Coronavirus pandemic could push half a billion people into poverty, Oxfam warns

More than 500 million people could fall into poverty as a result of economic damage from the coronavirus pandemic, Oxfam has warned.

Due to the far-reaching and draconian containment measures that have brought much of the world to a standstill, the charity has said that the subsequent economic slowdown will see poverty rise globally for the first time in 30 years.

The analysis, conducted by King’s College London and the Australian National University, concluded that countries in sub-Saharan Africa, north Africa and the Middle East would be worst affected.

“It looks like decades’ worth of progress on global poverty could evaporate,” Andy Sumner, co-author of the study and an international development professor at King’s College London, told the The Independent.

“Some regions are set to be pushed back by 30 years.”

The report warned that by the time the pandemic has passed, more than half of the world’s population could be living in poverty.

It used data from the World Bank to model different scenarios of consumption and income contraction, measuring the effects of reduced amounts of money being spent in economies at three poverty levels – $1.90 (£1.53), $3.20 (£2.58) and $5.50 (£4.43) per day.

It estimates that a 20 per cent drop in income as a result of recession caused by Covid-19 would push an additional 548 million people below the $5.50 line.

Professor Sumner said that with so many of the world’s poorest people working in the informal sector, the pandemic is set to usher in severe economic hardships for these individuals.

“If you imagine the kind of lockdowns we’ve had in the UK, in a developing country you’ll have millions of informal sector workers leaving Delhi or Mumbai, for example, to go back to villages,” said Professor Sumner. “These people will have virtually no income during this period.

“Even in our worst-case scenario, reality could be much worse for them.”

Last month, Human Rights Watch warned that a lockdown in India, home to one of the world’s largest informal sectors, could exacerbate hunger and homelessness across the country, with thousands of people left unable to work.

The findings come ahead of key virtual meetings to be held by the World Bank, International Monetary Fund and G20 finance ministers next week, in which plans to offer debt relief to the world’s poorest countries will be discussed.

The report says the potential impact of the virus poses a real challenge to the United Nations’ goal of ending global poverty by 2030.

“The world has these goals to ending poverty and ensuring the provision of universal health care, but the discussions about financing this have completely disappeared off the radar, so maybe it’s time to bring those broader aspirations about ending poverty back into the debate,” said Prof Sumner.

“Understandably at the moment, people are very focused on what’s going on in their country, but actually there’s a need for global collective action.

“These kind of crises can open up a space for wider thought on global policy. In a year or two’s time, when the crisis has passed, that space might remain open to think more boldly about how to reduce poverty around the world.”

Oxfam has called for an emergency rescue package that would enable poor countries to provide cash grants to those who have lost their income and to bail out vulnerable small businesses.

The charity said funding could be released by the “immediate cancellation of $1 trillion worth of developing country debt payments” and the creation of at least $1 trillion (£800 billion) in special drawing rights – a form of international currency that can be used to help struggling countries.

The UN, which last month launched a £1.5bn global humanitarian response to fight Covid-19 in developing countries, says nearly half of all jobs in Africa could be lost as a result of the pandemic.

David Miliband, CEO and president of the International Rescue Committee, told The Independent: “This is a political problem more than an economics problem, and the lesson of the last few weeks is not that we have not run out of money, but, if you need it, you can find it.

“The cost of intervention now, in the poorest countries in the world will be much less than the cost of letting the disease run rampant.”

Ana Arendar, head of Inequality Campaigns at Oxfam, said: “Oxfam is working with church groups, community organisations, NGOs and others to hold governments to account and make sure they do the right thing.

“It is revealing that what truly matters is human lives and the incredible power of solidarity and collective action, led by governments. Though while governments have started to act decisively domestically, international solidarity has yet to materialise on a grand scale.”