Tag Archives: Poverty

What is a Slum in Tanzania?

With time my perception changes. I can almost feel it. It’s due to the fact I am confused. What is poor and what is rich? At their extremes these terms are clear. But what’s going on in the middle? Whenever I see a dirt poor person with threadbare clothing and no shoes walking the streets the sign “poverty” flashes up in my head. But occasional local companions label such persons as “crazy”. So it starts to look like only the mentally ill are at the very bottom of the pyramid.

Housing is a similar case of confusion. What clearly looked like slums to me at the beginning is looking less and less so. I see unpaved roads, narrow pathways and no running water but then I see power lines running through such places and I see that most houses are built from bricks. Can this qualify as slum? Continue reading What is a Slum in Tanzania?

Why Do They Spend What They Don’t Have?

I grew up with a piggy bank. My generation was told by parents that it is important to save “for bad times”.  When bad times never came and I grew up I started to get a different idea of saving and the value of money. Yet I never considered credit except for buying a home. This one belief is hard to change: “Don’t spend what you don’t have.”

Yet the business model of microfinance institutions (MFIs) is based on the wish Continue reading Why Do They Spend What They Don’t Have?

The Epic Race of Population vs. Economy

Let’s do a little thought experiment to visualize the challenges faced by many developing countries. Imagine a country with a population growth of 5% and economic growth of 3% per year. The standard of living in year 0 would be 100%. Where would that country be after twenty years?

Continue reading The Epic Race of Population vs. Economy

Salt, Soap and Shoes for Tanzania’s Elders – A Success Story

Old people in rural Tanzania face a difficult life. While health and strength deteriorate they can not hope to be supported by one of their many children, who are either unwilling or unable to help or have been consumed by AIDS.

In addition to being less and less able to provide an income they sometimes become primary caretakers of their orphaned grandchildren. Continue reading Salt, Soap and Shoes for Tanzania’s Elders – A Success Story

Rich Man’s Safari in Poor Man’s Country

This week I’ve been looking into some ways of experiencing the abundant nature of Tanzania, rich habitats with intact food chains. Looking for a place where large herds of wildebeests can be seen on their migration, where lions lie low, where cheetahs chase, where antelopes frolic around and where vultures wait patiently for predators to open up a carcass. Possibly with an opportunity to visit Continue reading Rich Man’s Safari in Poor Man’s Country

Microfinance Reality Check

Microfinance promises a lot to many people. It depends on which promise we’re looking at: fight poverty, generate profits, provide financial services to the poorest, empower women, support entrepreneurs and create jobs.  Each has its own merits and each only provides a sliver of the “truth”. 

Take “fight poverty”. Only 50% of the loans are productive to start with. The other half don’t generate revenues and are used to buy food, pay school fees or medical bills. Obviously a non-productive loan is not considered a success in the narrow sense. But looking at the broader picture it might make sense to provide financial means to smoothen the income of the poor. And from an entirely different angle it is somewhat surprising that the poor repay their debts more easily than they save money beforehand.

Then there is the question of whom you ask: practitioners tend to have a more positive view based on anecdotes while quantitative researchers have a hard time proving positive impact and usually have to slice and dice the data to find impact, e.g. among rural female users of productive loans.

The existence of strong competition, market entry of traditional banks, new technologies and favorable regulatory environment all point to a potential success story, where efficient companies produce profits and operate in a sustainable manner.

To summarize: Microfinance services are helping, just not in the way microfinance’s foundational belief system says it does. If few clients actually use microfinance services in the way the original designers of microfinance programs expected them to, that doesn’t mean it is a failure. Microfinance does address the problem of income unpredictability. A stable, reliable source of credit, combined with savings, allows clients to meet their spending needs even as income ebbs and flows.

Hat tip to jaysupetran from Access Advisory for an in depth commentary oft the situation: Microfinance reality check.

(photo by Jovan J on Flickr)

Tanzania in Comparison

To get more of an idea about Tanzania I will compare it with Singapore, Switzerland and the United States – all countries represented to the 2015 cohort of Credit Suisse’s Global Citizens.

