D-lab. Poverty: the inability to attain a minimum standard of living and an acceptable quality of life. --World Bank Discussion Paper No.

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1 Poverty: the inability to attain a minimum standard of living and an acceptable quality of life --World Bank Discussion Paper No. 366

2 Poverty reduction History Definition Measurement Poverty Reduction Strategies (PRS) Micro-Finance case studies BRAC, Grameen Phone

3 Poverty-2 cent history First discovered 1901 by Booth and Roundtree in England who published poverty standards 1960s-Focus on GDP per capita (Pearson Commission) 1970s-Redistribution of wealth (Robert MacNamara) 1980s-Incorporation of non-monetary aspects, vulnerability, gender, 1990s-Well being, opportunities and choices 2004-Millennium goal to eradicate poverty

4 UN Millennium Development Goals ( 8) Develop a global development partnership 7) Environmental sustainability 6) Combat AIDS 5) Maternal health 4) Child Mortality 3) Gender equality 2) Universal Primary Education

5 Millennium Goal # 1 Eradicate extreme poverty and hunger Reduce by half the proportion of people living on less than half a dollar a day Reduce by half the proposition of people who suffer from hunger

6 What is Poverty? -Definition Lack of well-being Earning less than $1 per day Excluded from min acceptable way of life (EU) Maslov s Hierarchy of needs Basis needs for survival Higher order like affection and self esteem

7 From the WEB Poverty...Lacking sufficient wealth to live a normal life in a society. Poverty is the collective condition of poor groups, often nation-states. To avoid stigma these are usually called developing nations.

8 What is poverty? -Some Poverty Indicators Life expectancy (yrs) Infant mortality rates (deaths /1000 live births) Literacy rates (%) Mean years of schooling GDP growth rates (%) Gross national income (GNI) per capita ($/yr) Purchasing power per capita (PPP) ($/yr) Share of agriculture in GDP (%)

9 Poverty Indicators Indicator Zambia Honduras Haiti US Life Expectancy Infant Mortality (per 1000 live births) Literacy Rate (%) * Mean Years of Schooling GNI per capita $340 $930 $440 $35,400 Purchasing Power parity (PPP) $850 $2580 $1630 $37,500 GDP % growth % of Labor Force in Agriculture 67 3 Share of Agriculture in GDP 28 2*

10 Other considerations Is the poverty temporary or chronic? Is it economic or social poverty? Is it actual or potential poverty? Are the groups at risk? Is it absolute or relative poverty?

11 Bangladesh (GNI per capita= $400) Ultra Poor Poor

12 Zambia (GNI per capita=$340)

13 Poverty Reduction Strategies (PRS) Overall growth - A rising tide sinks all ships Re Distribution Decentralization (market, privatization) Direct aid (Donations, infrastructure) Micro-credit, micro-finance, micro- enterprise

14 Although donor organizations have had limited success they agree that a good PRS will Have local initiation and buy-in Government support Build rural capacity and Infrastructure

15 Agencies in involved in International Poverty reduction IMF (Structural Adjustment) World Bank UNDP Major NGOs CARE, BRAC, etc Development agencies USAID, DIFID, DANIDA, FIDIDA

16 Decentralization the transfer of authority and responsibility for public functions from the central government to subordinate or quasiindependent government organizations and/or the private sector

17 Decentralization Political Administrative Fiscal Market (privatization, deregulation)

18 Why Decentralization? More responsive to local needs Better control of public program at the local level Promotes innovation

19 BRAC (Bangladesh Rural Advancement Committee)

20 BRAC Started in 1972 by Fazle Hasan Abed 28,000 Staff, 34,000 p/t teachers 62,000 villages, over 4 million members Income generation and social development Focus on poor, rural, landless people Micro credit, health, education, and training

21 BRAC Micro-credit Disbursed over $ 2.1billion since % payback Must be a member of a village organization (VO) Loans from $20-$5000 Compulsory savings (.10 per week)

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23 BRAC poor Categories Moderate poor Less than 1 acre of land, manual labor, live in slums Vulnerable non-poor More than 1 acre of land, mostly farmers In 2002 BRAC started Challenging the Frontiers of Poverty Reduction Targeting the Ultra Poor (CFPR-TUIP)

24 Who are these ultra-poor? Rural women Own no land Widowed or divorced

25 BRAC s PRS Employment and enterprise development training (livestock, farming, horticulture) Investment for the ultra-poor (Woman receive assets to start an enterprise) Social development program (counseling, on livelihood strategies) Health care services (basic health,, family planning, immunization)

26 Grameen Phone

27 Grameen Phone Started in 1997 when Iqbal Quadir created an independent telecom company Woman take out a loan of 12,000 Taka ($200) for phone and service Some make up to $100/month 39,000 phones in 29,000 villages Over 50 million users in rural areas A cell phone call can replace a trip Larger national network subsidized Village phones

28 Discussion Questions Why are women the main focus of current PRS?

29 Discussion Questions Can you think of other marginalized groups?

30 Discussion Questions Is Grameen phone a repeatable model?

31 Discussion Questions Marketing To The Bottom Of The Does Pyramid help the poor?

32 Discussion Questions Is all (any) micro-finance sustainable?

33 Discussion Questions Why can economic growth be a poor indicator of poverty?

34 Overseas Development Institute Will Growth Halve Global Poverty by 2015? Towards National Public Expenditure Strategies for Poverty Reduction Trade Liberalization and Poverty Making Adjustment Work for the Poor The Poor and their Money: what have we learned? The Meaning and Measurement of Poverty Approaches to Sustainable Livelihoods for the Rural Poor Promises to the Poor: the Record of European Development Agencies

35 Next week s assignment Live wealthy (survive on $2 per day)