Can Poverty Be Cured?

Percent poverty world map (Photo credit: Wikipedia)

I think it can. And the cure is within reach. We already have the know how.

A poverty cured world is one without hunger, because the world already produces enough food, but will now also learn to distribute. It is a world where 5% of the people are taken care of in terms of their basic needs, just because. 100% employment is actually bad. You need some churn in the economy. Another 2% might not even be in a position to work, and they are taken care of. And there is willful employment for the other 93%. Everyone has internet access through their cheap smartphone. The Internet is in the air.

Basic food, basic shelter, basic clothing, internet in the air, basic education, basic health. The costs are not that high. But it is we that are so disorganized. And the Internet itself can be that organizing tool, the best there can be.

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Bitcoin Based Global Money Transfers At Near Zero Rates

This would be a strong anti-poverty tool.

Microfinance: Post Obama Race Talk

Image via WikipediaRace has to be talked about. Gender has to be talked about. That was the angle I came from. And I was Barack Obama's first full time volunteer in New York City, perhaps the country. And the guy absolutely refused to talk about race. Then one day he said "Race matters powerfully" and I thought, okay, now he is going to start. But no. The guy just did not believe in singing Kumbaya. The you-love-me-you-love-me-not race talk just was not for him.

Then he became president and pumped billions of dollars into inner city schools. And that act was more meaningful to me than any race talk he might have initiated.

Barack Obama Proved Me Wrong On Race And Libya

Grameen Miracles

Image by Getty Images via @daylife

New York Times: Grameen Bank and the Public Good: it’s important to protect successful social institutions from political maneuvers that could be damaging to them, and that an abrupt and forced removal of Yunus could damage confidence in the bank, which has 8.4 million mostly women borrowers and holds $1.5 billion in villagers’ savings. ...... Yunus was being targeted for political reasons. ....... others said that there were people within the government, as well as across Bangladeshi society, who opposed the work of the Grameen Bank on principled, if ideological, grounds. Simply put, many people don’t think that microfinance helps the poor and they believe that socially-minded businesses, like the Grameen Bank, undermine the work of government. ....... The question: ‘Does microfinance work?’ has been posed increasingly in recent years — sometimes in accusatory tones because microfinance, and its leading practitioner, Grameen, have received so much praise. ....... microfinance — including both loans and savings services — is, in fact, good for microbusinesses ....... microfinance is not, itself, one simple thing. It may involve loans, or savings, or a combination of the two, plus training, insurance or other services ...... the way poor people manage their households is far more complex than anyone had previously understood. ........ If microfinance doesn’t accomplish anything positive, then why are 128 million poor families busy taking loans? ....... what it really means for most people to be poor: to live with perpetual uncertainty. ....... the problem of living on $1 or $2 a day is that you don’t actually earn $1 or $2 every day ...... Some days you receive $5 and then nothing for two weeks. Life is unreliable ...... what we saw microfinance was doing for people was offering them a reliable source of money. With microfinance, you get a sum of money that’s promised on the day it’s promised in the amount that’s promised. It’s often the only reliable service that poor people have — and that’s incredibly powerful. ........ contrary to the depiction of poor people as passive victims of microlenders — as the field is often portrayed by its critics — Morduch and his colleagues found that the families they followed were “strategic” in their use of credit, often mingling a variety of formal and informal sources. “They weren’t always making the best choices — some did well, some didn’t — but they were very actively managing their affairs,” he said. “Our view is that there’s a lot more going on with microfinance — that it’s helping people keep an income flow, deal with health problems, keep their kids in school, get food on the table every day, and perhaps invest in businesses.” .......... self-employed women in Kenya were able to invest more in their businesses and increase household spending when they had access to savings accounts ...... “extending basic banking services could have large effects at relatively small cost.” ....... a middle path: the social business — the business that seeks not to maximize profits but to maximize some form of social impact. ...... Social businesses seek to harness market forces to provide essential goods and services to people who are typically underserved. ...... social businesses provide things like loans to small farmers, rural electricity and access to potable water. They also supply health services like ambulance care or cataract surgery. In addition to microfinance, Grameen has helped establish an array of for- and not-for-profit companies such as Grameen Danone, a joint venture with Danone (known to us as Dannon), which markets an affordable fortified yogurt product to address micronutrient deficiencies among the poor and Grameen Shakti, a renewable energy company. ....... Social businesses have evolved to address both the operational weaknesses of many government agencies and the lack of affordable products and services available to the poor through the market. By and large, they are a new invention .......... , it appears that social businesses can bring things like renewable energy, mobile technologies and affordable housing to poor people faster and more efficiently than governments ...... However, ongoing access to safe water for all is not something that can be guaranteed without the leadership of governments.

