Poverty persists despite impressive economic growth

Although Kazakhstan has enjoyed relatively high economic growth over recent years, fuelled mainly by its oil and gas industries, diversification of the economy is needed to further reduce poverty in the largest Central Asian country, UNDP said in a new report released on Wednesday.

"The main finding [of the report] is that poverty remains a problem in Kazakhstan and therefore needs to stay high on the national agenda of priorities," Gordon Johnson, deputy resident representative of UNDP Kazakhstan, told IRIN from the Kazakh commercial capital, Almaty, on
Thursday.

"One of the interesting findings from the report is that there is a very large portion of the population that is low income [as opposed to being in complete poverty]... about 47 percent of the population," the UNDP official said. The low income threshold is twice the subsistence minimum, thus a monthly income of some $70.

His comments came a day after the UNDP released its "Poverty in Kazakhstan: Causes and Cures" report prepared by local poverty and statistics specialists, Russian Living Standard Centre experts and the UNDP itself, continuing the series of publications monitoring the country's progress towards the Millennium Development Goals (MDG). The MDG calls for the halving, between 1990 and 2015, of the proportion of people whose income is less than one dollar a day.

According to the report, economic growth in Kazakhstan could have had a greater impact on improving living standards in the country, with unemployment and low incomes still the main causes of poverty. Data shows that over 57 percent of poor people in Kazakhstan are people of working age.

"The percentage of people living in poverty has declined since 1998 from about 34 percent down to about 24 percent in 2002. It is progress," Johnson added. According to some officials from the Kazakh Ministry of Economy and Budget Planning, in 2003 that figure had fallen even further to 19 percent.

People having an income below the subsistence minimum are considered to be living in poverty. That minimum, as set by the Kazakh government, is some $35 per month. Given that, the number of people living in poverty in the former Soviet republic has fallen from some five million to around three million people over the period between 1998 and 2003.

The question for Kazakhstan is whether members of the low income group are going to pull themselves out of this bracket and move up, or are going to fall into poverty, Johnson noted. "Therefore, one of the main recommendations of the report is that there needs to be some attention given in Kazakhstan to broadening economic growth," he emphasised.

Over the past four years Kazakhstan enjoyed remarkable economic growth, some 10 percent per annum on average, fuelled by extractive industries such as oil, gas and minerals. "We found that a large portion of the population, exactly in the oil producing regions, are still living in poverty," the UNDP official noted, adding that that meant that the extractive industries by themselves were not really bringing employment and reducing poverty in the region.

The highest urban poverty level is in Atyrau oblast, while the highest rural poverty is registered in Mangystau, these two oblasts being the oil-rich regions, UNDP said in a statement.

"In order for that to change, this growth needs to be broadened so that there are not just extractive industries but processing industries and also goods and services related to them," Johnson stressed.

Kazakhstan, a regional leader in terms of both economic growth and reforms, has seen some positive developments over the past several years. "The macro economy is fairly stable, inflation is low, the value of the tenge [Kazakh currency] is more or less stable. The banking and financial sector is pretty good compared to a lot of economies in transition. And all of this in turn has made an environment that's fairly favourable for foreign investment, and all of that is good news," Johnson explained.

According to the World Bank, Tajikistan is the poorest of the former Soviet Central Asian republics, with over 83 percent of its population living below the national poverty line. In Kyrgyzstan, the rate was 44 percent in 2002. Energy-rich Turkmenistan had an estimated 58 percent of people living below the national poverty line in the same year.

The report also makes some recommendations regarding various forms of social security. Another recommendation is that educational system has to be improved so that it produces more graduates in fields that are needed in the country.

Finally, the report says the government can't do this alone and it's important that civil society organisations are involved in the process. "If you put all those things together then poverty rate will continue to fall," Johnson said.