World Bank rejects Financial Times report that Rwanda’s poverty figures are manipulated

On 19 August 2019 at 09:19

The World Bank has deeply explained the rationale behind Rwanda’s poverty figures highlighting that it supports Rwanda’s methodology applied to depict statistics of poverty over the past years.

The statement released by the world follows recent the article published by the British financial magazine, Financial Times which reported that poverty figures in Rwanda are spin doctored to maintain a good reputation.

The Financial Times claimed to have conducted an analysis of the survey’s more than 14,000 data points and interviews with academics show that rising prices for Rwandan families meant poverty most likely increased between 2010 and 2014.

The analysis of the National Institute of Statistics (NISR) on findings of the 4th Integrated Household Living Conditions Survey (EICV4) and (EICV3) indicated that poverty reduced by 6.9% between 2011 and 2014.

The FT analysis of the same data contradicts that finding, suggesting there has been a consistent attempt to misrepresent the results.

According to the Financial Times (FT) calculations, it is only possible to show a poverty decline of 6.9 percentage points if the mean value of the NISR’s cost of living index was 4.7 percent.

The Financial Times explained that poverty could only have fallen by such a large margin if average prices for the poorest 40 percent of households increased by 4.7 percent or less between January 2011 and January 2014.

The magazine consulted Diane Rwigara, David Himbara, a dissident who fled the country, a Belgian Fillip Reyntjens among others.

Sam Desiere, a senior researcher at Belgium’s University of Leuven who has studied Rwanda’s poverty statistics, says average prices probably increased by at least 30 percent between 2011 and 2014 based on his analysis of price data included in Rwanda’s household survey.

That conclusion would imply that poverty increased by about 6.6 percentage points, according to the FT analysis. “The higher the inflation rate,” said Mr. Desiere, “the more poverty increases.”

The new statement released by the World Bank, indicates that the bank’s staff weighed in publicly, clearly, and with commensurate technical rigor on the Rwanda poverty measurement debate in a working paper (Revisiting the Poverty Trend in Rwanda: 2010/11 to 2013/14) published in September 2018.

“The National Institute of Statistics of Rwanda (NISR) shared the underlying survey data and engaged in constructive discussions to elaborate in detail on the methodology used to measure and monitor poverty in Rwanda. The published technical paper was based on careful and clearly set-out analysis, with a finding that supported the official trend published in NISR (2016),” reads in part the statement released by the World Bank.

The statement further reads that Consistent comparisons of monetary poverty measures over time, just like consumer prices or GDP, require the use of a deflator.
However, the World Bank clarifies that the appropriate deflator for measuring poverty is not the Consumer Price Index or GDP deflator, but rather a composite “cost-of-living” index that is representative of the food and non-food consumption choices of poor households as well as the unit prices they face in the markets where they purchase goods and services.

“Poor households consume a diet that is less diverse and relies more on self-produced (especially in rural areas), basic, and cheaper staples. The consumption choices and prices faced by the poor, be it in informal urban or rural markets, differ from those informal retail stores and supermarkets. A comparison between populated areas of Kigali and the country’s rural towns and villages shows wide variances in consumption choices and prices faced by households,” reads the statement in part.

“Differences over methodologies for poverty estimation are common in all countries, including developed ones, given the complexity of the subject matter. There is no single “best way” to estimate poverty that is appropriate for all contexts and all times. Methodology adjustments may be necessary to better capture the position of the poor, so that policy adjustments can be targeted to address their needs,” adds the statement.

According to the World Bank, the official NISR poverty measures are calculated using appropriate deflators that are computed based on the prices faced and consumption choices made by poor households in different regions of Rwanda.

The bank further explains that it has a strong track record of producing reliable analytical work.

“We continue to work on this topic in Rwanda, and we welcome critical views of our technical work and methodology. We support constructive debate aimed at improving the measurement and monitoring of poverty, as its elimination is at the core of our mission,” reads the statement.

The 5th Integrated Household Living Conditions Survey (EICV5) in October 2018 indicated that Rwanda had 11.8 million population in 2016/2017 of whom 38.2% were poor while 16.0% were under the line of extreme poverty.

President Paul Kagame recently criticized the article by the Financial Times which claimed that poverty figures in Rwanda are manipulated.

The President made the critics last week in a conversation dubbed ‘Meet The President’ held at Intare Conference Arena in Rusororo where he affirmed that nothing is fabricated about the progress Rwanda is making.

Commenting On the report Kagame said: “I will bet with anyone that there is actually nothing fake or fabricated or doctored about the progress we are making. If anyone is saying we still have problems to deal with, then they are right because there are still many challenges we have to deal with. We are dealing with them and we will deal with them. There is nothing new about Rwanda having problems, and all of us working together to make a difference for ourselves.”

Claiming the report false, the President also referred to the reports of the World Bank report, International Monetary Fund (IMF), World Economic Forum and Standard & Poor’s (S&P) which recently upgraded Rwanda’s economy from “B” to "B+".

“The S&P agency rated Rwanda from B to B+, the same week Rwanda is said to fake data about poverty levels. There is such a thing as western propaganda. That is why I really want us to be together in this fight because it is a fight for who we are and who we want to be. It is a fight about ourselves, about Rwandans, about Africans,” he said.

World Bank rejects Financial Times report that Rwanda’s poverty figures are manipulated