Leaving no one behind: Urban poverty traps in Sub-Saharan Africa

Abstract

Despite considerable achievements in the reduction of poverty over the last decades, poverty remains conspicuously high and profound. While fast urban population growth, especially in Sub-Saharan Africa, has contributed to poverty reduction, new development challenges like the urbanisation of poverty emerge. However, little is known about the state and persistence of poverty in urban areas. This study investigates urban poverty within the theory of poverty traps among urban households in Nigeria, Tanzania and Ethiopia, three countries in Sub-Saharan Africa with large urban populations and fast urban population growth. Using household panel data from the World Bank’s Living Standard Measurement Study between 2008 and 2015, we test whether consumption-based poverty traps exist in these contexts. Our results show that initially poor households experience an increase in well-being over time, while richer households face a decline and remain vulnerable to falling back into poverty. As households converge to consumption levels around the $3.20 poverty line, there is considerable movement into and out of poverty over time. However, a sticky consumption floor shows that despite upward dynamics amongst the poor, some are being left behind. Finally, we argue that improved urban data is needed to identify the vulnerable middle, and to design structural policies preventing them from falling back into poverty.