There’s no doubt that COVID-19 has had a detrimental impact on efforts to reduce poverty across the world. In addition to claiming the lives of so many people worldwide, the lockdowns, social distancing measures and disruptions of supply chains associated with the pandemic have sparked major economic losses. This has pushed vulnerable populations, in particular women, further below the poverty line. According to the World Data Lab, the world has lost five years in its attempt to end extreme poverty, reporting a rise of 50 million people experiencing extreme poverty in 2020.
However, the distribution of those who have fallen into poverty is not equally dispersed throughout the world and is much more prominent in countries where governments are ill-equipped to provide social protection measures.
Although the pandemic drastically affected both developed and developing nations, causing various economic challenges, including labor cuts, investment losses, and decline in tourism levels, developed nations reacted and increased their mitigative efforts through fiscal and monetary policies, reaching 28 percent of their GDP. In contrast, many developing nations had little to spend in response to the pandemic, with most only spending approximately 7 percent of their GDP in curbing negative impacts.
Prior to COVID-19, there were only 103 social protection measures implemented in 45 countries. Since the onset of the pandemic, the number of social protection programs rose to 1,414 across 215 countries. Although these financial aids were designed to support those struggling, most fragile countries didn’t–and still don’t–have the resources to keep programs afloat. Geographically, poverty is very concentrated in Africa and success in ending poverty globally will largely depend on African fragile states. It is estimated that by 2030, two of the most fragile and conflict states, Nigeria and the Democratic Republic of the Congo, will experience the greatest increase in the number of people living in extreme poverty if social supports are not provided to mitigate these risks.
As the world observes the International Day for the Eradication of Poverty on October 17, FINCA remains committed to being a catalyst for economic inclusion and poverty reduction among vulnerable communities. This includes providing financial services to unbanked or underbanked communities, promoting financial literacy and increasing access points for the poor to enable long-term economic growth for those working to break free from poverty and counter the negative impact of the pandemic. It also includes providing disadvantaged populations with access to basic services such as energy, education, health and sanitation that enhance their lives and increase their ability to be resilient during crises.
By combining access to capital through microfinance and support to social enterprises addressing unmet needs, FINCA is empowering struggling individuals and communities with opportunities to pull themselves out of poverty and build forward more productively and resiliently.