Mobilizing Resources for the Poor

Abstract

Beyond shifting development priorities and policies, the agenda to accelerate poverty reduction in Africa requires harnessing more resources. The message about spending more and spending better to address the critical needs for the poor is essential to meet SDG goals. Assessing a country’s poverty financing gap requires a sense of the needs of the country’s poor, as well as of the country’s capacity to mobilize the resources to meet them. This is challenging, conceptually and in terms of data. One metric regularly used to gauge needs is the aggregate poverty gap (APG). It is the monetary value of the gap between the income of the poor and the international poverty line aggregated across the poor population. It gives an estimate of the amount necessary to mechanically lift all the poor out of poverty through redistribution. As such, it provides a first (and imperfect) benchmark.1 In 17 out of 45 countries with data, who have over one-third of the poor in Africa, at least 10 percent of GDP (in 2016 prices) would be needed to fill the aggregate poverty gap. All but two (Lesotho and Zambia) of these are low-income countries. For Burundi, the Central African Republic, the Democratic Republic of Congo, Madagascar, Malawi, and Mozambique, the gap requires over 50 percent of the country’s GDP. By way of comparison, government tax revenues were only 9 percent on average in Africa’s low-income countries. Filling the poverty income gap