GHANA’S POVERTY

PROFILE 2013Ghana Living Standards Survey,

Rounds 5-626 August 2014

1

Outline of presentation • Introduction

• Data sources

• The standard of living measure

• Poverty lines and patterns

• Poverty covariates

• Summary

2

Introduction• Ghana achieved positive economic growth

from 1991 and by 2007 have become a lower-middle income country

• Poverty has declined in Ghana over the years

• These declines are largely due to growth

• To what extent have Ghanaian households and communities benefited from this growth?

• Which groups have benefited most? 

3

Data sources• Poverty has many dimensions. • The focus is on consumption poverty

• Ghana Living Standards Survey rounds• 2005/06 – GLSS 5• 2012/13 – GLSS 6

• Used expenditure data on:Education & HealthEmploymentHousehold Agriculture Household food and non-food ExpenditureNon Farm EnterprisesAssets

4

The Standard of Living Measure

• Involves calculating the total consumption expenditure for each household using adult equivalent scale. –Based on 2,900 calories per adult equivalent per day (Recommended dietary allowance 10 edition)

5

The Standard of Living Measure

Welfare=Total Household Expenditure Price Index * Household Size (eqsc) Total Household Expenditure:

Food expenditure (actual) Own food consumption Non food expenditure (actual) Non food (rent and user value) imputed Housing expenditure

 Price Index:

Regional price differentials6

The standard of living Measure…

• Household size in adult equivalent scale (eqsc)–The adult equivalent scale is

calculated based on the composition of the household, using a calorie-based scale of age and gender specific calorie requirements • Equivalent adults recognizes, for example,

that the consumption requirements of babies or young children are less than those of adults.

Setting Poverty linesTwo lines are estimated

Upper poverty line (absolute)Lower (food) poverty line (extreme)

• Upper poverty line estimates the overall poverty rate

• Lower poverty line estimates extreme poverty rate

8

Setting Poverty Lines• Over the period people’s tastes and preferences

have change. • The need to make adjustments of consumption

aggregates to reflect the changes in the consumption pattern

• the minimum basket was updated for consumption (inclusion of the user values- mobile phones, ipad, rice cookers, computers, etc.) to reflect wellbeing and living standards in Ghana now.

• Using the Engel method – estimated food and non food expenditure . food – extreme poverty line Food + non food – absolute poverty line. 9

NEW Poverty Lines (2012/13)

• Absolute poverty line (Upper)- Gh¢1,314.00 per year- Gh¢3.60 per day

• Extreme poverty line (Lower) - Gh¢792.05 per year- Gh¢2.17 per day

10

11

2013 Poverty Rates

Poverty rate: 24.2%

Extreme poverty rate:8.4%

Poverty Rates in Ghana, 2005 - 2013

12

Poverty declines 7.7 percentage points. This follows earlier trends (1991 and 2006)

By this rate Ghana has achieved the MDG 1 of halving

the poverty rate from 1990 levels.

Year

Absolute PL=Gh

¢1,314.00Extreme

PL=Gh¢792.05

2012/13 24.2% 8.4%

2005/06 31.9% 16.5%

Poverty level in Ghana (2012/13)

YearABSOLUTE

PL=Gh¢1,314.00

EXTREMEPL=Gh

¢792.05

2013 6.4 million 2.2 million

2006 7.0 million 3.6 million

13

Poverty Incidence by region: PL= Gh¢1,314

Western

Central

Greater Accra

VoltaEaste

rnAshanti

Brong Ahafo

Northern

Upper East

Upper West

Ghana0

10

20

30

40

50

60

70

80

90

100

22.9 23.4

13.5

37.3

17.824.0

34.0

55.7

72.9

89.1

31.9

20.9 18.8

5.6

33.8

21.7

14.8

27.9

50.444.4

70.7

24.2

2005/06 2012/13

Region

Incid

ence

(in

%)

14

Only Eastern region experienced an increase in poverty .

Even though the Upper East and Upper West regions have seen big poverty decline, they are still among the poorest

Contribution to poverty by region

15

The Northern Region has over the 7-year period contributed to poverty more than any other region

The three northern regions contributes more than a third to national poverty

Western Central Greater Accra

Volta Eastern Ashanti Brong Ahafo Northern Upper East Upper West0

5

10

15

20

25

7.36.4 5.9

8.77.5

12.6

9.8

21.0

10.910.0

7.96.9

3.8

12.1

9.3

12.0 11.4

20.8

7.48.4

2005/06 2012/12

Region

Perc

enta

ge

Decomposition of change (%) in poverty headcount, 2005/06 to 2012/13

16

 Chang

e

Share of change due to:

Growth RedistributionNational -7.7 -8.8 1.1

Urban -1.9 -2.4 0.5

Rural -5.8 -8.8 3.0• Observed change in mean value of the standard of living

(‘growth effect’)• Change in inequality when mean value is unchanged

(‘redistribution effect’)In Ghana Growth has remained the engine of poverty

reductionIn the absence of inequality, poverty reduction would have

been larger than -7.7%.

