standard bank group
The Standard Bank Group is among the longest-standing banking institutions in South Africa. Today, the company is the largest African bank by assets and earnings.

Beginning in the Eastern Cape of South Africa in 1862, Standard Bank emerged as the foremost financial institution in South Africa. Currently, the Standard Bank Group operates in 20 African countries, including emerging markets.

Emerging markets are one of Standard Bank’s specialties. They work with small groups to provide lending services when other banks would not. One of their goals is to provide sustainable development initiatives in order to manage their environmental impact.

Standard Bank’s sustainable development initiatives highlight its advancements. These include reducing their purchasing energy consumption by four percent, reducing the amount of paper they used by 200 tons and implementing IFC’s Lagos Environmental Performance and Market Development Programme for the sub-Saharan Africa region.

They have strategic partnerships with several key African companies and multinational corporations. These groups include the Green Building Council of South Africa and the International Emissions Trading Association.

The Standard Bank Group and their partners work toward developing a higher standard. In addition to several environmental initiatives, the Standard Bank Group also looks to influence the socioeconomic conditions of the overwhelming poverty. Approximately 40 percent of the population in sub-Saharan Africa lives in deplorable conditions.

The Standard Bank Group prides itself on boosting economic activity in South Africa. One effective way they achieve this is through financing the building of public infrastructure projects, which contribute to job growth in the unskilled and semi-skilled labor markets.

Another way Standard Bank contributes to the alleviation of poverty is through micro-lending ventures in which individuals are given small loans that are repaid over time. The bank facilitates growth for people needing money to help start businesses or send their children to school.

On Feb. 2, 2015 the Standard Bank Group decreased significantly in size and reach when it sold its majority stakes to the Industrial and Commercial Bank of China. The ICBC acquired 60 percent of the Standard Bank’s London Bank for approximately $765 million.

Currently, the Standard Bank Group is receding from the global market. It has sold major shares in international emerging markets such as in Russia, China and the UK in order to focus more of their energy and resources on investing across the African continent.

– Maxine Gordon

Sources: Ventures Africa, Standard Bank
Photo: Africa Top Success

digital banking
Cash-based systems for holding money are inefficient and hold a lot of risk, with especially high consequences for the world’s poor. With ‘digital cash’ and saving methods, more people are able to experience financial inclusion in modern banking, suffer less risky consequences and begin investing in their future.

Much of this banking is done through mobile phones, which have become increasingly available to developing countries. About 89 mobile phones exist per 100 people in these areas. Even non-financial institutions, such as small businesses, use mobile payments in order to perform faster business and expand their customer base.

Studies in Mexico have shown that in areas where more banking institutions were introduced, there was a rise in informal small businesses, as well as a seven percent rise in incomes. This demonstrates that greater access to banking systems can lead to economic stimulation.

Having financial transactions performed on mobile phones makes banking services cheaper and more feasible for the poor. Digital banking also comes with better financial records, making it easier for banks and other lending programs to develop credit scores, and lending methods that are tailored to their clients.

With digital banking, immediate transactions can be made from the comfort of one’s home, saving people time and money by avoiding a possibly long commute and day away from work in order to get to a bank. Digital banking also makes money less susceptible to common risks such as thievery, natural disasters, or manipulative friends and relatives.

Some people in these situations even pay others to keep their money safe, adding another unnecessary payment to their expenses.

Long distance transfers also become easier to accomplish. Many households in developing countries receive their income from a family member working in other parts of the country who sends money periodically.

A poll was conducted in 11 sub-Saharan African countries that discovered that 83 percent of those polled had made a payment to someone far away using cash. This involved giving money to bus drivers, asking friends to carry money, or taking time off work to deliver the money themselves.

These processes are not only unsafe, but they can be unreliable and slow.

After a bank was set up in a region in Malawi in 2002, farmers used it to hold their money after the harvest, so that they would be able to continue buying fertilizer throughout the year. Their crop yields grew, therefore increasing overall income, while allowing these farming families to send children to school for even more future investment.

Recently in Kenya, clients of M-Pesa, a mobile money program, were observed and compared to Kenyans without the program. When natural disasters or unexpected events came, M-Pesa clients were able to receive financial assistance from friends and relatives at a much faster rate, making any negative impact much smaller, and allowing their regular lives to be interrupted as little as possible.

The success of M-Pesa has sparked motivation for other countries to create similar programs. Tanzania has over 47 percent of their population using mobile banking, and Uganda has begun the process, and already has 26 percent of their population as a member of a mobile banking system.

Even governments benefit from mobile banking. Since Mexico’s adoption of digital banking in 1997, their government lowered their spending on wages, pensions and social welfare by $1.3 billion, or 3.3 percent annually.

A study was done in India that concluded the government could save $22 billion annually just by digitizing all payments and transfers.

Although digital banking is expanding throughout the developing world, there are still 2.5 billion people without any banking system. Governments, non profits and private groups are now working on making banking more digital, and therefore more accessible to these bank less people.

-Courtney Prentice

Sources: Skoll World Forum, Bill & Melinda Gates Foundation, Forbes, Global Envision, TIME, Foreign Affairs
Photo: Gulf Business

mobile tech
As mobile technology continues to rise and expand across our nation, it has also begun to play an important role in poorer, less fortunate countries as well. Mobile tech is becoming a crucial part in alleviating poverty, helping both the individual and the community of these areas in need. Here are five ways that mobile tech is improving lives.

