Key message 2 – Yet, the poorest are left behind.

The decreases in poverty described in Key Message 1 are driven by high-income countries. The difference in poverty reduction between low- and high-income countries is stark. Once social assistance transfers are factored in, the poverty headcount – the total number of people living in poverty – reduced by 3% in low-income countries, as opposed to 6% in lower middle-income, 8% in upper middle-income, and 16% in high-income countries.

Further, social assistance in lower-income countries is also less cost-effective. Social assistance in low-income countries delivers approximately 14 cents in poverty gap reduction for each USD spent on social assistance programmes, as compared to 45 cents in high-income, 32 cents in upper middle-income, and 29 cents in lower middle-income countries.

This is likely because poorer countries have been worse at targeting the poorest people, as alluded to in Ravallion (2016). As the following figures show, coverage is low in low-income countries and a large proportion of the benefits from social assistance are not received by the poorest. Figure 2 demonstrates that only 21% of the poorest receive social transfers as opposed to 73% in high-income countries. Further, figure 3 illustrates that in low-income countries, the bottom 20% receive 28% of total social assistance benefits, only slightly more than the 26% received by the richest 20%; by contrast, in high-income countries, the poorest 20% of the population receive 44% of total benefits, more than 6 times the proportion received by the richest quintile (i.e. richest 20% of the population).

Figure 2: Coverage of social assistance by income group

Figure 3: Benefit incidence of social assistance by income group

These findings are mirrored across different regions with less developed regions of sub- Saharan Africa and South Asia being worse at targeting. Figure 4 shows that the lowest coverage of social assistance is found in sub-Saharan Africa and South Asia (excluding India), particularly among the poorest. Only 22% and 26% of the poorest in sub-Saharan Africa and South Asia respectively, receive any social assistance. This implies that 78% of the poorest people in sub-Saharan Africa receive no social transfers from the government.

Figure 4: Coverage of social assistance schemes by region

Also, the distribution of social assistance is flatter in these two regions implying that the coverage of social assistance is equal across all income levels in these regions. This is especially true in sub-Saharan Africa where, as shown in figure 5, the poorest and richest quintiles receive similar proportions of social assistance transfers. All other regions show a progressive distribution of benefits. For example, in East Asia Pacific, 48% of social assistance goes to the poorest and 7% to the richest.

Figure 5: Benefit incidence by region