GHANA’S POVERTY PROFILE 2013 Ghana Living Standards Survey, Rounds 5-6 26 August 2014

Outline of presentation Introduction Data sources The standard of living measure Poverty lines and patterns Poverty covariates Summary

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?  

Data sources Ghana Living Standards Survey rounds 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 & Health Employment Household Agriculture Household food and non-food Expenditure Non Farm Enterprises Assets

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)

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 differentials

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 lines Two 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

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.

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

2013 Poverty Rates Poverty rate: 24.2% Extreme poverty rate:8.4%

Poverty Rates in Ghana, 2005 - 2013 Year Absolute PL=Gh¢1,314.00 Extreme PL=Gh¢792.05 2012/13 24.2% 8.4% 2005/06 31.9% 16.5% 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.

Poverty level in Ghana (2012/13) Year ABSOLUTE PL=Gh¢1,314.00 EXTREME PL=Gh¢792.05 2013 6.4 million 2.2 million 2006 7.0 million 3.6 million

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

Decomposition of change (%) in poverty headcount, 2005/06 to 2012/13   Change Share of change due to: Growth Redistribution National -7.7 -8.8 1.1 Urban -1.9 -2.4 0.5 Rural -5.8 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 reduction In the absence of inequality, poverty reduction would have been larger than -7.7%.

Inequality has increased slightly... Gini

POVERTY COVARIATES Employment status Ownership of Assets Access to Potable Water Sanitation (Toilet facility) Electricity

Poverty Incidence by employment status of household head HH headed by farmers remain the poorest in Ghana HH headed by private sector workers have experienced improvement in their poverty levels Poverty Incidence by employment status of household head

Percentage of households owning different durable goods has increased across all Regions Percentage of households owning fridge by Region fridge ownership in the Northern regions has almost tripled over the years

Percentage of households owning TV by Region Asset ownership in the Northern regions tripled over the years

Percentage of households owning mobile phone by Region

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. Percentage of households having access to potable water by Region

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 Percentage of households using adequate toilet facility by Region

Households using electricity Percent Household access to electricity has increased across all regions

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).

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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