Near-poor and natural disasters

Sri Lanka’s high level of “near-poor” people has made economic recovery from the recent floods and landslides even more challenging, as thousands of those affected are people who have become highly-indebted from previous natural disasters. They now face an uncertain future as they lack the capacity to recover independently, showing the country’s all-too-vulnerable lower middle class.

According to a survey by the Ministry of Disaster Management, hundreds of thousands of people have insecure livelihoods and could face challenges of food security unless coordinated relief is funnelled to communities from the Government. What is even more startling is that about 321,000 people or two-thirds of the affected population are from the Western Province, which is the most prosperous of all Sri Lanka’s provinces and makes the highest contribution to the national economy. 

The May 2016 floods and landslide have also caused the highest displacements, widespread damage to productive assets, and losses to livelihoods and agricultural and livestock production, with Colombo, Gampaha and Kegalle the worst-affected districts.

Over 90% of these populations had been hard-hit by the recurrent natural disasters during the last five years, the report said, referring especially to floods in 2013 and 2015. The frequent natural disasters in the same regions had undermined household resilience and the affected populations had built up unsustainable levels of debt. Food security of the affected populations will be challenging due to displacements, lack of livelihood and income sources.

The grim findings echo a World Bank report released earlier this year that showed that despite significant economic gains over the past few years, 40% of Sri Lanka’s population lives on less than Rs. 225 a day with growing inequality and higher numbers of poor living in urban areas.  

Sri Lanka has made encouraging progress in reducing poverty to below 7% of the population, but pockets of severe poverty remain, especially in the north and east regions of the country. The effectiveness of poverty alleviation programmes launched over the past few years are also questionable with measures not lifting people out of poverty, the report noted.

It also pointed out that a large number of near-poor, that is people who are just above the poverty line but can very easily fall below it, show the vulnerable situation of many people. Getting jobs to these low qualified members of society will be a major challenge before the Government. 

The Sri Lanka Poverty Assessment has found that the fall in poverty stems mostly from increasing labour incomes as the economy has shifted from less productive agriculture towards the industry and service sectors, more urbanisation, and rising domestic demand. 

Clearly, economic reform, investment and development has to reach this group of “near-poor” people. The biggest challenge before the Government is understanding the vulnerabilities and needs of these people and helping them rebuild. Future prosperity for Sri Lankans will depend on addressing chronic revenue shortfalls and fostering a more competitive and inclusive economy so that these people can be given a chance to be financially independent.