Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty

“For more than fifteen years Abhijit V. Banerjee and Esther Duflo have worked with the poor in dozens of countries spanning five continents, trying to understand the specific problems that come with poverty and to find proven solutions. Their book is radical in its rethinking of the economics of poverty, but also entirely practical in the suggestions it offers. Through a careful analysis of a very rich body of evidence, including the hundreds of randomized control trials that Banerjee and Duflo’s lab has pioneered, they show why the poor, despite having the same desires and abilities as anyone else, end up with entirely different lives.

Through their work, Banerjee and Duflo look at some of the most surprising facets of poverty: why the poor need to borrow in order to save, why they miss out on free life-saving immunizations but pay for drugs that they do not need, why they start many businesses but do not grow any of them, and many other puzzling facts about living with less than 99 cents per day.

POOR ECONOMICS argues that so much of anti-poverty policy has failed over the years because of an inadequate understanding of poverty. The battle against poverty can be won, but it will take patience, careful thinking and a willingness to learn from evidence. Banerjee and Duflo are practical visionaries whose meticulous workoffers transformative potential for poor people anywhere, and is a vital guide to policy makers, philanthropists, activists and anyone else who cares about building a world without poverty.”

I bought this book on a whim on one of my recent book binges. I hadn’t heard anything about this book prior to buying it, but was pleasantly surprised (and excited) when I found the book’s excellent website, among some great economics and development bloggers I follow who recommend the book. It is even used as required reading in many university-level development courses.

The book was also recently awarded the Best Business Book of the Year prize by the Financial Times (FT) and Goldman Sachs.

I have high expectations for the book after reading about it and I highly recommend you pick up a copy for your own economics/development collection. Those who recommend it say it is not heavy reading, so go buy it and dive in!

Disclaimer: I linked to Amazon.com for those money-conscious readers buying the book online, but I highly recommend supporting your local brick-and-mortar bookseller by buying it there instead.

Improving access to financial services:

• Mobile payment system
• Micro-insurance system
• Micro-lending platform

Provision of agricultural information:

• Mobile information platform
• Farmer helpline

Improving data visibility for supply chain efficiency:

• Smart logistics
• Traceability and tracking system
• Mobile management of supplier networks
• Mobile management of distribution networks

Enhancing access to markets:

• Agricultural trading platform
• Agricultural tendering platform
• Agricultural bartering platform

via @IAALD

Those are 12 agricultural opportunities in utilizing mobile technology as highlighted by a recent report by Vodafone. The rewards? A potential $138 billion addition to developing world farmers’ incomes by 2020.

My particular interest is in the mobile information platform as well as the microfinance portion of the report: micro-insurance, micro-lending, and mobile banking systems. Along with those systems a tremendous need will arise for financial literacy and technology training. It is a great opportunity for educators and technologists across the world.

I have three questions:

• Will technology incubators (hint: @iHub) around the world heed the call to produce these technologies?
• What role will educators play in the need for financial literacy training outside of formal schooling?
• Given that women do the majority of the farming around the world, what effects will this technology have on their abilities to become more economically independent?

I recently met up with a group of environmental migrant women who have been with BRAC for about twenty years after being displaced from their homes due to riverbank erosion. One of them had started working in a printing press making flyers, which is the way local candidates promote themselves before the elections – by stringing the flyers up like laundry on a clothesline. She realized that it was a pretty simple yet profitable business and decided to start her own printing press a few years later. After telling me this, her daughter arrived and I was dumbfounded: twice the size of the thirteen-year-olds I had grown accustomed to seeing in Bangladesh 25 years ago when I lived there, she was in school with the dream of one day becoming a doctor. This is what happens when children eat enough nutritious food every day. I see those changes everywhere: wealth in village communities, larger homes with sanitary latrine labs, three meals a day, and husbands that are involved in the lives of their wives and daughters.

That is from a recent interview with president and CEO of BRAC USA, Susan Davis. Both this woman and organization are very inspiring to those like myself interested in how microfinance can help alleviate poverty and build opportunities for millions of people across the globe.

Intercontinental Ballistic Microfinance from Kiva on Vimeo.

In this week’s Kiva Pledge Update I am supporting Tettey, who deals in mobile phones and accessories in Kade, Ghana.