Inequality has increased slightly...

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Western Central Greater Accra

Volta Eastern Ashanti Brong Ahafo

Northern Upper East

Upper West

Ghana

-0.100

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.3720.401

0.419

0.3540.334

0.3940.369

0.4060.402 0.426 0.4190.384

0.381 0.370

0.412

0.376 0.387 0.383

0.4230.404

0.485

0.423

2005/6 2012/13

Gini

• POVERTY COVARIATESEmployment status Ownership of AssetsAccess to•Potable Water•Sanitation (Toilet facility)•Electricity

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Poverty Incidence by employment status of household head

19

HH headed by farmers remain the poorest in Ghana

HH headed by private sector workers have experienced improvement in their poverty levels

Public Employee

Private Employee

Self-employed (non-agric)

Self-employed (agric)

Unemployed Retired Not Active0

5

10

15

20

25

30

35

40

45

50

9.0

14.317.0

45.1

20.0

9.1

38.6

7.110.8

12.8

39.2

28.1

4.7

23.6

2005/06 2012/13

Poverty incide

nce (i%

)

20

fridge ownership in the Northern regions has almost tripled over the years

Percentage of households owning different durable goods has increased across all Regions

• Percentage of households owning fridge by Region

Wes

tern

Centra

l

Greater

Accra

Volta

Easte

rn

Ashan

ti

Brong A

hafo

Northern

Upper Ea

st

Upper W

est

0

10

20

30

40

50

60

70

19 17

45

1115

27

18

5 4 3

38

27

62

19

28

45

27

13 1512

2005/06 2012/13

Percen

t (%)

Percentage of households owning TV by Region

21

Weste

rn

Central

Greater Accr

aVolta

Eastern

Ashanti

Brong Ahafo

Northern

Upper East

Upper West

0

10

20

30

40

50

60

70

80

90

27 25

63

1925

39

22

128 6

62

51

84

41

48

66

47

3427 30

2005/06 2012/13

Percen

t (%

)

Asset ownership in the Northern regions tripled over the years

22

Percentage of households owning mobile phone by Region

Weste

rn

Central

Greater Accr

aVolta

Eastern

Ashanti

Brong Ahafo

Northern

Upper East

Upper West

0

10

20

30

40

50

60

70

80

90

100

1625

44

812

27

134 6 4

8277

8980 77

8379

73

59 62

2005/06 2012/13

Percen

t (%)

23

Percentage of households having access to potable water by Region

Access to potable water has increased across almost all regions.

Potable water includes pipe, bottle/sachet, protected well/spring, and borehole. It excludes unprotected well and surface water.

Western Central Greater Accra

Volta Eastern Ashanti Brong Ahafo

Northern Upper East Upper West

0

20

40

60

80

100

120

77 78

90

58

70

8780

60

78

98

85 86

98

68

81

9487

78

86

95

2005/06 2012/13

24

Percentage of households using adequate toilet facility by Region

Use of flush & KVIP toilet facility has increased across all regions, but remains low in the 3 northern regions

Western Central Greater Accra

Volta Eastern Ashanti Brong Ahafo

Northern Upper East

Upper West

0

10

20

30

40

50

60

70

80

90

41 43

81

3238

60

38

21

11 8

6860

83

5054

73

56

36

1421

2005/06 2012/13

25

Households using electricity

Household access to electricity has increased across all regions

Western Central Greater Accra

Volta Eastern Ashanti Brong Ahafo

Northern Upper West Upper East0

10

20

30

40

50

60

70

80

90

100

53

42

82

31

38

61

48

27

12 11

7267

91

6163

82

63

48

33

43

2005/06 2012/13

Percent

Summary

• Ghana has consistently been experiencing poverty reduction since the 1990s .

• Ghana achieved the MDG1 of halving its poverty level in 2013.

• 24.2% of Ghanaians are poor and therefore cannot afford to spend Gh¢3.60 per day (Gh¢1,314.00 per year).

• 8.4% of Ghanaians are extremely poor. That is putting all their expenditure together, they cannot afford to spend Gh¢2.17 per day on food (Gh¢792.05 per year).

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Summary cont’d

• Poverty has decreased in all regions except Eastern.

• Greater Accra recorded the lowest poverty rate.

• The three northern regions recorded the highest poverty rates even though there were improvements.

• Inequality in the distribution of welfare has increased slightly.

• Access to services (potable water, toilet facilities and electricity) and ownership of assets have increased across all regions

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Thank You