World Bank Report: Analysis of Poverty in Myanmar

Key Findings of the Myanmar Poverty Assessment

Two main messages were delivered in Part One (MOPF and World Bank, 2017a):

  1. Living standards have improved and poverty has declined between 2004/05, 2009/10 and 2015.
  2. The joint technical analysis recommended rebasing and revising the poverty measure first established in 2004/04 to reflect the needs of Myanmar’s population in 2015.

The Ministry of Planning and Finance has adopted the above recommendation, and the poverty profile presented in this report, Part Two of the Joint Poverty Assessment, uses a new updated poverty line based on the needs of Myanmar’s population in 2015.

Four key findings are presented in this Part Two report:

  1. The updated poverty analysis confirms the decline in poverty seen between 2004/05 and 2015. It also puts forward a new estimate of poverty based on consumption patterns in 2015. Poverty is estimated to be 32.1 percent in 2015, down from 48.2 percent in 2004/05.
  2. Although the correlates and drivers of poverty in Myanmar are diverse, patterns among poor households can be clearly seen through the lens of human, physical and financial capital.
  3. Poverty reduces life quality for all and limits the potential of Myanmar’s children in multiple ways.
  4. Households report facing costly shocks such as weather or health incidents that reduce their ability to focus on longer-term investments and result in harmful coping strategies.

Finding One: Poverty is estimated to be 32.1 percent in 2015

A new consumption aggregate and poverty estimate based on the needs and living conditions of Myanmar’s population in 2015 are presented in this report – Part Two of the poverty assessment. There are three key differences between the new welfare measure and the welfare measures previously used in Myanmar.

First, durables are included to reflect the growing importance of home assets, such as electric fans, solar batteries and mobile phones. Second, the calorie norms and adult equivalent parameters used were revised to reflect updated calorie estimates produced by the Ministry of Health. The calorie estimates used in this poverty measurement exercise are more finely cut than those used in the previous exercises. Finally, the new consumption aggregate and poverty line are based on the food and non-food consumption patterns of the population in 2015, compared to 2004/05 in the case of MNPED et al (2007) methodology. These differences are discussed in greater detail in the accompanying Technical Report.

Using the new consumption aggregate and poverty line, we estimate that 32.1 percent of the population of Myanmar currently lived in poverty in 2015.

Poverty in Myanmar farms and villages (rural areas) is substantially higher than that in its towns and cities (urban areas): 38.8 percent of the rural population are estimated to be poor compared to 14.5 percent of those in its towns and cities. This amounts to 15.8 million poor in total, of which 13.8 million live in rural areas and 2.0 million in urban areas. Using the new poverty estimate, we see a decline in poverty from 48.2 percent in 2004/05 to 42.4 percent in 2009/10 and 32.1 percent in 2015. The poverty decline shown below mirrors that seen using the old poverty estimate.

Poverty remains geographically spread in Myanmar: while the Coastal and Hills and Mountains regions contain a disproportionate number of the poorest individuals, 65 percent of the poor live in the Dry Zone and Delta. In the Coastal and Hills and Mountains areas of Myanmar, we estimate that four in ten of the population are poor and one in six will struggle to meet their basic food needs. Despite a lower share of the population living in these areas, they account for 47 percent of the food poor and 38 percent of those in the bottom quintile of the expenditure distribution. The densely populated Dry Zone and Delta areas account for 65 percent of Myanmar’s poor. Although the headcount rate of poverty in the Delta is the lowest of all areas, its high population density implies that the number of poor remains substantial: there are an estimated 5.5 million poor in the Delta (including Yangon), compared to 2 million in the Coastal Zone.

All detailed analysis presented in this report is based on the new poverty measure and consumption aggregate, based on living conditions of 2015 (“MOPF and World Bank (2017b)” methodology).

Finding Two: Poverty can be clearly seen through the lens of human, physical and financial capital.

Demographic structure and the education levels of heads distinguish poor and non-poor households. The demographic composition of poorer households is quite distinct from non-poor households: poorer households are typically characterized as having more family members and as having more dependents per working age individual. Children of all ages are more likely to be living in poor households than individuals of working age and elderly individuals. Households with more children under the age of 15 are more likely to live in rural areas, have less educated and younger household heads. The demographic composition of these households makes them more likely to have lower welfare levels, by nature of having more people depending on fewer and less educated workers.

Poor households have a weaker productive and financial asset base.

Asset ownership reflects the productive potential of households, and is an important correlate of current wellbeing as well as of potential consumption growth. In situations where credit markets are thin and for households who have difficulty accessing credit markets, households have a lower ability to borrow for investment and have to be more reliant on own-capital accumulation for investment. Asset ownership—both in terms of numbers and value – is lower among poorer households. This is true for household and business assets, as well as for land – the most important asset owned by agricultural households.

Households in Myanmar display a high degree of diversification, with income from multiple sources. Poorer households are disproportionately concentrated in agriculture, either as causal laborers or as small holder farmers, and tend to be less diversified in their activities.

