Far from the glitz of Beirut and other Arab capitals, poverty and internal disparities continue to plague the region. So what is being done about the problem? The answer varies in focus and intensity among the different countries of the region. One problem, however, is defining exactly what we mean by poverty, and then measuring it properly. To that end, a $6 million grant from the World Bank was approved in Lebanon this month to finance various social studies that would help to properly address poverty and other development issues in the country. (The is part of the third step of the Emergency Social Protection Implementation Support project approved during the Paris III Conference held in January 2007.) The results of the studies will be used to propose new mechanisms that set poverty measures and estimate the number of underprivileged in Lebanon, along with their characteristics and needs, in order to better allocate financial support.

Until these studies appear, the best figures on poverty in the country come from a previous study released this year by the United Nations Development Program, which indicated that the number of poor people in Lebanon increased by at least 5% between 2004 and 2007, and that more than 30% of the population, or about 1.2 million Lebanese, lives on less than $4 per day. Furthermore, the proportion of individuals living on less than $2.4 per day increased to close to 9% of the total Lebanese population, or about 340,000 people. The study adds that poverty is heavily concentrated among unemployed and unskilled workers, who are concentrated in the construction and agriculture sectors, which employ around 38% of all the poor. The report also highlighted discrepancies in the distribution of expenditure within different income groups, with the poorest 20% accounting for only 7% of overall consumption in the country, while the richest 20% make up about 43%. Though this inequality is similar to that in other middle-income countries, the problem in Lebanon is that poverty could propel the desperate to become extremists, which in turn exacerbates political instability.

One of the most important aspects of the study, therefore, is its focus on the regional dimension. The report clearly indicates that some of Lebanon’s regions lag behind in development, and therefore more efforts should be exerted to create job opportunities and to promote further education in such places to avoid the kind of desperation that could lead to political violence.

Lebanese national statistics suggest that the growth in real per-capita private consumption has been just under 2.8% annually since 1997, yet the study stressed that the distribution of this expansion across different regions within Lebanon was uneven. It was the highest in Beirut, at around 5% annually, which is not surprising considering the widespread investment and job creation that the capital witnesses in times of stability. A higher-than-average growth rate was also observed in the South and Bekaa, reaching 4% annually. On the other hand, Mount Lebanon and the North saw trivial growth in consumption, which translated into a relative decline in their mean per-capita expenditure compared to the overall average. As a result, significant disparities in consumption in different areas of the country persist; while Beirut has the highest mean per-capita consumption, which is more than 1.5 times the national average, the North has the lowest, at around three-quarters the level for the country as a whole. In conclusion, the report suggests that Lebanon as a whole is capable of meeting the UN Millennium Development Goal target of halving the proportion of people living in extreme poverty by 2015, and that it can also make considerable progress in reducing inter-regional disparities. However, this requires stability above all, which in turn is damaged by poverty, forming a dangerous vicious circle.

The regional element of poverty is also crucial in other parts of the Arab world, including, for example, Jordan. The kingdom has over the past few years made consistent efforts for structural reform of the economy, but social development is lagging, with abject poverty still at a dangerously high level of close to 15%. Household expenditure and income surveys show a rising distortion in the distribution of wealth and the subsequent shrinking of the middle class, which also augers badly for social stability.

In response, donors have been generous, with, for example, the European Commission committing 30 million Euros in 2004 to support poverty reduction through local development in Jordan. Traditionally, Jordanian anti-poverty efforts had been spearheaded by the central government and centered on job creation in the public sector and cash handouts. However, the European approach stresses the local level, and focuses on individual municipalities working with private business and volunteer groups to create sustainable projects on the grass-roots level. In addition, the EU support program addresses the policy, legal and regulatory framework related to local development, including support to pursuing decentralization.

As the municipal level is the core of the program, the design, financing and implementation of comprehensive local development strategies and plans focus on 18 municipalities chosen from among the poorest in the kingdom. At the same time, the program has countrywide outreach, supporting reform and strengthening institutions. Because the 18 poorest municipalities in the country are mainly the farthest from the capital, the geographic parallel with Lebanon is clear, as glitzy property development in parts of Amman contrast sharply with cases of great rural poverty.

Nevertheless, the kingdom’s policy of decentralization is gradually empowering municipalities, with the political side of this process moving forward through local elections held last year. In a traditionally highly centralized system such as Jordan, this new tendency is welcome, and the Lebanese development effort could profit from a closer look at the Jordanian model. Of course, the fulfillment of a number of preconditions are essential for a viable local anti-poverty drive to succeed, including a sound macro-economic policy and public finance system, the monitoring of poverty indicators, and maintained commitment to a decentralization process facilitating local development. Lebanon clearly has a long way to go in these respects, but the message from Amman should be clear: The fight against poverty must have a local focus and concentrate on helping to achieve sustainable growth – not handouts.

Riad al Khouri is co-founder and principal of KryosAdvisors, and Senior Fellow of the William Davidson Institute at the University of Michigan