance food security and nutrition, and much more.
Climate Change impacts are wide reaching:
1.2 billion people around the world face life-changing risks from climate-related hazards, such as floods, heat waves, droughts or cyclones. Estimates from 103 countries, which make up 86 percent of the global population, show that 1.2 billion people are exposed to at least one climate-related hazard and are highly vulnerable on at least one dimension in 2021.
Driven by very high rates of exposure to heat waves, the population of South Asia has the highest exposure to climate shocks (almost 90 percent) and around 30 percent of the population is at high risk.
In Sub-Saharan Africa, around 40 percent of the population is exposed to climate shocks, and almost all of this population is considered at high risk.
The World Bank Group supports countries to protect communities from climate hazards, develop early warning systems, improve access to insurance for communities and businesses threatened by climate shocks, and establish health care systems for rapid crisis response.
We also help countries prepare for the low-carbon, resilient transition, enabling them to build climate-smart economies. In fiscal year 2024, we delivered a record $43 billion in climate finance and are channeling 45 percent of our annual financing to climate action by 2025. To provide policy makers with strategic recommendations to tackle climate issues, we have also published Country Climate and Development Reports covering nearly 70 economies.
Gender equality remains an unfulfilled aspiration:
Gender equality is not just a matter of fairness and justice, it is also essential for development. It is key to unlocking economic productivity, reducing poverty, deepening social cohesion, and enhancing the well-being and prosperity of current and future generations. Yet women continue to face barriers to achieving their full potential. In countries at all income levels, fewer women participate in the labor force than men. To make matters worse, the crises afflicting countries today often have disproportionate negative effects on women, girls, sexual and gender minorities, and other marginalized groups.
Globally, female labor force participation has remained relatively stagnant over the past three decades and significantly lower than that of males, except in high-income countries
Debt burdens are squeezing the poorest economies:
The COVID-19 pandemic sharply increased the debt burdens of all developing countries—and the subsequent surge in global interest rates has made it harder for many to regain their footing. At the end of 2023, the total external debt owed by low- and middle-income countries stood at a record $8.8 trillion, an 8 percent increase from 2020. Interest payments for developing countries surged by nearly a third to $406 billion, leaving countries with less funds to invest in critical areas such as health, education, and the environment.
To help tackle the growing debt crisis, we assess developing countries’ debt sustainability and bolster their debt transparency and management capacity. Since 2022, the World Bank and other multilateral institutions have invested nearly $51 billion more than we collected in debt-service payments from IDA-eligible economies, with the World Bank accounting for a third of that sum.
Debt levels for Low- and Middle-Income Countries (LMICs) hit a record US$8.8 trillion in 2023.
Developing countries growth slower than before COVID-19:
Global growth is expected to hold steady at 2.6 percent in 2024 before edging up to an average of 2.7 percent in 2025 and 2026. Although this is promising, it is still well below the 3.1 percent average in the decade before the COVID-19 pandemic. Developing economies were projected to grow 4 percent in 2024, slightly slower than in 2023. This means that between 2024 and 2026, countries that make up more than 80 percent of the world’s population and global gross domestic product would still be growing more slowly than they did in the decade before COVID-19.
Commodity prices will remain higher than pre-pandemic:
Global commodity prices are projected to plummet by nearly 10 percent from 2024 to 2026. Unfortunately, this will do little to alleviate the pain of high food prices in developing countries where food-price inflation remains high, double that of advanced economies. In general, overall commodity prices will remain 30 percent higher than in the five years before the COVID-19 pandemic.
The world is not business-ready
Countries do better at enacting regulations to improve the national business climate than they do in providing the public services needed to secure actual progress. All 50 economies assessed in the World Bank’s inaugural Business Ready 2024 report had implementation gaps that are hampering their business climate. They scored an average of 65.5 for the quality of their regulatory framework, meaning that, on average, economies are nearly two-thirds of the way to being business-ready in this area. But they scored just 49.7 for their public services, indicating that they are only half as ready as they should be.
The world is about two-thirds business ready on the quality of business regulations and only half business ready when it comes to the efficiency of public services for the private sector.
Data gaps are hindering children’s well-being
Countries lack crucial data on issues that directly impact the well-being and future potential of children, from birth registry and early childhood development to access to education and mental health.
Over 40 percent of births are not registered in more than half of Sub-Saharan African countries, and more than half of all countries lack comparable data on children’s basic reading proficiency. These data gaps are more acute in regions with the largest lending portfolios in World Bank operations.
Without quality data, countries cannot fully understand the root causes of systemic childhood deprivation or address these issues. The result? Millions of children around the world could remain stuck in the cycle of poverty for generations to come.
This is why the World Bank is working to fill these key data gaps. We are scaling up financial and technical support to strengthen countries’ data and statistical systems and enabling the production of a “minimum data package for children, adolescents, and youth.” These data will help power new policy making, service delivery, and development impact to help ensure that all children have the chance to rise to their potential.
Looking ahead:
To quote Ajay Banga (President of the World Bank Group), “Forecasts are not destiny. You can change destiny, but you have to work at it”. We are not naïve to the challenge and this is the beginning of a long journey. We need urgent, collective action to get back on track and achieve our goals of ending extreme poverty and boosting shared prosperity on a livable planet by 2030. Countries must promote green, inclusive, and sustainable economic growth to tackle the intertwined global challenges and jumpstart progress. This will mean creating more opportunities for women and youth, boosting climate mitigation and adaptation, and revitalizing international cooperation and financing for development.
The World Bank Group stands with countries to support these efforts. This is where our heart lies: helping nations emerge from less fortunate circumstances to enable people to reach their full potential. Our mission demands unwavering endurance—an insatiable will to keep pushing forward through time, setbacks, and challenges.
In 2024, we announced new targets and initiatives, including M300, our goal to deliver electricity to 300 million Africans by 2030 with the African Development Bank. We also committed to scale up social protection programs for 500 million people, support countries in delivering quality, affordable health services to 1.5 billion people by 2030, and launch an ecosystem approach for agribusiness. Other steps include new financial instruments to increase lending capacity, a new World Bank Group Guarantee Platform to boost our annual guarantee issuance to $20 billion by 2030, and a new World Bank Group Corporate Scorecard, a cornerstone of our efforts for greater efficiency, impact, and results. And to close the year, we achieved a robust IDA replenishment, which will enable life-changing investments for hundreds of millions of people in the poorest countries.
This is the way of the future to help us best address today’s development challenges and those of tomorrow.
RECOMMENDED ARTICLES
Comment
No comments found.