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Herefore 14 Poverty Lines Report No: AUS0000426 . Afghanistan Poverty in Afghanistan Results based on ALCS 2016-17 Public Disclosure Authorized . July 2018 . POV . Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized . Document of the World Bank . © 2017 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “World Bank. 2018. Poverty in Afghanistan: Results based on ALCS 2016-17. © World Bank.” All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. 2 POVERTY IN AFGHANISTAN1 One of the main objectives of the Afghanistan Living Conditions Surveys (ALCS, formerly the National Risk and Vulnerability Assessment or NRVA) is to provide information on welfare and living standards, on their evolution over time, and their distribution over households. Of particular importance is the measurement and tracking of welfare amongst the poorest segments of the population, and ALCS survey data provide the principal means for estimating the extent and severity of poverty in Afghanistan. MEASURING POVERTY IN AFGHANISTAN: THE COST OF BASIC NEEDS APPROACH The measure of welfare adopted to assess population living standards is based on household expenditures. An individual is considered as poor if their level of consumption expenditures is not sufficient to satisfy basic needs, or in other words, if their consumption expenditure falls below the minimum threshold identified by the poverty line. In line with international standards, the official absolute poverty line for Afghanistan is estimated following the Cost of Basic Needs (CBN) approach and it was set using the NRVA 2007-08. The CBN absolute poverty line represents the level of per capita consumption at which the members of a household can be expected to meet their “basic needs” in terms of both food and non-food consumption.2 To assess the evolution of wellbeing over time, the 2007-08 poverty line was updated to 2011-12 and 2016- 17 prices for each of the survey years to reflect changes in the cost of living. Figure 1 below briefly describes the data sources and the estimation methodology3. It is important to note that the detailed consumption expenditure module, which allows for direct estimation of poverty, was not included in the ALCS 2013-14. Rather, survey-to-survey imputation techniques were used to predict poverty rates for this survey year. The 2016-17 estimates introduced improvements in the methodology, which have been consistently taken backwards to 2011-12 and 2007-08 (survey to survey imputation estimates for 2013-14 have not yet been revised). These comprise of three important changes: (i) In the interest of increased transparency, and in line with international good practice, non-food thresholds are inflated from their 2007-08 benchmark levels using non-food inflation rates as measured by the official CPI; (ii) Improvements and changes in the survey questionnaire have required small changes in the definition of the welfare measure, which have been consistently revised for all survey years; and (iii) CSO has made the decision in the interest of transparency to include all provinces in national estimates; while indicating clearly provinces for which estimates are 1 This report was prepared by a team from the Poverty and Equity Global Practice of the World Bank and included Nandini Krishnan (Senior Economist), Christina Wieser (Economist), and Zihao (Tobias) Wang (Consultant). 2 More specifically, the food component of the poverty line captures the cost of consuming 2,100 Kcal per day following the typical food consumption patterns of the relatively poor; the non-food component of the poverty line is estimated as the median non-food expenditure of individuals with food consumption around the food poverty line. For more details, please refer to: http://documents.worldbank.org/curated/en/665241533556485812/Poverty- measurement-methodology-using-ALCS-2016-17 3 For a more in-depth description of the methodology, please refer to: http://documents.worldbank.org/curated/en/665241533556485812/Poverty-measurement-methodology-using- ALCS-2016-17 3 deemed to be of inadequate quality due to the security situation or concerns about data quality. These revisions imply that current estimates may differ from previously released numbers. Figure 1: Data sources for poverty measurement and methodology 2007-08 NRVA: 2013-14 ALCS: 2011-12 NRVA: 2016-17 ALCS: BENCHMARK IMPUTATION OF POVERTY ESTIMATES POVERTY ESTIMATES POVERTY ESTIMATES POVERTY ESTIMATES •Define welfare •Food poverty threshold •Survey did not include •Food