Recently, the World Bank Group released the 2020 Ethiopia Poverty Assessment: Harnessing Continued Growth for Accelerated Poverty Reduction. One of the sub topics of the first chapter, 2011-2016: Continued Growth and Poverty Reduction is Gains in non-monetary dimensions of welfare.
Using 2016, the date of the most recent survey on poverty and living standards, this sub-topic stated that trends in non-monetary indicators of living standards largely confirm the reduction in poverty. Between 2011 and 2016, ownership of durables increased, housing quality modestly improved, and more people gained access to an improved water source. Human development indicators improved as well though most remain low. In 2016, only one in three youth in the 15-24 age-cohort had completed primary education.
The growth in household consumption between 2011 and 2016 was accompanied by improvements in non-monetary dimensions of welfare. The share of households with a television, mobile phone, refrigerator, animal cart, and motorcycle increased, often from a low base, as did the use of improved housing materials and access to electricity. In 2016, 61 percent of Ethiopian households lived in a house with an improved roof (defined as a finished roof: Corrugated iron, wood, cement fiber, ceramic tiles, cement, roofing shingles), up from 47 percent in 2011. Having improved walls (cement, stone with cement, bricks, cement blocks, covered adobe, wood planks/shingles) remains however rare. Access to electricity increased from 23 percent in 2011 to 26 percent in 2016.
Access to improved water improved as well. In 2016, 35 percent of Ethiopians used an unimproved water source, down from 46 percent in 2011. The type of sanitation used changed too, though unimproved toilet facilities remain the norm (the use of improved pit latrines remained unchanged at about 11 percent). A third of households still do not use any toilet facility.
Human development indicators followed the overall positive trend. Delivery in a health facility sharply increased from a low base, the share of fully immunized children increased by 14 percentage points, and stunting rates decreased from 44 percent in 2011 to 38 percent in 2016. Infant and child mortality rates decreased accordingly. Net enrolment in primary school increased, more children are completing primary school, and gross enrolment in secondary school was higher in 2016 than in 2011.
Despite the sharp improvements, human development indicators in Ethiopia remained low. In 2016, only 26 percent of births happened in a health facility (in the five years preceding the survey) and less than 40 percent of children had received
all basic vaccinations. Only one in three children 15-24-years-old had completed primary school, and over 25 percent of age-eligible children were not in school. As a result, Ethiopia ranks relatively low on the Human
Capital Index.
The Human Capital Index (HCI) is designed to capture the amount of human capital a child born today could expect to attain by age 18. The HCI has three components: (i) Survival, measured by the under-five mortality rate; (ii) Expected years of learning-adjusted school, measured by the quantity of education a child can expect to attain by age 18, corrected by a measure of learning quality-proxied by student achievement tests; and (iii) Health, measured by the stunting rate of children under five and the probability of a 15-year-old surviving until age 60. The health and education components of the index are combined in a way that reflects their contribution to worker productivity, based on evidence from rigorous micro-econometric empirical studies. The resulting index ranges between 0 and 1. A country in which a child born today can expect to achieve both full health (no stunting and 100 percent adult survival) and full education potential (14 years of high-quality school by age 18) will score a value of 1 on the index. Therefore, a score of, for instance, 0.5 signals that the productivity as a future worker for a child born today is 50 percent below what could have been achieved with complete education and full health.
Given the strong correlation between per capita GDP and human capital, low-income countries tend to score poorly on the HCI. Ethiopia is no exception. With a HCI of 0.38, Ethiopian children born today can expect, as future workers, to attain 38 percent of their potential productivity. With a score of 0.38, Ethiopia ranks 135th out of 157 countries. Relative to the comparator countries, Ethiopia scores at par with Uganda, better than Mozambique (0.36) and Rwanda (0.37), and worse than Tanzania (0.40) and Myanmar (0.47). Relative to its overall rank (135), Ethiopia
scores lower on learning-adjusted years of school (4.5 years) and share of children not stunted (62 percent). Ethiopia however over performs relative to its income level: Given GDP per capita, the human capital index in Ethiopia is higher what would be expected, reflecting the Government’s large investments in the health and education sectors.
To summarize, the evolution of asset and human capital indicators corroborate the poverty and consumption dynamics set out earlier. Between 2011 and 2016, household consumption levels increased, asset holdings increased, and physical housing conditions modestly improved. Indicators of child health improved substantially and access to education broadened from a low base.
Meanwhile, quoting the same assessment, Modern Diplomacy reported that poverty reduction in Ethiopia continued despite adverse climatic conditions, with the share of the population below the national poverty line decreasing from 30 percent in 2010/11 to 24 percent in 2015/16. Though the report was finalized before the current COVID-19 (coronavirus) crisis, its results can inform the design of interventions to cushion the impact of the pandemic on low-income households.
Sustained rapid economic growth in Ethiopia translated into strong poverty reduction in urban areas, with the poverty rate tumbling by 11 percentage points, from 26 percent in 2010/11 to 15 percent in 2015/16. In rural areas of Ethiopia, the reduction in poverty was relatively slow with the poverty rate decreasing by four percentage points from 30 percent in 2010/11 to 26 percent in 2015/16.
Agricultural growth, improvements in access to markets, and the flagship rural Productive Safety Net Program (PSNP) were important drivers of rural poverty reduction over the period 2010/11-2015/16. The report finds that the contribution of the PSNP to poverty reduction could further be enhanced by better aligning needs with beneficiary numbers, improving geographical targeting, and harmonizing the different food security programs and interventions. Strong poverty reduction in urban areas was tightly linked to positive labor market developments over the period, in particular increasing returns to self-employment. More than half of the urban poverty reduction took place in small and medium towns. These towns are however lagging on infrastructure and significant investments will be needed to prepare these towns for their projected rapid growth.
“While the poverty assessment paints a positive picture of Ethiopia’s poverty reduction record, it highlights two areas of concern,” said Carolyn Turk, World Bank Country Director for Ethiopia, Eritrea, Sudan and South Sudan. “First, the poorest 10% of the population have not experienced real consumption growth between 2005 and 2016, suggesting that economic growth has so far eluded the poorest. Second, access to important opportunities such as education and clean water is highly skewed, with children in rural areas being far less likely to complete primary school or progress to secondary education compared to similar children in urban areas. If left unaddressed, this inequality of opportunity can translate into higher economic inequality for the future generation, negatively affecting inclusive growth.”
While the report stresses that further agricultural growth will remain the principal vehicle of poverty reduction over the short-term, the contribution of urban areas to poverty reduction is increasing and is projected to continue to do so.
“Ethiopia’s urban population will be more than double in the coming 15 years,” said Tom Bundervoet, World Bank Senior Economist and co-author of the report. “Much of this increase is projected to happen in small and medium towns, which have the potential to provide employment opportunities to the surrounding rural populations. Extending the benefits of growth to the poorest Ethiopians will be a key challenge going forward and will require concerted efforts to improve human capital accumulation of the rural poor.”
The Ethiopian Herald April 30/2012
By STAFF REPORTER
