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Meet Mrs Banda

 

Meet Mrs Banda from Malawi, or Margaret to friends. She’s a vibrant woman who’s used support from a microfinance program run by the Salvation Army to help her and her family gain a better life.

For Mrs Banda, microfinance has enabled her to increase her income by a factor of 10 – from 200 to 2000 Kwacha a day. It’s a great example of how fighting poverty is about enabling individuals to flourish, and how aid can work.

It’s in stark contrast to the beating that microfinance has taken in the press in the last few months. The New York Times has even gone so far as to say that, “Microcredit is losing its halo in many developing countries,” as Governments in India and Bangladesh seek to tighten the reins on what has been hailed as a saviour to the world’s poor.

There are legitimate questions to ask about how much microfinance can achieve, and what the rules and regulations should be, but we need to ensure that we remember microfinance is enabling real changes in people’s lives, right now.

As part of this, it’s worth remembering that the concern raised about microfinance has almost entirely been focused on the for-profit organisations – businesses who see microfinance as a way to make money. They’re a very different breed of organisation to the non-profit and social microfinance organisations.

In a recent interview on Australian TV about the critiques of for-profit microfinance groups, Calum Scott from Opportunity International Australia said that “we fear that this will overshadow the good work that socially focused microfinance organisations have been doing both in India and other countries."

Microfinance isn’t a silver bullet, but for women like Margaret Banda, it’s an important step on the ladder out of poverty.

You can donate to the Salvation Army's Generate project here, or by phone on +44 (0) 20 7367 4777 

 

Education vs Job Creation

 

A policy question from Taneshia House, who this week asks,

“What do you say when people - economic justice activists - say formal education doesn't solve poverty? What if they say that job training and job creation is more important? Is that true?”

They both matter. It’s not possible to create jobs that reduce poverty without an educated population, but education doesn’t solve poverty by itself. To unpack this, it’s worth thinking a bit about the role that each of these things – jobs and education – play in reducing poverty.

Looking at education first, it’s important to note that it’s about more than preparing people for the world of work. In a review of research on the area, academics Emily Hannum and Claudia Buchmann noted that,

“Countries with better-educated citizens indeed have healthier populations, as educated individuals make more informed health choices, live longer, and have healthier children. The populations of countries with more educated citizens are likely to grow more slowly, as educated people tend to marry later and have fewer children.”

Beyond this, people who can read and write can participate more fully in social and political life, and have a greater opportunity to influence the world around them. Development economist Amartya Sen talks about education in terms of freedom, arguing that education gives individuals increased opportunity to pursue their dreams.

But, as many people argue, having a high school certificate or university degree doesn’t end poverty. You can be educated and hungry, smart and unemployed.

That’s where job creation comes in. As agricultural productivity increases, far fewer people are needed in primary production, meaning that huge amounts of labour are freed up for work in other industries like manufacturing and services. Or, as is often the case, freed up to be underemployed or unemployed.

Formal education creates people with skills to work, but doesn’t create jobs for these people (other than a few who are employed in the education sector). Good formal education, backed up with the right (and culturally appropriate) incentive structures can be an engine for enterprise and the flourishing of small businesses that create employment. Job training and informal education can foster skills for jobs that already exist, bridging the gap between formal academic skills and the needs of the workplace.

Spending time in places like Cambodia, Ghana and Rwanda, I’ve seen first hand the huge challenges facing high school and university graduates. Having worked hard in formal education, they’re often bewildered to find so few jobs available, and despite the ambitions of many, they often lack the skills to start their own enterprises. These countries desperately need the skills these young people have, but they don’t have the resources to put them to good use at the moment.

That’s where the role of things like outside investment, short-term migration overseas and aid can be so important. They can provide the employment opportunities, markets and resources needed to help educated citizens move out of poverty and become productive taxpayers, contributing to their own economy and creating opportunities for others.

At the Global Poverty Project, we’re committed to providing you the tools to take more and better action that will really see an end to extreme poverty, starting with the ability to ask questions like this. If you’d like to ask a question for future blogs, email it to blog@globalpovertyproject.com, ask us on our Facebook discussion page or tweet at us using the hashtag #askGPP.
 