According to his Kiva business page:

Tettey is forty-three. He is married and has four children, all in school. He lives with his wife and children in a rented apartment in a town called Kade in the Eastern Region of Ghana. He works hard to be able to provide for the family. Tettey is a trader. He deals in mobile phones and accessories. He sells in a shop by the roadside in his community. He tells us that he buys the phones from the big cities at affordable prices. Tettey has been in business for three years and wants a loan to procure all kinds of phones in larger quantities in order to expand his business.

Stay tuned for the next Kiva Pledge Update on December 6th.

In this week’s Kiva Pledge Update I am supporting John Lubowa, who currently rides a boda-boda in Lugazi, Uganda.

According to his Kiva business page:

Lubowa John is the leader of his lending group in Lugazi. He is 36 years old, married, and has five children aged 5, 7, 9, 11 and 13. They are all in primary school. John also takes care of seven dependants, including orphans.

John is a hardworking man and has been a boda-boda rider for Lugazi Town Council for the past five years. He shows good customer care towards his clients. His business is seasonal, which affects his cash flow. He is able to make 20,000 UGX a week profit. He has a dream of buying his own bike so that he could earn a larger income and continue to educate his children to the last level. John is requesting a loan to purchase a cow (with a top-up from his savings) so that he could sell milk to diversify his family income.

Stay tuned for the next Kiva Pledge Update on November 22nd.

In this week’s Kiva Pledge Update I am supporting Ayub Mupere’s Group, who is currently operating a clothing boutique in Lugazi, Uganda.

According to their Kiva business page:

Mupere Ayub has had a boutique in Bukamunye for one and a half years. He is a married man with nine children between the ages of 1 and 18, as he takes care of his siblings. He is a determined man and he is lucky that he is able to make 80,000/= profit a week. Before having a boutique, Ayub was a fisherman. He does not regret the change, although his business is affected by high competition. He ensures that he treats his customers well and has quality clothes for resale; hence, more sales. In the future, Ayub wants to be a wholesaler so that he can build a house for his family.

Ayub needs a loan to be able to restock his boutique with more clothes for a steady supply of products. He is the leader of his lending group in Lugazi.

Stay tuned for the next Kiva Pledge Update on November 8th.

In this week’s Kiva Pledge Update I am supporting Margaret Nankabirwa’s Group, who is currently operating a secondhand clothing store in Kampala, Uganda.

According to their Kiva business page:

Nankabirwa Margaret is the leader of her lending group in Namasuba. She is a young woman who is obsessed with the desire to succeed through hard work. She is not yet married and has no child.

Margaret has a business selling secondhand clothes and has a shop in central Kampala. She joined her lending group to be able to access more capital for her business since she could not find any other alternative and, sincerely, she has found it worthwhile. She wants to be an independent lady and, even if she gets married, not leave everything to her husband.

Margaret needs a loan to be able to buy more clothes for increased variety, leading to increased sales and hence more income and profits.

Stay tuned for the next Kiva Pledge Update on October 25th.

In this week’s Kiva Pledge Update I am supporting Semugenya James’ Group, who is currently operating a general store in Lugazi, Uganda.

According to their Kiva business page:

Semugenya James is a hardworking woman with a retail shop in Lweru trading centre. She is 45 years old and married. She is responsible for twelve children between the ages of four and 24 years, some her own and some, orphans.

Semugenya used to be a farmer but was affected by the drop in price of produce and so changed to retail sales. From her shop she makes 200,000 UGX in profits, mostly attributable to the use of her loan and the quality of her products.

At the moment, Semugenya is requesting a loan to restock her shop with more goods and to pay for part of her children’s school fees. Semugenya dreams of becoming a wholesaler as well as educating her children to the highest level.

Stay tuned for the next Kiva Pledge Update on October 11th.

In this week’s Kiva Pledge Update I am supporting Dawa Marita, who is currently in the business of selling bread and beans in Gudele, Sudan.

According to his Kiva business page:

Dawa Marita is currently in the business of selling bread and beans and is requesting a loan to stock more beans to sell. Dawa is 39 years old and is Married with a husband that is a teacher. She has 4 children and her children go to school. With the extra profits from her loan, she hopes to be able to open up a shop BRAC’s holistic approach to poverty alleviation and empowerment of the poor encompasses a range of core programs in economic and social development, health, education , and human rights and legal services which are delivered through an extensive network of village organizations. BRAC has become one of the world’s largest NGOs as a measured by the scale and diversity of its interventions. In 2007, BRAC started operations in Southern Sudan. The microfinance program, which is targeted towards returning war refugees, has already formed 418 village organizations with more than 14,000 women members.

Stay tuned for the next Kiva Pledge Update on September 27th.