POVERTY IN NEPAL: CHARACTERISTICS, STRATEGIES

AND CHALLENGES

Trilochan Pokharel, NASC, tpokharel@nasc.org.np

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Objectives

explain the concept of poverty examine the characteristics of poverty describe the poverty reduction strategy in

Nepal discuss policy gaps

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Session content

Understanding poverty Characteristics of poverty Poverty reduction strategy in Nepal Policy gaps

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Story about poverty

Who are poor? Why are they poor? Difference between poor and poverty? What are the characteristics of poverty? What can be done to reduce poverty?

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Story…

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1 million death Period 1973-1977 Cause – famine

Lack of entitlementsAmartya Sen, 1981, Poverty and Famines: An Essay on Entitlement and Deprivation.

Why people die in famine? – Amartya Sen

Bangladesh

Famine

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Which line we travel? PROTECTIVECapabilities,

enabling people to with stand

•economic shocks•natural disasters•conflicts

ECONOMICCapabilities to•earn income•consume•have assets

POLITICALCapabilities including•human rights •voice•political freedom•participation

HUMANCapabilities based on

•health•education•nutrition•shelter

SOCIO-CULTURALCapabilities concerning•dignity•valued membership society•social status

GENDER

GOVERNANCE

Source: www.poverty-wellbeing.net

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Is this the difference?

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Understanding poverty

If poverty were deprivation, the questions are: Yet deprivation of WHAT? By how much? Over what time period? Whose? A country, region, village,

family individual.

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Understanding poverty

Money metric (conventional approach) World Bank's $1 ($1.25 since 2005) and $2

concept NLSS 's poverty line

Capability approach (Human Development- Amartya Sen)

Social exclusion approach Participatory approaches (Robert

Chambers)

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Convergence in poverty measurement (Nepal)

1996 2003 20100

1020304050607080

Poverty headcount ratio at $1.25 a day (PPP) (% of popu-lation)National Poverty Line ($0.6 a day)

Source: World Bank, 2013

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But…

1996 2003 20100

10

20

30

40

50

60

70

80

90

100

Poverty headcount ratio at $1.25 a day (PPP) (% of population)National Poverty Line ($0.6 a day)Poverty headcount ratio at $2 a day (PPP) (% of population)Source: World Bank, 2013

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Poverty Measurement in Nepal (2010/11)...

Food - NRs. 11,929 Non food - NRs. 7,332 Total- NRs. 19,261 Average calorie required - 2,220 cl

Source: CBS, 2011

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% pop below poverty line

1995-96 2003-04 2010-110

5

10

15

20

25

30

35

40

45

50

42

31

25.1622

10

15.46

43

35

27.43 NepalUrbanRural

Source: CBS, 2011

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Progress made so far...

Source: CBS, 2011

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Gini coefficient

1992/93 2003/04 2010/110.2

0.3

0.4

0.5

0.34

0.41

0.330000000000002

Source: CBS, 2011

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Share of Income (%)

Fifth (Richest)

20%

Fourth 20% Third 20% Second 20%

Lowest (Poorest)

20%

0

10

20

30

40

50

60

1996 2003 2010Source: World Bank, 2013

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Per capita consumption deciles (in NRs.)

1995/96 2003/04 2010/11 0

20000

40000

60000

80000

100000

120000

All Nepal Poorest (First) Fifth Richest (Tenth)

Source: CBS, 2011

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% of hh receiving remittance

1995/96 2003/04 2010/11 0

10

20

30

40

50

60

23.4

31.9

55.8

Source: CBS, 2011

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% of GDPCountry name

2009 2010 2011 2012

Tajikistan 35.1(47.2) 40.9 46.9 47.5

Kyrgyz Republic

20.9 26.4 27.6 30.8 (38.0)

Nepal 23.1 21.7 (25.2) 22.4 25.0

Moldova 22 (26.3) 23.3 22.8 24.5

Lesotho 32.1 28 26.1 23.8

Samoa 23.8 21.3 22 23.2

Bermuda 23.2 22 22.6 21.8

Armenia 8.8 10.7 19.7 21.3 (32.4)

Haiti 20.9 22.3 20.6 20.4 (58.7)

Source: World Bank, 2013

Figures in parenthesis are percentage of population below national poverty line in respective year.