Natural Resources - a curse or a solution?

 

Imagine for a moment that you’ve just been elected as President of Nigeria, rising to power on a ticket that set out to halve poverty in your country within five years.

You’ve done the numbers, and in purely financial terms, it should be easy. You exported around $55b in oil in 2009, and need only a fraction of that amount as a government to invest in poverty-reduction measures.

But, for years governments before you have failed. The oil and other natural resources that should be your ticket out of poverty have been a curse. They’ve made other exports uncompetitive, created huge competition for power, allowed corruption to flourish, and sparked conflict.

Sitting behind your desk on day 1, it’s easy to be overwhelmed by the challenge ahead. The money is clearly out there, but it’s leaking into all the wrong places because of theft, mismangement, and poor decisions in the past.

You know that it could be different. Gazing into the middle distance, you’re reminded of a meeting you had with Norwegian officials just a few weeks before. They outlined to you how their country had turned oil revenues into national wealth and one of the world’s highest standards of living. As you chatted to them, you saw that these officials were no smarter, better educated or more honest than Nigerians, and that your country too could make resources work.

Grabbing out a pen, you start to scribble. You write out the decision process from exploration to discovery, extraction to export. You map out the key players involved – your government, the citizens who live in the resource-rich areas, local and foreign companies who do the extraction work, and the foreign governments and companies who buy the end products. With the help of advisors, you start mapping out where the money goes and why, who decides what to do, and how they do it.

With all this in hand, the question becomes – if this is the reality, what do we want to change? What are the guiding principles and ideas that should drive the resource extraction process so it benefits everyone?

Well, a group of the world’s leading economists, statesmen and entrepreneurs have done just that. They’ve developed the Natural Resources Charter, a set of twelve precepts setting out guidelines on how to best manage the economic opportunities created by natural resources. Driving the precepts are the reality that natural resources in a country are owned by the people. Therefore, the exploitation of a natural resource by a country should be designed to secure the greatest social and economic benefit for its people.

As President of Nigeria, the Charter has been written for people just like you. It’s designed as a tool for your Government to use to inform decision-making. Alongside this, the Charter places responsibilities on both the extraction companies and the home countries of these companies. It requires that companies consider the environment and social dynamics of the country they’re operating in, and avoid major human rights violations. It requires developed countries to push for a more transparent industry in the international arena and also regulate the behaviour of their companies at home and abroad by taking these measures into consideration.

Of course, you’re not really the President of Nigeria. But, as someone who cares about the end of extreme poverty, you’ve got an opportunity to see that natural resources are more often used for the benefit of people. Nigeria’s annual oil exports are greater than the total amount of annual aid to Africa, which means that ending poverty requires that these resources are used better.

That’s why we’ll be increasingly focused on natural resources, corruption and transparency at the Global Poverty Project in the coming months. We’ll be working with the Natural Resource Charter and others to outline what can and is being done to make resources work for the world’s poor, and what role each of us can play in making this happen.

GPP Supporter Questions to Nestle - Responses

 

Recently we met with the team at Nestle UK, and they offered to answer some of your questions about how they work. After gathering your suggestions on Facebook, we passed the five most liked questions onto Nestle. These are the answers to the first two questions from Nestle's Corporate Affairs team. The answers to questions 3, 4 and 5 are posted here. Our thanks to Alison and Sam at Nestle for being open to such dialogue.

1/ John Scale: I would like to ask why they continue to aggressively market baby milk formulas in developing countries, even going as far as promoting them as providing protection against illnesses such as diarrhoea despite the mass of evidence showing how this is causing huge harm to children in these countries and continuing breast-feeding could save 1.5 million children a year.

John, you raise a number of important points. Nestlé supports exclusive breastfeeding for the first six months of a baby’s life with continued breastfeeding and the introduction of adequate complementary foods thereafter because as the World Health Organisation (WHO) has stated “… some 1.5 million children die each year because they are not adequately breastfed”. However, the WHO never suggested that ‘not adequately breastfed’ meant ‘fed on infant formula’. The vast majority of women in developing countries breastfeed but exclusive breastfeeding is rare. In those countries, most children who are not exclusively breastfed do not receive infant formula, but are given water, solid foods like sticky rice, or whole cow’s milk which are not considered appropriate substitutes (for more information, see: www.unicef.org/publications/index_51656.html).

