Poverty in Ethiopia – Arithmetic fairytale

How an interim report about poverty alarmingly omits the poor from its index and declares a decline in poverty.

 Hone Mandefro

 With the start of the new millennium in the year 2000, the World Bank and IMF replaced the decades-old Structural Adjustment Programs with Poverty Reduction Strategy Papers (PRSP) as the basis for their lending. It was part of the effort to mitigate the negative consequences of poverty reduction policies in countries struggling to sustain a sound economic development.

Since then more than a dozen developing countries have written different rounds of poverty reduction strategy papers followed by monitoring and evaluation system of their implementations.

In the past few years Ethiopia too has published various reports on poverty reduction outcomes of its Poverty Reduction Strategy Paper (PRSP) – now renamed Plan for Accelerated and Sustainable Development to End Poverty (PASDEP).

In the second half of March 2012, Ethiopia has released a new interim poverty analysis report intended to highlight major findings of the 2010/11 poverty analysis. The final finding of this interim report is scheduled to come “in few months” but few expect the confusing and bold statements made in the interim report to get any clearer than they already are.

Financed by the Ministry of Finance and Economic Development (MoFED), the report was announced in the presence of big party wigs including First Lady Azeb Mesfin, but the minister of MoFED, Sufian Ahmed, was conspicuously absent.

When statistics is a myth

According to the report, the 2010/11 poverty analysis was based on a survey conducted on 27,830 households (less than 0.0004 % of the total population), sampled from all urban and rural areas throughout the country except for three zones in the Afar and six in the Somali regions, which are termed “non sedentary.”

Since the release of the interim report, which declared a decline in poverty, public debates are raging on whether the practical basis of the survey were legitimate enough to represent a country of more than 80 million people.

The general feeling of the public, particularly in towns and cities, is that the cost of living has increased dramatically: many people see themselves poorer and more vulnerable than in the past, and countless households have been pushed into poverty.

The high cost of living as a result of soaring inflations, which in Ethiopian case have reached a staggering 40% only a few months ago, are often obtained from dialogues with ordinary people than quantitative based empirical studies that has sampled less than 0.0004 % of the total population, although that too is essential, according to an economist at the Addis Ababa University.

The interim report has instead claimed that overall poverty in Ethiopia has declined from 38.7% in 2004/5 to 29.6% in 2010/11. The report also indicated that, unlike in most other developing countries, urban poverty (25.7 %) and rural poverty (30.4%) are not significantly different from one another.

Many independent research projects have in the past been reporting that the perception of declining income inequality as a result of a supposed economic growth has shadowed the real poverty reduction efforts in Ethiopia.

A research by Almayehu Fekadu of Haromaya University, for example, claims that the national difference of income as measured in terms of Gini Coefficient has declined from 0.44 in 2004/05 to 0.37 in 2010/11 and reported “urban inequality has declined substantially” in the past five years.  The report attributed the cause to the “pro-poor development endeavors” including “urban infrastructural development, promotion of labor intensive activities, credit and business promotion activities, and the distribution of subsidized basic food items to urban poor in times of crisis”.

Other economists interpret it differently. For starters, there is no viable income redistribution program in Ethiopia, and the low coefficient means that a considerable proportion of people in rural areas live dangerously close to the poverty line with significant risks of falling below at any given time because of common problems such as low rainfall and crop failures.

Methodological err?

“Household surveys tend to underestimate average levels of consumption (in international purchasing power parity terms), especially in the poorest countries, and therefore systematically underestimate poverty levels, most notably in sub-Saharan Africa,” writes Stephen Devereux and Kay Sharp of the Institute of Development studies at University of Essex.

In Ethiopia poverty estimates based on the levels of current consumption are heavily determined by a range of variables: rainfall, harvesting seasons and times when food-aid deliveries reach their peak seasons are just some of them. During the main rainy season, between June and October, food is scarce amongst both the urban and rural poor. These seasonal factors show the importance of timing in data collection. However, there is nothing to indicate this variable in the interim report.

In addition, the 2010/11 poverty analysis data was collected from households systematically selected from a list of households. However, “such a sampling frame misses an important social group from the point of view of poverty measurement: the homeless, a group whose ranks are swelling in most, particularly large, urban centers in Ethiopia,” say Arne Bigsten from Göteborg University and his colleagues from the Addis Ababa University Economics department.

Not much faith can be placed in the data collected from Somali and Afar regions too as the survey excluded nine zones from both. The zones excluded are pastoralist zones where the level of poverty is simply overwhelming. This is an endemic tendency of over-generalization in most of Ethiopian poverty analysis endeavors, both public and independent. This one is not different either.

 Are all poor the same?

Researches of poverty analysis in Ethiopia indicate poverty among pastoralists is more severe than among agriculturalists.  According to a study paper by prominent social anthropologists Philip Beven and Alula Pankhurst, “pastoralists and agro-pastoralists make up nearly 15 % of Ethiopia’s total population and are among the poorest and most vulnerable rural people in the country”.

Excluding Somali and Afar pastoralists is a significant inaccuracy.

There is one missing variable too: gender, which is frequently cited in many countries’ poverty analysis reports as the most important variable. After all, poverty is not gender-neutral and Ethiopia is a country where widespread gender-based prejudice and discrimination is prevalent resulting in more severe poverty amongst women than men. Arne Bigsten confirms that “compared to male-headed households, female-headed households face an 8.9% higher probability of being poor in rural areas”.

Given the above points it is perfectly safe to conclude that the interim report, intended to provide baseline data for poverty reduction planners who want to know who the poor in discussion are, is disappointingly limited in the amount of information it supplies.