Tanzania Singapore Switzerland United States
Nation founded in 1964 1965 1291 1777
Size by rank 31 192 136 3
Population (rank) 50 mio (26) 6 mio (116) 8 mio (96) 318 mio (4)
Population growth rate 2.8% 1.9% 0.8% 0.8%
Life expectancy at birth 61 years 84 years 82 years 80 years
Infant mortality by rank 49 220 203 169
HIV/AIDS prevalence rate 5.1% 0.1% 0.4% 0.6%
Obesity prevalence rate 5% 7% 18% 33%
Literacy rate at age 15 68% 96% 99% 99%
GDP per capita (PPP) $ 1700 $ 62,400 $ 46,000 $ 52,800
Social Progress rank 116 46* 3 16
Population below poverty line 36% 25%** 8% 15%

* Malaysia figure
** officially no data is available, therefore best guess according to this source is shown

How to shape the future

After promising progress in the last 15 years the world community wants to finish off what they started and tackle the next challenges: Sustainable Development Goals (SDG) or a post-2015 Development Strategy which still needs to be agreed and finalized in detail. The goals is to drive five big transformation shifts until 2030:

1. Leave No One Behind
After 2015 we should move from reducing to ending extreme poverty, in all its forms. We should ensure that no person – regardless of ethnicity, gender, geography, disability, race or other status – is denied basic economic opportunities and human rights.

2. Put Sustainable Development at the Core
We have to integrate the social, economic and environmental dimensions of sustainability. We must act now to slow the alarming pace of climate change and environmental degradation, which pose unprecedented threats to humanity.

3. Transform Economies for Jobs and Inclusive Growth
A profound economic transformation can end extreme poverty and improve livelihoods, by harnessing innovation, technology, and the potential of business. More diversified economies, with equal opportunities for all, can drive social inclusion, especially for young people, and foster sustainable consumption and production patterns.

4. Build Peace and Effective, Open and Accountable Institutions for All
Freedom from conflict and violence is the most fundamental human entitlement, and the essential foundation for building peaceful and prosperous societies. At the same time, people the world over expect their governments to be honest, accountable, and responsive to their needs. We are calling for a fundamental shift – to recognize peace and good governance as a core element of well-being, not an optional extra.

5. Forge a New Global Partnership
A new spirit of solidarity, cooperation, and mutual accountability must underpin the post-2015 agenda. This new partnership should be based on a common understanding of our shared humanity, based on mutual respect and mutual benefit. It should be centered on people, including those affected by poverty and exclusion, women, youth, the aged, disabled persons, and indigenous peoples. It should include civil society organizations, multilateral institutions, local and national governments, the scientific and academic community, businesses, and private philanthropy.
(source: Wikipedia)

My thoughts: Quite a program, quite a show. Wondering why the genocide in Rwanda was allowed to happen and why Iraq was invaded. Both seemingly go against what humanity wants to achieve. Let’s find out what the world community of 193 countries will agree on in their September 2015 meeting. What are your opinions?

(photo by U.N. on flickr)

Saving the World – Millennium Style

I was wondering how the development industry wanted to make this world a better place in the year 2000. Here’s what the global community wanted to achieve between 2000 and 2015: Millennium Development Goals (MDG)

  1. Eradicate extreme poverty and hunger
  2. Achieve universal primary education
  3. Promote gender equality and empower women
  4. Reduce child mortality
  5. Improve maternal health
  6. Combat HIV/AIDS, malaria, and other diseases
  7. Ensure environmental sustainability
  8. Develop a global partnership for development

(source: Wikipedia)

Do you want to know how well the world has done in 14 years? Here is the latest 2014 chart showing some very real progress. Compare it to 2005 (below) to see how the number of the red cells has gone down. 2014: 6 elements in the red; 2005: 34 red cells. That’s a whopping 75% improvement!

Currently the strategy for the future is being discussed. Find out more in the next post.

MDG_2014_progress_chart
Status 2014
MDG_2005_progress_chart
Status 2005