Oxfam, a confederation of charitable
organizations focused on the alleviation of global poverty, recently released a
report with a rather disturbing statistic. In ‘An economy for the 99 percent,’
they revealed that just 8 men owned as much as the poorest 3.6 billion people
on the planet. These eight, the report claims, are a symptom of growing income
inequality in the world, and an obstacle to poverty alleviation. In order of
wealth, they are: Bill Gates, Microsoft founder; Amancio Ortega, founder of
fashion house Inditex; Warren Buffett, financier; Carlos Slim Helu, Mexican
business magnate; Jeff Bezos, Amazon boss; Mark Zuckerberg, Facebook creator;
Larry Ellison, Oracle founder; and Michael Bloomberg, former mayor of New York.
And yet… global poverty continues to
decline despite these individuals’ massive wealth. In the last 25 years, the
share of the world population that lives in extreme poverty (defined as less
than US$ 1.90 per day) has declined from 35% in 1990 to just 10.7% today. Even
sub-Saharan Africa has its share decline from a peak of 58.4% in 1993 to 41%
today. Globally, the number of people living in extreme poverty has decreased
from 1.85 billion in 1990, to just 766 million today – in 25 years, over 1
billion people have been lifted out of extreme poverty.
The numbers show that a large number of
those are, however, still in Africa. Those is extreme poverty are 383 Million
in Africa, 327 Million in Asia, 19 Million in South America, 13 Million in
North America, 2.5 Million in Oceania and 0.7 Million in Europe. But how many
of these are in Namibia? Luckily, the Namibia Statistics Agency is on the case,
and conducted a Namibia Household Income and Expenditure Survey in 2015/20-16,
to update their 2009/2010 one. And they have released their preliminary Key
Poverty Indicators.
In order to measure poverty, they
established three different poverty lines. The food poverty line is defined as
those persons unable to purchase enough food to sustain themselves, i.e. unable
to buy 2100 calories worth of food each day. This was calculated to cost N$
293.10 per month. In 2003, this meant 9% of the population, or 163 000 people
in Namibia, lived below this line. Since then, this number has reduced to 5.8%
of the population, or 31 000 people less.
Then there’s the extreme poverty line, i.e.
those living on less than N$ 389.30 per month. This measure by nature includes
the food poverty line. In 2003, this amounted to 21.9% of the population, or
398 000 people in Namibia. By now, that has been reduced to 11% of the
population, or about 147 000 people no longer living in extreme poverty!
Finally, we come to the standard poverty
line – those people defined as being simply poor. This is defined as living on
less than N$ 520.80 per month. In 2003, this amounted to a staggering 37.7% of
the population – 685 000 people. Now, however, this has been reduced to a mere
18% of the population – a reduction of almost 275 000 people no longer living
in poverty!
Clearly, the Namibian government has done
an outstanding job in reducing poverty here at home. Still, that 18% is quite a
sizable 410 000 people in our country. We still have some ways to go, hence the
Harambee Prosperity Plan. But what about that income inequality? Well, last
time it was measured in 2009/2010, our Gini Coefficient had been reduced to
59.7 – we were no longer the country with the most unequal distribution of
income in the world, and moved down to sixth place. There was much room for
improvement, and improve we did. The latest figures show our Gini Coefficient
down further, to 57.2. This means we’re now tenth in the world! We’ve moved up
to better than Zambia!
Well, with so much improvement, why then
the alarmist nature of the Oxfam report? Perhaps it is because while the world
certainly has improved for those living in developing countries, income
inequality has increased among the developed nations of the world, and they are
feeling the squeeze on the middle class there. In fact, while there were
significant real income gains over the past 15 years for those from the bottom
of the income distribution to the 80th percentile, those from the 80th
percentile to the 95th received no gains at all – and that’s where
the Developed middle class find themselves.
It is also a fact that humans are wired to
pay way more attention to negative news than positive news – hence why I’ve
seen little about the Key Poverty Indicators of Namibia over the past month.
Media tends to focus on the negative news in order to attract eyeballs – and
that’s not a balanced view of the world. On every day in the last 25 years
there could have been a newspaper headline saying “The number of people in
extreme poverty fell by 137,000 since yesterday”.
For example, Oxfam failed to mention that
five of those eight richest people have signed The Giving Pledge, Bill Gates
(co-founder), Warren Buffett (co-founder), Mark Zuckerberg, Larry Ellison, and
Michael Bloomberg. That pledges them to commit more than half of their wealth
to philanthropy. The total commitments under the pledge is already US$ 732
billion.
Two-thirds of the poverty reduction over
the past two decades have come from economic growth. As Mr Buffet said, “In my entire lifetime, everything that I’ve
spent will be quite a bit less than 1 percent of everything I make. The other
99 percent plus will go to others because it has no utility to me. So it’s
silly for me to not transfer that utility to people who can use it.” It is
time we harness the knowledge and experience of those who know how to create
wealth if we want to create the growth required to do it. They seem to stand
ready to help the world do just that.
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