Although 70 percent of households are engaged in agriculture, the majority of these households also earn income from additional non-agricultural income sources, such as income from labor, non-farm businesses or remittances from non-agricultural occupations. Poorer households are more likely to be solely engaged in agriculture and, within agriculture, in casual labor activities. Poverty among farming households is strongly linked to low agricultural incomes, reflects small plots of land, and limited irrigation resulting in a heavy reliance on the main monsoon crop.

Worse off households are also characterized by broader structural constraints that limit opportunities.

Poorer households are typically less integrated into the formal economy than non-poor households: they are less likely to have identification cards or to have legal titles for their dwellings. Access to these entitlements and official documents can serve as enablers to households for accessing some public services, accessing formal credit sources, enforcing their claims and rights, and for undertaking secure market transactions.

Finding Three: Poverty reduces life quality and the potential of Myanmar’s children

There are many deprivations associated with poverty in Myanmar.

Myanmar’s population continues to suffer from deprivations that limit their ability to feed their families, to finish school and to recover from health shocks. Approximately a third of households report limiting the quality of their diet as a consequence of inadequate resources while 8 percent of households report running out of food due to a lack of resources.

Health related difficulties affect all households in Myanmar: out of pocket expenses are high and the number of days of labor lost is significant.

Self-reported ill-health is common in Myanmar: nearly one in six individuals reported having been sick and taken time off normal activities in the last thirty days. Health issues are the most common single shock type reported by households. Health expenditures are high and almost exclusively out-of-pocket, placing a large burden on households. Sixteen percent of households in our sample face catastrophic health care expenditures, accounting for more than 10 percent of total welfare. Poorer households have more difficulty affording appropriate treatment, and are more likely to respond to health difficulties through negative coping strategies, such as borrowing money from informal sources at high interest rates.

Many rural and poor households lack year round access to basic public services such as electricity and improved drinking water.

People all over Myanmar, and particularly the poor, suffer from difficulties accessing some basic services and infrastructure including clean water, health services and electricity. Only 33 percent of households have access to electricity through the public grid and the majority of those with public grid access live 239 in urban areas. However, off-grid sources of electricity are used extensively, and a myriad of alternative sources of energy have sprung up, from communal provision and solar home systems to rechargeable batteries. Access to improved water sources is highly seasonal in rural Myanmar, and in particular in the Delta area. Outside of the wet season, rainwater harvesting is replaced by water collection from ponds and rivers. Nearly 3 in 10 people lack access to year round improved drinking water, and 1 in 4 lacks access to improved sanitation. Many rural areas also lack access to the critical infrastructure needed to connect to markets within Myanmar and to the rest of the world.

Myanmar is set to experience a possible demographic dividend in coming years1, but malnutrition, high infant mortality, and poor quality education will limit the ability of children from poorer households to play a full role in achieving Myanmar’s growth potential.

Out of every 100 children born in Myanmar, 6.2 die before their first birthday and 7.2 before their fifth (Ministry of Immigration and Population, 2015). Children from poor households are more likely to live in food scarce environments, with implications for their physical and mental growth potential. The dominance of rice in diets in Myanmar means that calorie consumption is typically high but the poor lack the full dietary diversity needed to reduce malnourishment. Six out of 10 children starting grade one drop out before the end of middle school; among families in the bottom 40 percent of the consumption distribution, this figure is seven in 10. Dropout rates are high for both boys and girls, and differences in dropouts across richer and poorer households dwarf gender gaps. School dropout at the secondary level in Myanmar is closely linked to costs, despite substantial increases in the budget for schools. The effects of such childhood poverty are devastating and long-lasting, limiting physical and cognitive development, with subsequent effects on labor market outcomes.

Finding Four: Households are affected by shocks that may reduce their longer-term growth

There is considerable vulnerability to poverty in Myanmar.

Beyond the third of the population who are poor, a further 14 percent are near-poor, in that their expenditures are above the poverty line of 1303 kyat but below 1564 kyat per adult equivalent per day, 20 percent higher than the poverty line. Thirty percent of the population live within 50 percent of the poverty line. For these people, unanticipated shocks to income or welfare, such as illness of a family member or pests that hit crops, can send them back into poverty. Since many households live life on the cusp of poverty, setbacks such as the illness of a family member, crop failures, or natural disaster can have severe negative repercussions.

Families struggle to make longer term investments that can improve their well-being, in part due to having to focus on urgent short-term problems. Households weathering insecurities take actions that affect their ability to bounce back, including cutting back on their investments, selling core productive assets, and withdrawing children from school. Poorer households have more limited recourse to formal credit or relatives that can help them to weather large shocks, leading to households taking out high interest loans that they may struggle to pay back. A fifth of all households in Myanmar are estimated to be heavily indebted and nearly one in five households has taken out a loan to cover basic food needs.

Source: World Bank

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