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Live example

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Utilization of remittances

Daily Consump-tion ; 78.9

Repay loans ; 7.1

Household Property ; 4.5

Education ; 3.5 Capital Formation ; 2.4

Source: CBS, 2011

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Poverty reduction strategies

Ninth Plan (1997-2002) poverty alleviation as its main objective and

interlinked with development sectors reduced poverty from 42.0 (1996) to 30.8 (2003)

Tenth Plan (2002-2007) poverty alleviation by mobilizing the means and

resources, through the mutual participation of the government, local agencies, NGOs, private sector and civil society, to extend economic opportunities and open new environment that enlarge employment opportunities

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Poverty reduction strategy paper (PRSP)

Four pillars of Tenth Plan/ PRSP High, sustainable, broad based economic

growth Social sector development including human

development Targeted programme including social

inclusion Good governance

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Three Year Plan (2013/14-2015/16)

Objective

Reduce population below poverty line to 18 percent

Strategies

1. Increase productive employment and opportunities2. Emphasize on capacity development, productivity,

distributive justice and equitable development3. Coordinate poverty reduction programmes

organized by different sectors and organizations4. Implement demand based targeted programme

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Big questions

What have made contributions to poverty reduction? Government policy interventions? NGOs intervention? Market? Labour migration? Anything other?

Reaching the bottom of pyramid? Decomposed analysis? Targeting the targets?

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Policy gaps

Poverty reduction and employment Mainstreaming poverty reduction

programmes Poverty as a cross-cutting issue Effectiveness of poverty reduction policies Utilization of fragmented money

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Opportunities...

Level of people's awareness Demographic, gender and peace dividend National and international commitment for

inclusive development Social capital Remittances

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The focus areas…

Pro-poor and inclusive growth Investing in human capital (health, education,

food security etc) Investing in physical capital (water, sanitation,

rural roads, electricity, rural development etc) Redefining investment- nutrition, health,

education Reducing social inequality Good governance Rights-based approach to development

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References

National Planning Commission, 2002, The Tenth Five Year Plan 2002-2007, Kathmandu: National Planning Commission.

National Planning Commission, 2003, The Tenth Plan: Poverty Reduction Strategy Paper 2002-2007, Kathmandu: National Planning Commission.

National Planning Commission, 2007, Three Year Interim Plan 2006/07-2009/10, Kathmandu: National Planning Commission.

National Planning Commission, 2011, Three Year Plan 2010/11 -2012/13: Approach Paper, Kathmandu: National Planning Commission.

National Planning Commission, 2011, Millennium Development Goals: Needs Assessment for Nepal 2010, Kathmandu: National Planning Commission.

National Planning Commission, 2013, The Thirteenth Plan Approach Paper, Kathmandu: National Planning Commission.

Central Bureau of Statistics, 2011, Nepal Living Standard Survey-III: Press Release, Kathmandu: Central Bureau of Statistics.

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Contd...

Pokharel, Trilochan, 2015, Poverty in Nepal: Characteristics and Challenges, Journal of Poverty, Investment and Development, pp 44-55.

Polak, Paul, 2008, Out of Poverty: What Works when Traditional Approaches Fail, San Francisco: Berrett-Koehler Publishers, Inc.

The World Bank, 2000, Poverty Reduction in the 1990s: An Evaluation of Strategy and Performance, Washington D. C.: IBRD.

United Nations Development Programme, 2010, Human Development Report 2010, New York: UNDP.

Sachs, Jeffrey D, 2005, The End of Poverty: Economics Possibilities of Our Time, New York: The Penguin Press.

The World Bank, 2003, Poverty in Guatemala, Washington DC: The World Bank.

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Thank you for your patience