On Poverty Alleviation and How It Should Be Done

On Poverty Alleviation and How It Should Be Done
By Alyssa Encarnacion | 3 March 2017

Over the years, countless poverty alleviation programs have been tried and tested by institutions around the world. Governments and organizations alike have experimented with various types of projects in an attempt to answer the question, “How do we make the poorest of the poor better off?” To this day, the answer to that is still unclear.

Efosa Ojoma from The Guardian provided one possible solution in his recent article wherein he proposed that approaching poverty as a process problem would be more effective in improving the welfare of the poor. Contrary to the resource problem approach wherein the main concern is what to give, the process problem approach would focus more on how to give aid in such a way that the beneficiaries themselves will be actively involved in making these sustainable in the long run.

He demonstrated this by mentioning M-Pesa, a “mobile phone-based platform for money transfer and financial services” initiated in Kenya in 2007. The initial objective of the project was to support microfinance via Vodafone’s mobile platform, given that in-person transactions were logistically difficult to conduct. With that, M-Pesa was created and since its launch, it has successfully extended financial inclusion to roughly 20 million Kenyans, many of which are low-income individuals who access the platform for its basic financial services (e.g. deposits, withdrawals) and microcredit provisions. Other economic activities conducted through the platform include business transactions, fundraising for small enterprises, payments for households, etc. In short, M-Pesa revolutionized the way Kenyans can receive and transfer cash, making their money so much easier to access and quicker to reinvest so that it can grow.

Ethiopia serves as another example. HIV incidences began to rise in 1986, so much so that by the late 1990s it was prevalent in 3.4% of the population (between 15-49 years old). To address this, the Ethiopian government adopted the Community Conversation approach initiated by the UNDP in their Leadership Development Program. Their initiative involved training facilitators to reach out to local communities and hold discussions regarding HIV and the circumstances surrounding it, with the aim of informing citizens about the disease and how it can be prevented. The community conversations were conducted across the country, making it a priority in the national health program along with endorsement from the Ministry of Public Health. The impacts have been significant. By 2011, the number of Ethiopians who received HIV testing and counseling increased 10-fold compared to the data in 2005. The positivity rate of HIV among those being tested also declined from 14 million in 2005-2006 to less than 2 million in 2012-2013.

These two examples show how addressing the issues from a process problem approach can generate significant improvements. Instead of simply creating more ATM machines or distributing free condoms, the developers of M-Pesa and the Ethiopian government respectively focused on addressing financial inclusion and health in the long-term. In this respect, Ojoma was correct in arguing that the process problem approach is effective.

Contrary to Ojoma’s other arguments, however, the resource problem approach does hold some merit in certain instances. The Clean India Campaign he mentioned in his article was clearly a failed project; perhaps the Indian government made the wrong estimates as to how many toilets they should’ve built, etc. Providing free education, however, arguably leads to significant benefits to the students regardless of the country they are living in. It serves as a stepping stone for secondary or higher education. It empowers them by giving them basic knowledge they can use to help themselves or their families. It can even train them for employment in the future. Creating more public schools to make public education more accessible is not a wasted investment, unlike what Ojoma implied in his article; in order to become literate and skilled, education needs to be provided as a resource which the students can use to improve themselves.

The point of contention, in short, is that using the resource problem approach can be beneficial at times, depending on the nature of the issue being addressed.

One example is the Bolsa Familia Program in Bazil. Launched in 2003, Bolsa Familia is essentially a conditional cash transfer (CCT) program with three main elements: 1) direct income transfer to poor families; 2) compliance with conditionalities in order to reinforce reinforce basic social rights; and, 3) coordination of programs to support households in poverty. Households are classified into certain categories, and each category is assigned a specific income transfer. Each grant comes with conditions, such as required vaccination or attendance in school and seminars, etc. If these conditions are met, then the income transfer will continue for the duration of the household’s registration in the program.

Although a process is involved (i.e. requiring conditionalities to be met, etc.), Bolsa Familia can be seen as a program that essentially provides resources, which in this instance is cash. While Ojoma may argue that this is unsustainable, the data shows otherwise. 90% of the funds reach the lower 40% of the population, allowing them to buy their necessities (such as food, clothing, etc.) while also providing other needs for the children (such as school supplies). From the initial 1.7 million households that were registered in the program in 2003, only 522,000 of those households remained by 2014, meaning the rest were able to generate income that surpassed the limits needed to be considered impoverished. Income inequality fell by 4.6% in 2004 compared to that of 1995, and although inequality is still at large in Brazil, the program has clearly helped in closing that gap already.

Another example is the Pantawid Pamilyang Pilipino Program, or the 4Ps, which is another CCT program implemented in the Philippines by the Aquino administration. Just like the Bolsa Familia, its main elements include social assistance (i.e. providing income transfers to poor families) and social development (i.e. investing in children’s health and education, promoting awareness on family development, etc). Essentially, the 4Ps also follows the resource problem approach; annual income is transferred to qualified families to cover health and nutrition expenses, and so long as predetermined conditions are met, income will continue to be transferred to these families.

Although there have been complications in the execution of the program, the 4Ps has undoubtedly produced positive results. Similar to the Bolsa Familia, 90% of the covered households belong to the lower 40% of the population in terms of income. In select covered areas, school attendance and the number of children who availed of health services increased compared to before the program was implemented. In 2016, roughly 1.5 million families under the program had improved their status to “non-poor,” meaning they were able to generate enough income to surpass the limits needed to be qualified as under the poverty line. Along with that, 66 beneficiaires of the 4Ps graduated with bachelor’s degrees and are set to enter the workforce, to be assisted by the Department of Labor and Employment in choosing their respective careers.

These two examples show that the resource problem approach can, at times, be more appropriate and effective in targeting certain issues developing countries may be facing. Education and health are important, but sometimes what individual households need more in order to treat these as priorities are the resources to provide themselves these basic necessities. Holding seminars on the importance of school or vaccination may not be enough to convince them that these are important; they also need to be given a starting point to be able to realize that.

Ultimately, the main takeaway from all of these is that there is no perfect solution to poverty. Similar to how there are many issues each country must face, there are also many underlying factors that must be considered when facing these issues, such as the scope and nature of the problem, the beneficiaries involved, the ability of the government to provide for these beneficiaries, and much more. Assessing development projects from the resource problem approach and the process problem approach will significantly help in crafting the necessary solutions, but in the end the best way to measure whether a project is effective and sustainable is if it has benefited the poor and vulnerable, just as they were meant to.

Sources:

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On Poverty Alleviation and How It Should Be DoneBy Alyssa Encarnacion | 3 March 2017

On Poverty Alleviation and How It Should Be Done
By Alyssa Encarnacion | 3 March 2017