poverty threshold aggregate priced 2007 food bundle the detailed prices 2007 food bundle •Define reference at 2011 prices expenditure modules at 2016-17 prices population (2nd-5th •Non-food poverty • Survey to survey •Change: Non-food decile) threshold was re- imputation methods thresholds calculated •Define reference estimated based on were used to estimate based on inflating 2007 quantity bundle 2011 food thresholds poverty non-food threshold •Food threshold: Cost of •Helmand and Khost using non-food inflation purchasing 2100 dropped as measured by CPI kilocalories per capita •Comparable poverty •Consistency: Welfare per day following the trends (32 provinces) aggregate and poverty same consumption line made consistent to pattern as the reference reflect improvements in bundle questionnaire •Non-food threshold: • Coverage: All provinces Average non-food to be included in expenditures of national estimates, with households whose per data quality capita food expenditure assessments is close to the food threshold •Define poverty line Source: CSO and World Bank. POVERTY LINES Poverty lines in Afghanistan are estimated at the regional-urban/rural strata level, and the national poverty line is the population weighted average of these regional-strata lines. The classification of provinces into regions for this purpose is shown in Table 1 below. These 8 regions, when split into urban-rural strata, yield 14 region-strata classifications (some regions do not have urban strata), and therefore 14 poverty lines. Table 1: Regions and provinces West Central South East Northeast North West Southwest Central Kabul Ghazni Kunarha Badakshan Balkh Badghis Helmand Bamyan Kapisa Khost Laghman Baghlan Faryab Farah Kandahar Daykundi Logar Paktika Nangarhar Kunduz Jawzjan Herat Nimroz Ghor Panjsher Paktya Nooristan Takhar Samangan Urozgan Parwan Sar-e-Pul Zabul Wardak 4 Figure 2 shows the revised poverty lines for Afghanistan after implementing the methodological changes described above. In 2007-08, the national average threshold for the cost of covering basic needs, the poverty line was 1,261 Afs per person per month. This threshold, consistently defined and valued at 2016- 17 survey prices, increases to 2,056 Afs per person per month. Relative to 2007, this represents a 64% increase in the cost of basic needs, comprised of a 68% increase in the cost of the basic food bundle (benchmarked at 2,100 Kcalories per person per day), and a 58% increase in the cost of non-food necessities. Figure 2: Poverty lines (weighted national Figure 3: Implied average inflation (relative to average), 2007 to 2017 2007=100) based on poverty lines Food Non-food Total Food Non food Total 168.43 163.69 2,056 157.67 1,758 146.37 139.16 1,261 1,188 1,034 130.01 Afs person per month Afs per 868 706 724 555 100.00 2007-08 2011-12 2016-17 2007-08 2011-12 2016-17 Source: CSO, World Bank staff estimates, NRVA 2007, Source: CSO, World Bank staff estimates, NRVA 2007, 2011 and ALCS 2016 2011 and ALCS 2016 The rest of this chapter is organized as follows. The next section briefly describes the country context in which the revised poverty trends are situated, followed by a description of the trends in welfare between 2007 and 2017. These trends are analyzed at the national, urban-rural and regional level. The chapter concludes with a profile of Afghanistan’s poor, highlighting key correlates of welfare. CONTEXT, 2007-2017: DECLINE IN ECONOMIC GROWTH AND A DETERIORATING SECURITY SITUATION The overall macro-economic and security context in the country since 2007 can be broken into two distinct phases, pre- and post- the 2014 security transition. While the pre-transition phase was characterized by higher economic growth and a relatively stable security situation, since 2014, growth has stagnated, and the security situation continues to deteriorate. In this context, the 2016-17 poverty estimates are the first direct estimates of welfare since the security transition in 2014. 5 Figure 4 plots per capita GDP and annual GDP growth between 2007 and 2016.4 Between 2007 and 2012, GDP per capita increased from $381 to $691, with economic growth averaging 11.2 percent per year. In contrast, the Afghan economy has grown at an average of 2.1 percent between 2013 and 2016, and GDP per capita in 2016 remains $100 below its 2012 levels. This economic slowdown has been accompanied by a deterioration in security since 2014 and economic activity (as measured by new firm registrations, Figure 5) has been adversely affected.
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