Features
Understanding Poverty: A complex, multidimensional challenge
Defining Poverty
Poverty is typically defined as the state of lacking sufficient financial resources to meet basic living standards such as food, shelter, and healthcare. The most common measure is income poverty, where individuals live on less than a certain amount per day. For instance, the World Bank defines extreme poverty as living on less than $1.90 a day. However, poverty is not solely about income. The multidimensional poverty index (MPI) considers various factors, including education, health, and living standards, providing a more comprehensive view of poverty.
Sri Lanka’s economic growth and extreme level of corruption have been a crucial factor in reducing poverty. The expansion of sectors such as tourism, manufacturing, and services has provided new employment opportunities, particularly in urban areas. However, the benefits of economic growth have not been evenly distributed. Additionally, the economic disruptions caused by the COVID-19 pandemic have highlighted the vulnerability of many households, pushing some back into poverty due to loss of income and employment.
Economic Factors
The economic dimensions of poverty are often the most visible and measurable. Unemployment, underemployment, and low wages are primary contributors to poverty. In many developing countries, large segments of the population work in informal sectors with no job security, benefits, or legal protections. Economic instability and lack of access to credit also exacerbate poverty, trapping individuals and families in a cycle of debt and financial insecurity.
Globalization and technological advancements have created economic growth in many regions, but the benefits have not been equitably distributed. Wealth concentration among the elite contrasts sharply with widespread poverty. Economic policies and practices, such as austerity measures, can also negatively impact the poor, reducing access to essential services and support.
Social and Cultural Factors
Social and cultural factors play a significant role in perpetuating poverty. Discrimination, based on race, gender, ethnicity, or religion, can limit access to education, employment, and social services. Gender inequality is particularly notable, with women often experiencing higher rates of poverty due to systemic barriers such as wage gaps, limited employment opportunities, and the burden of unpaid care work.
Cultural norms and traditions can also influence poverty. In some societies, rigid social structures and expectations restrict social mobility, making it difficult for individuals to improve their economic status. Additionally, marginalized communities may lack political representation, further entrenching their disadvantaged positions.
Health and Education
Health and education are critical components of the poverty equation. Poor health can be both a cause and consequence of poverty. Lack of access to healthcare services, inadequate nutrition, and unsafe living conditions contribute to high morbidity and mortality rates among the poor. Health issues can limit individuals’ ability to work or attend school, thereby reducing their economic opportunities and perpetuating the cycle of poverty.
Education is a powerful tool for breaking the cycle of poverty. However, access to quality education remains uneven, particularly in low-income countries. Children from poor families often face barriers such as inadequate school facilities, lack of trained teachers, and the need to work to support their families. Without education, these children are less likely to secure well-paying jobs, perpetuating the cycle of poverty.
Sri Lanka boasts high literacy rates and relatively good health indicators compared to other South Asian nations, thanks to its focus on free education and healthcare services. These investments have helped build human capital and enhance economic opportunities for the poor.
Environmental Factors
Environmental issues, like deforestation, soil erosion, and water scarcity, can devastate these communities, reducing their income and food security.
Climate change exacerbates existing vulnerabilities. Extreme weather events, such as floods, droughts, and hurricanes, disproportionately impact poor communities, which often lack the resources to recover and rebuild. Additionally, the poor are more likely to live in areas prone to environmental hazards due to cheaper land prices, increasing their risk of exposure to natural disasters.
Political Factors
Political instability, corruption, and poor governance are significant barriers to poverty reduction. In many countries, corruption siphons off resources that could be used for social services, infrastructure, and economic development. Political instability disrupts economic activities, discourages investment, and leads to displacement and insecurity.
Effective governance and political will are crucial for poverty alleviation. Policies that promote economic growth, ensure fair distribution of resources, and protect human rights are essential. Social safety nets, such as unemployment benefits, healthcare, and education subsidies, can provide a buffer against economic shocks and help lift people out of poverty.
Challenges and Barriers to Sri Lanka
A significant barrier to poverty reduction in Sri Lanka is the pervasive corruption among politicians and certain segments of the administration, particularly within revenue-collecting institutions, such as customs. This corruption undermines economic growth and equitable development by diverting resources that could otherwise be used for social welfare programmes, infrastructure improvements, and other poverty alleviation initiatives. Moreover, the inefficiency and lack of transparency in these institutions hinder effective governance, erode public trust, and create an environment where illicit practices can flourish, further entrenching poverty and inequality. Addressing this issue requires robust anti-corruption measures, institutional reforms, and enhanced accountability mechanisms to ensure that resources are used effectively and equitably for the benefit of all citizens.
Microfinance: A Double-Edged Sword
Microfinance has been promoted as a tool for poverty alleviation by providing small loans to those who lack access to traditional banking services. However, in Sri Lanka, microfinance has also contributed to sustaining poverty. Many microfinance institutions charge very high interest rates, trapping borrowers in a cycle of debt. Instead of lifting families out of poverty, these loans can exacerbate financial stress and lead to further economic hardship.
High interest rates and aggressive collection practices have led to widespread indebtedness among poor households. Borrowers often take out multiple loans to repay existing debts, leading to a vicious cycle of borrowing and repayment. This situation is particularly dire in rural areas, where economic opportunities are limited, and borrowers have fewer means to repay their debts.
Addressing Poverty: A Multifaceted Approach
Addressing poverty requires a comprehensive, multifaceted approach that tackles its root causes and mitigates its effects.
Policies should focus on inclusive economic growth, controlling corruption, ensuring that the benefits of development reach the poorest segments of society. Investing in education and healthcare is vital for building human capital and improving long-term economic prospects.
Social policies must address discrimination and promote equality. Empowering marginalized communities through legal reforms, political representation, and social programmes can help break the cycle of poverty. Gender-sensitive policies are particularly important, as women and children often bear the brunt of poverty’s effects. Expanding and strengthening social protection programmes to cover more vulnerable groups, including informal workers, elderly, and disabled individuals.
Environmental sustainability should be integrated into poverty reduction strategies. Protecting natural resources, promoting sustainable agricultural practices, and addressing climate change are essential for ensuring the long-term well-being of impoverished communities. Disaster risk reduction and resilience-building measures can also mitigate the impacts of environmental shocks.
International cooperation and aid play a crucial role in supporting poverty reduction efforts, particularly in the poorest countries. However, aid should be carefully managed to ensure it reaches those who need it most and supports sustainable development.
Job Creation and Formalization:
Encouraging job creation in both urban and rural areas, with a focus on formalizing the informal sector. Providing training and skills development can help workers transition to more secure and better-paying jobs.
Education and Healthcare:
Continuing to invest in education and healthcare to build human capital. Enhancing the quality of education and making healthcare services more accessible, particularly in rural areas, will contribute to long-term poverty reduction.
Conclusion
Poverty is a complex and multifaceted issue that requires a holistic approach to address effectively. It is not merely about a lack of income but encompasses various dimensions, including health, education, social inclusion, and environmental sustainability. By working together at local, national, and international levels, we can create a more equitable and just world where poverty is significantly reduced, and all individuals have the opportunity to thrive.
A major barrier that Sri Lanka faces is the extreme level of corruption among politicians and certain segments of the administration, especially within revenue-collecting institutions, such as customs. By adopting a comprehensive and inclusive approach that addresses the root causes of poverty and promotes sustainable development, Sri Lanka can continue to make strides towards eradicating poverty and ensuring a better quality of life for all its citizens. The road ahead requires concerted efforts from the government, civil society, and the international community to build a more equitable and resilient nation.
(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala). The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.lk and www.researcher.com)