26 June 2010

Making Poverty History in Southern Sudan

How much would it cost to lift everyone in Southern Sudan above the poverty line? The answer is the triangle to the left of the red poverty line and beneath the blue population distribution line.
That triangle (apparently also known as the poverty gap - why didn’t I pay more attention in class!), is roughly equivalent to SDG 1.8 billion, or $750 million at official rates.
So in theory it would cost an annual $750 million to eradicate poverty in Southern Sudan.
The value of aid spending in Southern Sudan in 2010?
$739 million.
The value of the GoSS 2010 Budget?
SDG 4.5 billion ($1.9 billion)
Just saying.
National Baseline Household Survey, 2009
The GoSS Donor Book, 2010
The GoSS 2010 Budget-at-a-glance


Philip said...

Cash transfer are the way forward.

However, it's worth pointing out that in order to avoid creating hge incentive problems at the poverty line, you would also have to pay out to those above the line, ie, you want to bend the curve towards the right, but you still need it to curve.

Matt said...

The graph is consumption but let's imagine it is income for a second. The budget and non-budget aid should be entering in the GDP figures somewhere, so that $1.9 billion or so is theoretically sitting somewhere in your graph.

This means that reducing poverty using public/aid funds is equivalent to redistribution among the S. Sudan population, right?

Matt said...

That's minus aid spent on imports (desperately trying to recall my 2006 MSc exam question)

Lee said...

Philip and Matt are of course both entirely correct.

@Philip: Giving a flat transfer to the entire population of the value of the poverty line would cost about $3 billion, so just over the total value of public/aid funds. You could always go for a fraction of the poverty line instead.

@Matt: The Ugandan informal cross-border trade survey suggests that Southern Sudanese imports from Uganda are roughly the same size as Southern Sudanese government spending. A lot of money is leaking. I would love to see the poverty incidence of public/aid spending!

Philip said...

Well, it's vary gracious of you to say so. I'm not sure that I would give everyone a cash transfer. Just that in order to address the incentive issue you would have to give cash to some people above the line. Overall, I think you made an excellent point.

Anonymous said...

“The Ugandan informal cross-border trade survey suggests that Southern Sudanese imports from Uganda are roughly the same size as Southern Sudanese government spending.”

The last time I looked at it, it didn’t. Total (formal and informal) trade across the border amounts to about $1billion I think. Substantially less than the budget of about $1.8 billion.

Lee said...

Total Ugandan informal exports (most of which are to Southern Sudan) were $260m in December 2009 - that is $3 billion annualised.


Derrill Watson said...

Setting aside consumption vs. income, consumption of the "right things," and the setting of comparable but arbitrary poverty lines that don't reflect individual needs - Imagine for a moment that all the aid money was handed to the poor in such a manner that consumption rose to the poverty line. Has poverty been eradicated?

The answer I keep getting is No. The people are still poor even if many of the effects of their poverty have been ameliorated. If the transfers don't come again in the next time period, they are still poor. They still are also still vulnerable to poverty and hunger (food insecure). And that's even without introducing Senian capabilities or entitlements or rights and duty-bearers.

Even so, the point(s) is well taken.

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