Poverty Factsheet

PDF Version of Factsheet (176 kb)

Millennium Development Goal 1: To eradicate extreme poverty and

• Target 1: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day.

Key messages

• Extreme poverty is defined as having to live on less than $1 a day. If the proportion of people whose income is less than $1 a day was halved, it would reduce the number of people living in extreme poverty from £1.2 billion in 1990 to 890 million in 2015.
• Globally, the number of people living in extreme poverty is falling, but there are large variations in progress between regions. Asia is making good progress, but there is little movement elsewhere and sub-Saharan Africa is going backwards.
• Economic growth is a necessary condition for poverty reduction. The countries that have seen the greatest progress in income poverty reduction have been those with the strongest growth rates.
• Growth is not just essential for reducing income poverty, but also for reaching the other Millennium Development Goal targets. Growth enables governments to fund more basic social services, it affects the extent of economic discrimination against women and also the extent to which poor people are either exploited or empowered in the economic, social and political arenas.

Facts and figures:

• In 1990, 28% of the developing country population lived in extreme poverty. By 2000, it had fallen to 22%.
• East Asia has already cut its poverty rate in half and South Asia is making good progress.
• In sub-Saharan Africa, the proportion in extreme poverty has risen slightly from 47% in 1990 to 49% in 2000.
• In sub-Saharan Africa, the average per capita growth rate over the 1990s was –0.2%. In East Asia, it was 6.4%

Are we on track to meet the target?

Provided economic growth remains on track it is anticipated that 12.5% of the world’s population will be in poverty in 2015, achieving the target.

Obstacles to improvement

Economic growth is a necessary condition for poverty reduction. However, economies can only thrive in countries where there is peace, stability and good governance. Beyond that, developing countries need to have more private investment from domestic and foreign sources and more diversity in their export and agricultural production to protect them against adverse price and weather shocks. They also need to have greater access to international markets - which means reducing or removing unfair tariffs and subsidies - and more, high-quality infrastructure for transport and communications.

Creating more wealth by encouraging economic growth is half of the equation. But poverty reduction depends upon wealth being shared out more fairly. The huge inequalities between the rich and poor in developing countries, where the vast majority of assets and income is concentrated in very few hands, is an enormous obstacle to reducing poverty.

Progress - What DFID is doing to help

DFID is trying to develop a better understanding of the linkages between growth and poverty reduction and identify ways to better promote the type of growth that the poor participate in and benefit from.

We are working with the International Monetary Fund (IMF) and the World Bank to improve understanding and analysis of the poverty and social impacts of major economic reforms, and to support better poverty monitoring.

DFID is providing money and expertise to support the development and implementation of country-led poverty reduction strategies in developing countries. This should lead to the creation of comprehensive and coherent poverty reduction plans that make the best use of the available government and donor resources.

What the international community is doing to help

Governments and multilateral institutions such as the World Health Organisation, OECD, the World Bank and the International Monetary Fund are working together to encourage economic growth and ensure that the benefits of this growth trickle down to the poor.

Case studies

The ComMark Trust: The ComMark Trust, funded by DFID, supports and promotes policies and institutional and operational initiatives to help develop and improve the way the commodity and service markets work in Southern Africa to benefit the poor.

ComMark is focusing on the key sub-sectors that clearly have the potential to make the biggest impact on pro-poor growth and poverty reduction. Within these sectors, ComMark will identify those areas where the market is failing. Failing markets prevents the economy from growing and makes it much harder to share the wealth that is being created with a nation’s poor.

The FinMark Trust: The FinMark Trust was established in March 2002 with initial funding of £5 million from DFID. It is an independent trust whose business is controlled by five trustees from countries in Southern Africa. The trust’s mission is summarised as "Making financial markets work for the poor". In pursuit of this objective, the FinMark Trust aims to promote and support policy and institutional development towards the objective of increasing access to financial services by the un- and under-banked of southern Africa (South Africa, Botswana, Lesotho, Swaziland and Namibia.)