Impact of COVID-19 on Poverty in Nepal’s Urban Informal Economy: A Closer Look

Abstract Context: The COVID-19 pandemic has had a severe impact on both the formal and informal sectors globally. Loss of income and employment among informal workers has increased their vulnerability, pushing them further into poverty which is likely to impact their health as well. Aims: This paper assesses the impact of COVID-19 and its control measures on poverty dynamics within Nepal’s urban informal economy, using a public health perspective. Methods: Structured questionnaires were used to collect data from respondents. The analysis is based on 5 years of data (2015/16–2019/20) collected through face-to-face interviews with 423 informal economy workers from six metropolitan cities. The paper assesses trends in poverty transitions before and during the pandemic. Results: The poverty rate among workers in the urban informal economy, which had been declining from 2015/16 to 2018/19, increased drastically during the COVID-19 pandemic. The data show that the number of workers who remained poor decreased steadily over the first 4 years but increased in the final year. Similarly, the number of workers who remained nonpoor grew over the first 4 years but declined in the last year. Transitions from nonpoor to poor also declined until 2018/19 but rose again in 2019/20 due to COVID-19. Conclusions: The study highlights the importance of understanding poverty dynamics from a long-term perspective.The experiences in Nepal and globally highlight the need for both short-term and long-term interventions to reduce risks and support informal workers, enabling them to sustain their livelihoods and contribute to the well-being of low-income populations during public health crises.