1 KEY MESSAGES AND RECOMMENDATIONS
The direct economic impacts of the COVID-19 pandemic and associated lockdowns are leading more people into poverty and hunger. Estimates to date on the impact of COVID-19 on poverty and food security are an important first step towards understanding the potential scale of need. However, they are mainly based on very high-level projections that apply uniform assumptions on impact, that simultaneously under-estimate the scale of needs and obscure who or where the needs are likely to be. At the same time, there have been some impressive efforts at compiling a detailed picture of social protection responses (Gentilini et al; IPC-IG), but the scattered and incomplete nature of the data makes it difficult to ascertain the extent to which coverage is expanding to meet the increase in needs.
This exercise aims to provide a more comprehensive look at needs, coverage, and gaps for 10 fragile and conflict-affected countries. It does this by undertaking detailed micro-simulations for three ‘deep dive’ countries (Bangladesh, Ethiopia, and Zimbabwe) and a more ‘light touch’ approach in the others (Afghanistan, Burkina Faso, Chad, DRC, OPT, Syria, and Yemen).
With respect to needs:
• Needs, as measured by those whose consumption falls below the national poverty line (which tends to be similar to the global ‘extreme’ $1.90/day line), are predicted to increase significantly as a result of anticipated COVID-19 recessions: in the 10 countries included here alone, over 55 million additional people will be pushed into poverty.
• This increase in need is disproportionately found in urban areas. For example, in Bangladesh urban poverty incidence increases by 124% compared to 43% in rural areas; and in Ethiopia 272% versus 29%.
• While number of people in need increased, the poverty gap is estimated to decrease on average, since many of the newly poor are closer to the threshold than the existing group already in poverty. However, many who started out already poor are also impacted by COVID-19 and fall even further below the poverty line, so even if the average poverty gap is decreasing overall, it will increase significantly for many households.
• Applying a micro-simulation model that accounts for greater levels of heterogeneity and differentiated impacts suggests that the number of those affected will be significantly higher than estimates to date. Approaches that assume a uniform impact across the board (which include most of the existing estimates) yield estimates of need that are significantly lower even for the same average impact than ones that account for heterogeneity. As an example, in Ethiopia alone, this would lead to an under-counting of the new poor by 8 million. This has major implications for the global estimates of COVID-19-induced poverty produced by the World Bank and others, suggesting great caution in their interpretation1 . It also has major implications for our understanding of who is in need; these approaches tend to imply that it is those who were just above the poverty line who would be thrown into poverty as a result of COVID-19-induced recessions. Accounting for heterogeneity emphasises that many who started out far above the poverty line will be hit hardest.