Defeating Global Poverty

I attended the official launch event of the new partnership alliance between microfinance leaders Unitus and Accion in Bangalore this past Friday. This is a unique partnership of two experienced and innovative organizations who are turning their expertise and resources to bring massive acceleration of access to microfinance to India, a country with 1/3 of world's poorest and to date significantly underserved with the empowering help of microfinance services.

The alliance has set an extremely ambitious goal of serving 15 million poor households in India by 2015 estimating to touch conservatively 75 million people (assuming 5 people per household.) This would represent a massive impact on global poverty in addition to being a transforming process for India.

Unitus will be focusing on "scaling up" innovative, early-stage/start-up Microfinance Institutions (MFIs) and Accion will be focusing on helping large, traditional banks in India "down-scale" to start providing relevant financial services to the poorest. Unitus has a good start with current partnerships with 5 very promising MFIs who are demonstrating significant progress already.

An overview of Microfinance

Labels: accion, india, poverty, unitus

An article in the Sunday Times of India called Healthcare for a billion by Kiran Mazumdar Shaw reports that rural indebtness caused by illness is far greater than that caused by crop failure. The problem with this kind of indebtness for the poor is that often they have to go to moneylenders charging often 10% interest per day(!) to pay these bills resulting in long-term (or possibly lifetime) indebtedness and resulting extreme poverty.

She highlights a couple of success stories both governmental and private sector driven. The government in the south India state of Karnataka (capital is Bangalore) has a program called Yashaswini Health Insurance under which various co-ops receive insurance coverage for a range of surgical procedures for 60 rupees (about $1.50) per year. A private initiative, Arogya Raksha Yojana is a more comprehensive insurance program covering surgeries, hospitalization, medical consultations and medicines for just 120 rupees (about $3.00) per year.

She ends with a quote from Winston Churchill: "Insurance brings the miracles of mathematical probability to the rescue of the masses."

If this statistic is accurate, then health insurance needs to be a top priority for the growing microfinance sector.

Labels: healthcare, microinsurance, poverty

If you don't have time to read Jeffrey Sachs book "The End of Poverty", here is an interview on "Can we end global poverty?" with John Cassidy of The New Yorker where he lays out some of his arguments.

Labels: poverty, sachs

Interesting article in recent Fortune business magazine called How Shantytowns Become Real Cities* by Robert Neuwirth highlights his experiences in living in shantytowns (basically, slums) on the outskirts of major 3rd world cities. These are people who are moving from rural to urban environments and having to setup their homes/shelters as squatters. He estimates that there are currently about 1 billion squatters and is increasing by 70 million per year.

He suggests that De Soto's suggestion of focusing on establishing legal title for these people is not the right priority and might even be negative right now. Instead, he advocates for two things: (a) "security of tenure"—confidence that they will not be arbitrarily evicted; (b) access to politics—some way to participate in the larger city.

He describes a success in an area on the outskirks of Instanbul, Turkey called Sultanbeyli where people began colonizing undeveloped land in the 1970's with the usual lack of running water, electricity and sanitation. Today, they now have a city with a mayor who "presides over an amazing squatter establishment: a planning department, a department of public works, a sanitation department, and a municipal bus service. This squatter city of 300,000 people has stores, offices, restaurants, banks, Internet cafés, and a post office in its bustling downtown. Almost every home has access to legal electricity, water, and sewers. The community is exploring ways to compensate claimants who held earlier rights to its land. And it has even created rules to rein in its own growth, thus protecting adjacent forests that are crucial to Istanbul’s water supply. Sultanbeyli has done all this without title deeds."

How did this happen? Turkey has a law that when there are 2,000 inhabitants, they are legally able to apply for recognition as a municipality, which gives the residents a chance at self-government.

*I've noticed that Fortune.com seems to make access to archive article available only for paid subscribers after a certain amount of time.

Labels: poverty

Teach for America is an interesting program which recruits highly qualified non-education major college grads for two-year stint as teachers in under-achieving US schools. Many of the recruits are not planning a teaching career and return to post-graduate schools afterwards. This program is getting a lot of interesting corporate and private foundation sponsors because of its innovation.

Read article in New York Times.

Labels: poverty, social entrepreneurs