Localised Poverty Data Reveals Need for Targeted Interventions

Of Nepal’s 753 local levels, 444 have poverty rates above the national average, according to the Small Area Estimation of Poverty, 2023 report published by the National Statistics Office (NSO).

The assessment of monetary poverty at the municipality and district levels was unveiled on Friday, January 9. It shows that the remaining 309 local levels record poverty rates below the national average of 20.27 percent.

At the local level, poverty rates vary widely, ranging from as low as 1.18 percent to as high as 77.89 percent. The highest poverty rate, at 77.89 percent, is recorded in Junichande Rural Municipality of Jajarkot district, while the lowest, at 1.18 percent, is found in Gharapjhong Rural Municipality of Mustang district.

Kathmandu Metropolitan City has the largest number of people living below the poverty line, at 59,218, despite a relatively low poverty rate of 6.87 percent.

At the district level, Achham in Sudurpaschim Province records the highest poverty rate at 49.58 percent, while Kaski in Gandaki Province has the lowest, at 5.63 percent. Of Nepal’s 77 districts, 43 have poverty rates above the national average, while 34 fall below it.

The report presents estimates for four key indicators: the Poverty Headcount Rate, Poverty Gap, Poverty Gap Squared, and the total number of poor. The poverty headcount rate measures the proportion of the population living below the poverty line. The poverty gap shows how far, on average, poor households fall below the poverty line. The poverty gap squared captures inequality among the poor.

According to the NSO, the use of multiple indicators allows policymakers to draw conclusions based on several bases, rather than relying solely on poverty rate. In densely populated areas, even a low poverty rate can translate into a large number of poor people, while in sparsely populated areas, a high poverty rate may still involve fewer poor people.

To produce the estimates, the NSO used data from the Nepal Living Standards Survey IV and the National Population Census 2021. Provincial, district, and local-level models were developed using the Small Area Estimation method.

Small Area Estimation (SAE) is a statistical method that combines survey data — originally designed to generate national or provincial-level results — with auxiliary information from sources such as the Population Census, administrative records, geospatial data and other datasets. This integrated approach enables the estimation of key indicators for lower administrative units, including districts and local governments. According to the NSO, more than 60 countries worldwide use SAE to produce local-level poverty estimates.

The Office said the report provides insights into the diverse nature of poverty across Nepal. Similar lower-level poverty estimates using this method were previously published in 2006 and 2010.

The findings are expected to support policy, planning, and programme formulation at the federal, provincial, and local levels, particularly as demand for disaggregated data has increased since Nepal adopted a federal system.

According to the Nepal Living Standards Survey IV conducted in 2022/23, 20.27 percent of Nepal’s population lives below the poverty line. Nepal measures monetary poverty using the Cost of Basic Needs approach. The current poverty line is set at Rs 72,908 per person per year, up from Rs 19,261 in 2009/10. Individuals whose annual per capita expenditure falls below the threshold are classified as poor.

According to NLSS IV, poverty incidence remains higher in rural municipalities, at 24.7 percent, compared to 18.3 percent in urban municipalities.