Grameen Under Attack At Home

Image via Wikipedia

New York Times: Opinionator: Microfinance Under Fire: Both the bank and Yunus, have come under attack by the government of Bangladesh and its prime minister, Sheikh Hasina Wazed. It has taken 35 years of painstaking effort to build Grameen into a world-class institution that serves millions of poor people. That progress could be lost if the country’s leaders fail to appreciate what makes the Grameen Bank work........ The Grameen Bank is not just the largest microlender in the world, with 8.4 million borrowers (most of them women villagers) who received more than $1 billion in loans last year, it is the flagship enterprise in an industry that, in 2009, served 128 million of the world’s poorest families. ...... Yunus, the founder of the bank, is an entrepreneurial figure cut from the same cloth as Steve Jobs, the founder of Apple. He has devoted himself since the 1970s to demonstrating, institutionalizing and spreading microfinance. ...... Legally, the government owns 25 percent of Grameen and has the right to appoint a quarter of its board members, including its chairperson. In practical terms, however, the government has little justification to intercede in the bank’s operations. Today, of the Grameen Bank’s paid-up share capital, only 3.5 percent comes from the Bangladeshi government. It is the bank’s borrowers who are its majority owners. They control 75 percent of the board seats and they have supplied 96.5 percent of the paid up share capital. And it’s the savings of villagers — about $1.5 billion — that now finances the bank’s activities and growth. ......... Nevertheless, the government is proceeding to remove Yunus against the objections of its majority owners and will probably succeed. ...... Yunus is being punished for criticizing the government and making a bid to start a political party in 2007. ......... The Grameen Bank is a strong, well-managed institution with 25,000 employees. It could probably withstand his departure. Indeed, given Yunus’s age, it’s critical to pave the way for a successor. But if he is replaced in a manner that diminishes confidence, the bank could face problems. ........ the Grameen Bank depends on unusually high levels of motivation among its staff and high levels of trust among its borrowers. A forced removal of Yunus that is seen as illegitimate, politically-motivated, or vindictive could alienate thousands of employees and trigger a run on savings or loan defaults. ......... The state-owned banks have regularly extended loans to elite borrowers (who default at high rates) as a form of patronage. Unlike Grameen, which is financially self-sufficient, the state banks are perpetually in need of cash infusions from the government. ........ The Prime Minister has made it clear that she believes the interest rates are too high. ...... if the government installed a bureaucratic manager who failed to appreciate the bank’s 
Image via Wikipediaentrepreneurial culture, it could suck the life out of the bank. ....... Before Grameen Bank workers get hired, for example, they spend close to a year demonstrating their interest in serving the poor. They have to do things like write detailed case studies about the lives of village women to show that they genuinely care about, and understand, their clients. Managing this workforce is nothing like managing a run-of-the-mill bank. ........ Over the past few months, officials have sought to damage Yunus’s reputation, claiming without evidence that he has enriched himself at the expense of the poor, intentionally harmed borrowers, and engaged in fraud. The prime minister has called microlenders loan sharks “sucking the blood of the poor.” Her son circulated a letter which contained a litany of unfounded accusations against Yunus — the most outrageous being that the government created the Grameen Bank, not Yunus. ......... It’s not as if Bangladesh is lacking real problems that require government attention. There can be no sense in destabilizing the leading institution in an industry that provides financing to more than half of the households in the country. ........ On March 15, the Bangladeshi Supreme Court postponed ruling on Yunus’s case for two weeks........ Given that Yunus understands Grameen’s culture better than anyone, he should have a key say in any leadership change. ........ Wise governments should view microfinance programs not as adversaries, but as partners in furthering public goals — organizations that need to be regulated, but not controlled. ...... Foreign governments and multi-lateral institutions have invested hundreds of millions of dollars in the Grameen Bank and other large microfinance organizations in Bangladesh, and elsewhere, with the goal of alleviating poverty. They also need to remember that it’s not enough to finance development organizations. They need to protect them, too.

