Nepal's multidimensional poverty index: analysis towards action.

Research Report.

SUMMARY: This report presents Nepal's official national Multidimensional Poverty Index (MPI) using the latest data from the Multiple Indicator Cluster Survey (MICS) 2014. Based on the Alkire Foster methodology, the MPI counts the joint deprivations faced by individuals. Following the indicators of the global MPI, the Nepal MPI includes multiple indicators related to health, education, and living standards. Our computations show that 28.6% of Nepal's population is multidimensionally poor. The indicators that contribute most to multidimensional poverty in Nepal are undernutrition and households that lack any member who has completed five years of schooling. A unique feature is that the Nepal MPI can be disaggregated by the newly formed seven provinces of Nepal. Naturally, the rural­urban divide is evident, with 7% of the urban population and 33% of the rural population being multidimensionally poor. We find that Provinces 6 and 2 have the highest rate of multidimensional poverty - with every second person being multidimensionally poor (50%) - followed by Provinces 5 and 7 (approximately 30%). The major contributing indicators to overall poverty in Nepal and in rural Nepal are malnutrition and insufficient years of schooling. Looking backwards, we find that ground­breaking and continuous progress has been made in reducing multidimensional poverty. According to strictly harmonised data, Nepal halved its MPI 2006-2014. The incidence of multi dimensional poverty has gone down (using harmonised datasets) from 59% in 2006 to 39% in 2011 and 29% in 2014. At the same time, we see statistically significant progress being made across all of the ten indicators of multidimensional poverty. To highlight just one, the incidence of those who are multidimensionally poor and lack access to adequate sanitation facilities went down from more than 50% to less than 20%. To keep up the momentum of these achievements will require ongoing efforts and political leadership in the coming years. Major investments in health and education will be necessary to lift the poorest of the poor out of multidimensional poverty. Further, in order to reduce regional inequalities across provinces, greater interventions for the poorest provinces are required.