We take our responsibility to market infant formula in a responsible manner very seriously and have, since 1982, applied the WHO International Code of Marketing of Breast-milk Substitutes universally and voluntarily in developing countries. Today this means that we do not advertise or promote infant formula to the public; do not donate free samples to mothers or to hospitals; ensure that all our infant formula products state that ‘breastfeeding is best’ with instructions for the safe preparation in the primary languages as well as diagrams to overcome the challenge of low literacy. Also, all our labels comply with local legislation and all health claims we make are scientifically substantiated. If you know of a Code breach, tell us and we will investigate. For more information please follow the link to our website www.babymilk.nestle.com.

2/ Graeme Hodge: Nestle: when are you going to expand your Fairtrade accreditation to all of your products and stop hiding behind the cocoa initiative- an initiative that has made little or no change to the daily reality for over 12,000 trafficked children who produce your cocoa products for you?

Nestlé has been working to address key issues facing cocoa farmers for many years and in 2009 we launched our £65million Cocoa Plan to accelerate programmes that aim to improve the economic, social and environmental issues facing cocoa farming communities. See www.thecocoaplan.com

Focusing predominantly on Cote d’Ivoire the world’s largest cocoa producing country the plan is based around working closely with farming cooperatives, paying a premium for better-quality cocoa, investing in farmer training and providing 12 million high potential cocoa plantlets to improve yields and therefore farmer productivity and income.

Kit Kat is our leading confectionery brand and Fairtrade certification of our most iconic brand is a demonstration of our commitment to bringing The Cocoa Plan to life and improving the lives of cocoa farming communities. We have started with Kit Kat four finger because one of the challenges of certifying a brand as large as Kit Kat is that there is currently insufficient supply of quality Fairtrade certified Ivorian cocoa to certify the whole brand. We will continue to work with Fairtrade to build relationships with additional co-ops to increase the supply of high quality Fairtrade cocoa from the Ivory Coast.

With regard to child labour Nestlé is against all forms of exploitation of children. The company is firmly committed to actions to eradicate unacceptable practices, in line with our commitments in the Nestlé Corporate Business Principles and the Nestlé Supplier Code and you can find out more about these on our website at (http://bit.ly/ieh2aB and http://bit.ly/dKZ4TH). We are also a founding member of the International Cocoa Initiative set up specifically to address child labour issues in cocoa farming. I would also urge you to consult the Fairtrade position on child labour. The Fairtrade Labelling Organisation recognises “child labour is a very complex and intractable issue...” Unfortunately, “no person or organisation can simply guarantee that child labour does not occur in a supply chain, but Fairtrade can provide assurance that its standards, certification, and producer support services all contribute to a solutionhttp://bit.ly/fx20E2.

MDG8: Dropping Debt

 

I remember first seeing this amazing video by award winning Director Antony Minghella back in 2005, a few weeks before world leaders descended on Gleneagles for the G8. It captured the essence of the injustice that was the debt owed by some of the world's poorest countries to some of the richest.

Up until this point, the whole debt issue - which saw illegitimate debts to rich countries being paid back at a much higher rate than some poor countries were receiving aid - had been a sideline in my mind, and in the minds of many around the world. Although I empathised with the cause, and agreed that poor countries shouldn't have to pay back unfair debts, I couldn't get my head around of how to make sure it didn't just because a cycle of loan-forgive-loan forgive. 

But, thanks to the tireless efforts of the Jubilee Debt Campaign, especially in the UK, debt had moved to the forefront of the fight against poverty. They rightly argued that ultimately fighting poverty shouldn't be about charity and aid - it should be about justice and self-sufficiency. But, how could a country ever hope to reduce poverty if they were trapped in a cycle of debt? I chatted recently to Nick Dearden about the campaign, what it is about, and what it's achieved to date. Here's what he said...

We'll publish more of this interview with Nick - including much more analysis of the debt issue in the coming weeks as consider the role of debt and development financing issues looking to the future.