The Institutions Of Globalization Will Be Built On The Internet

This is the internet century. This is the globalization century. At first I thought in terms of the UN, since it was the only global body. Then I thought in terms of the US, the oldest democracy, the richest country, the biggest power. And I have thought in terms of the internet all along. But as the internet's capacity has grown, I have thought primarily of the internet more and more.

This is the internet century. The internet is the new country. It is not America no more. America has become Europe. America is an old country.

For the biggest problems, the grandest challenges, it is the power of the internet that has to be unleashed. That internet does not operate in a vacuum. It permeates the old institutions like ether.

So when I say the institutions of globalization will be built on the internet I am making plenty of room for old institutions meshing with the internet. You open the windows and let the air come in.

But the biggest problems remain unsolved. Poverty is nowhere close to being cured. Sex slavery is not even much talked about. Climate change is apace. The biggest challenges have proven way bigger than the existing institutions. New institutions will have to be created. And those institutions will get created primarily on the internet. There is room for many on internet only institutions. Big institutions.

Microfinance Alone Can't Cure Poverty

Image by uncultured via FlickrMicrofinance is no magic bullet. Microfinance alone can't cure poverty.

Good governance, I think, is the first precondition. Yunus saw that. That is why he tried to launch a political party in Bangladesh a few years back. But looks like the politicians in Bangladesh have managed to unlaunch him instead.

Not Rich Yet

Image via WikipediaI am not rich yet, and it really, really bothers me.

For me it is about the power. The power to run and grow a corporate organization. The power to do good. The power to go after the stated mission of curing poverty.

Unless you yourself can create serious wealth, how can you claim you are in the curing poverty business?

Democracy + Education + The Market = Wonderful Things.

Microcredit is only a small part of microfinance. Microfinance is only a small part of the many tools needed for the War On Poverty.

Microfinance: No Substitute For Good Governance

Image via WikipediaDemocracy is basic. I am a firm believer in democracy. The year a country becomes a modern democracy is year one in that country's life. Lack of democracy, bad governance, massive corruption, and civil war are situations that are not within the domain of the microfinance industry. Basic good governance is critical for the microfinance industry to have a playing field where it can start performing, it can start to lift people out of poverty in large numbers.

There is plenty of diversity within the microfinance industry. There are many right ways. And microfinance is not the only tool with which to cure poverty. China has lifted more people out of poverty the past few decades than any other country, and it does not even allow MFIs to come in.

Revolutionary Poverty Alleviation

Image via WikipediaThere are natural lakes, and there are man made lakes. Well, all poverty is man made. Poverty does not have to exist.

I once heard a billionaire say there is enough marble just in West Virginia to build a mansion for every family on earth, but we have not reached that organization level yet as humanity. We keep getting in each other's way.

My industry - microfinance - has been a failure to date. Every year that the industry has existed, the number of poor people on the planet has gone up. That is failure.

Non Profit Microfinance Vs For Profit Microfinance: The Stupid Debate

Image via WikipediaThere has been a stupid debate going on for a few years now that has taken new life the past few months. There is a school of thought that says microfinance can be non profit and non profit alone.

There has been some serious abuse of microfinance. A lot of MFIs - microfinance institutions - have been messing up the last mile in serious ways. Charging ridiculously high rates is one of them. Some debt collection methods have been shady.

Kiva And My Outfit: Three Major Departure Points

Image via CrunchBaseI am a huge fan of Kiva. They went from raising $5 million five years ago to raising over $100 million last year and are projected to raise close to a billion dollars in five years. But that would still be a drop in the ocean. Global poverty is no small challenge.

There are more than 10,000 MFIs - microfinance institutions - in the world today. But global poverty is as big as ever. It looks like a virgin terrain to me. There is so much work to do.

Blog Carnival: Global Poverty

Image via Wikipedia

July: Netizen Blog Carnival Month

1. Blog Carnival: Internet For The Billions
2. Blog Carnival: Wimax
3. Blog Carnival: Cheap Laptops
4. Blog Carnival: Microfinance
5. Blog Carnival: Venture Capital
6. Blog Carnival: Google
7. Blog Carnival: Google (2)
8. Blog Carnival: Bill Gates, Chrome OS
9. Blog Carnival: Google Wave
   
10. Blog Carnival: Android
11. Blog Carnival: Entrepreneurship
    

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