SDG 1 – No poverty

End poverty in all its forms and everywhere

With SDG 1, the global community had set itself the goal that no one should live in extreme poverty by 2030. However, it is estimated that by the end of 2022, up to 670 million people were affected by extreme poverty; they had less than USD 2.15 a day at their disposal.

In the past 30 years, over 1 billion people have been able to lift themselves out of extreme poverty. But recent developments are undoing much of the progress that has been made. Crises such as the COVID-19 pandemic or the Ukraine war as well as rising inflation are exacerbating existing poverty, which is rising again for the first time since 1998. According to World Bank estimates, more than 75 million people have fallen into extreme poverty in 2020 alone; in 2030, about 7% of the world's population (around 575 million people) are still expected to live in extreme poverty. So it is already clear that SDG 1 is no longer achievable.

People in sub-Saharan Africa and South Asia are particularly affected. The danger of becoming chronically poor, i.e. no longer being able to free oneself from poverty, is particularly great for young, poorly educated people and those living in rural areas, as well as for women. Climate change and violent conflicts are further factors that increase poverty.

Poverty is not only measured by income, hunger or homelessness. Some people hardly need any money, grow their own food, but lack access to education and health facilities. Therefore, those who are restricted in their self-realisation, for example because violence and oppression prevail and human rights are not respected, can also be described as poor. As diverse as the dimensions of poverty are, as diverse must be the approaches to overcoming it.

Moreover, poverty does not affect everyone equally. Women are more often affected by poverty than men, as are children, people with disabilities, LGBTI persons and other marginalised groups, for example due to ethnic or religious affiliation. Measures to combat poverty must therefore pay particular attention to these groups.

KfW Development Bank bases the selection and design of its projects on the goal of poverty reduction. It takes into account the various dimensions of poverty and designs its projects together with the partner in such a way that they contribute to direct or structural poverty reduction. This includes income-generating measures, social transfers, voucher systems, the expansion of social and economic infrastructure, the strengthening of functioning financial systems and the development of social security systems.

While in industrialised countries all conceivable emergencies can be cushioned by insurance, large sections of the population in developing countries have few opportunities to adequately insure themselves against risks such as illness, old age, disability, maternity, crop failures or natural disasters. Social protection includes all measures and instruments that support people in coping with social and economic risks. This includes health, unemployment and pension insurance, but also cash transfers or vouchers for basic security and in emergency situations.

To break the vicious circle of poverty and inequality, KfW promotes the establishment and strengthening of social security systems. In Iraq, for example, it finances "Cash for Work" programmes as short-term assistance for internally displaced persons, returnees and needy local residents. In Malawi, on behalf of the BMZ, it is promoting a social programme for disadvantaged families who can secure their livelihoods through "cash transfers".

KfW has also been involved in the development of innovative insurance products for some time and is involved in funds that support such products. These include the InsuResilience Solutions Fund (ISF), which disburses rapid aid in the event of a disaster and thus protects vulnerable households from impoverishment, hunger and the threat of debt. Sustainable drought insurance, which was created as part of the ISF, is one of four measures in Ethiopia to protect against weather risks, such as prolonged drought. So far, around 30,000 households have already benefited from this.

Another instrument that KfW is increasingly using in the area of social protection is Policy Based Financing (PBF), which uses Financial Cooperation funds to promote government reform programmes in partner countries. In this context, KfW is supporting the expansion of social protection for (extremely) poor and vulnerable households in Rwanda on behalf of the BMZ.

In many partner countries, micro, small and medium-sized enterprises in particular contribute to the national income and secure a large share of jobs. At the same time, however, they have little access to credit or loans. For this reason, many KfW projects aim to give the small and medium-sized enterprise sector in particular access to financial services by strengthening financial institutions.

However, KfW's measures are not only aimed at companies. Private households, especially poorer households, often have inadequate access to accounts, loans or other financial products and are therefore unable to securely deposit savings or participate in cashless payment transactions. Functioning financial systems and needs-based financing options thus make a significant contribution to securing livelihoods and sustainable economic development.

In Namibia, for example, KfW grants microloans on behalf of the BMZ for poor people, especially in rural regions, and for micro-enterprises. In Ghana, on the other hand, it finances vouchers for vocational qualification within the framework of dual training, which significantly improves employment and income opportunities.

Women and girls are among the least secure people in the world and make up a higher proportion of the poor than men. Women often work unpaid and informally, and therefore have less access to social protection systems than men. When they do have an income of their own, they often work shorter hours and are paid less. In financial emergencies, girls' and women's nutrition, health and education are more likely to be cut than men's in many countries.

KfW Development Bank claims that its projects also contribute to gender equality. Each project is carefully analysed in advance to determine what potential it offers for gender equality. Some projects are aimed specifically at women in order to promote their equality. It is examined whether projects can contribute to gender equality by specifically addressing gender-specific needs, removing access barriers or consciously empowering women.

Find out more about gender equality here

Empowering people to take their lives into their own hands - this is a core component of all KfW Development Bank projects. But promoting the knowledge and skills of individual people is not enough. For living conditions in a country to improve in the long term and poverty to be reduced, the state must also be prepared to tackle reforms, and conducive framework conditions and reliable structures must exist. If these capacities are lacking, development projects cannot have a sustainable positive impact.

KfW therefore helps its partners not only with financial resources, but also in the form of policy advice, programme design or the selection of suitable financing models. For example, it supports the establishment of registries so that needy population groups can receive targeted support. The overarching goal is to strengthen the partners so that they can plan and implement development projects on their own responsibility and ensure the sustainability of the newly created social and economic infrastructure.

Even if the global goal of ending extreme poverty by 2030 can no longer be achieved, KfW remains actively committed to fighting poverty. Drawing on its economic and development experience, it focuses primarily on helping vulnerable population groups to help themselves. It strengthens partners' ownership and promotes capacity building for poverty reduction - while strictly respecting human rights.

In 2023, numerous KfW Development Bank projects contributed to the achievement of SDG 1. With just under EUR 1.5 billion, poverty alleviation is strengthened as the main goal. In addition, various projects with a total financial volume of around EUR 3.9 billion promote poverty reduction as an important secondary goal.