Education

While mobile tech has been increasingly implemented into curriculums in the United States to increase efficiency, so it has been in poorer countries as well. One educational, nonprofit company named Eneza Education has been participating in this effort. The mobile platform has over 100,000 students in 400 schools all over Kenya, and aims to increase enrollment to over 200,000.

Banking

According to The World Bank, some 2.5 billion people — half of the adult population — do not have a bank account. As a result, it is harder for individuals to accumulate wealth or save for the future. However, mobile banking is allowing more and more people around the world to have access to an electronic money saving system. Individuals are now able to take out insurance policies, set up loans and transfer money to one another. By allowing poverty-stricken individuals to save, overseas markets are being strengthened.

Tracking

Tracking, by means of mobile technology, is something of a double-edged sword, but many analysts agree that the pros outweigh the cons. One major drawback is that mobile tech is a powerful tool in organizing human trafficking. Traffickers have the ability to streamline, organize and, yes, even advertise their exploits through this technology. Despite this unfortunate use of tracking, officials are becoming increasingly able to crack these codes to bust traffickers. In fact, The Polaris Project has been able to harness data analysis to ensure the safety of people who have been kidnapped.

Health care

Without access to health care, it is nearly impossible to alleviate poverty in some regions of the world. Mobile tech is helping improve the quality of health care at a rapid pace. “Malaria No More” is an example of one NGO using mobile tech to improve health care conditions. One of “Malaria No More’s” campaigns has soccer star Didier Drogba dispatch a text message to millions of Kenyans that asks, “Are you and your family sleeping under your nets tonight?” Safety sleeping nets are an incredible way to reduce the contraction of malaria. The NGO reports that this campaign has increased the number of individuals sleeping under tents by 12 percent.

Agriculture

Mobile tech is at it’s best when it is transferring small amounts of data quickly between individuals and groups. This is proving invaluable to farmers. Take the Kenyan mobile platform SokoniSMS64 for example. The program uses SMS text messages to unload details about the wholesale price of crops to farmers. In turn, farmers communicate among one another and with traders to negotiate fair pricing. There are also services such as “iCow from M-Farm” that assists farmers who have livestock. The app can set schedules, helps organize feeding routines and even has a built in weather app, so that farmers can adequately prepare for upcoming days

– Andrew Rywak

Sources: huffingtonpost.com, businesssolutiontopoverty.com, womendeliver.org
Photo: Scribe

investments_in_Kenya
In January of this year, USAID announced a new poverty reduction initiative in Kenya. In partnership with Kenya Commercial Bank (KCB) and General Electric (GE), USAID promotes investments in Kenya between the KCB and medical institutions that need financial assistance to offer appropriate medical care.

To provide this assistance, banks will grant loans to hospitals and other health centers. These investments in Kenya would have previously been considered unsafe and unlikely to be returned, but under the agreement with USAID, they are guaranteed reimbursement. If a full return cannot be made, USAID will pay back 50 percent of the loan.

The KCB, according to the deal, is obliged to divvy $1 million for medical equipment like MRIs, incubators and other standard-increasing machinery to be used in local health centers. GE has left $660,000 dollars for USAID to use as potential reimbursement funds, though only $500,000 (50 percent) should be used. In return, the Kenyan health services will purchase GE equipment, expanding GE’s global market.

There are some, however, such as Monica Onyango of Boston University, who are afraid this may lead to an overstated importance of imported goods, when in fact, locally manufactured equipment is better for local economic development.

Michael Metzler, director of Development Credit Authority (which is the tool used by USAID to promote loans, as in the initiative in Kenya,) reassures skeptics like Onyango that local business and manufacturing will still have the power Kenya needs it to have to grow. Quoted recently in a Global Post article, Metzler said that “we’d be very sensitive to a deal in which that was the case.”

Aside from the deal’s economic influence, clearer effects of the enhanced medical treatment new loans insure will be seen in public health. This expedites poverty reduction in Kenya by reducing the number of deaths caused by preventable diseases thriving in impoverished communities. These include diseases such as HIV, diarrhea, tuberculosis and malaria.

Illness and poverty go hand in hand, and until one is dealt with, the other is likely to expand. This new USAID initiative incorporates this idea and acts accordingly.

Adam Kaminski

Sources: Health Poverty Action, Global Post, Federal News Radio
Photo: USAID

G20_global_banking_system_and_poverty
Last February, a group of G20 ministers met in Australia to evaluate and establish global growth goals for the next five years. In this meeting, they reasserted their countries’ commitment to “carefully calibrated and clearly communicated” monetary policy settings. According to a communique published following the meeting, G20 members will not allow for complacency when it comes to fostering growth measures. While specific plans have yet to be developed, the main goal is to raise the global GDP by 2 percentage points in the next five years, which promises to create millions of new jobs.

Supporting these plans, the International Monetary Fund (IMF) issued a report outlining strategies to raise the global GDP by 2.25 percent.

Accordingly, it states that while this established goal is ambitious, it is not unrealistic. However, as recovery from the 2008 recession remains disappointing, the global economy “remains far from achieving strong, sustainable and balanced growth.” Coupled with issues of demand and high levels of debt, one element of weakness remains the volatility of the financial system.

In another report, the IMF has announced that regulators have not done enough to stabilize the global banking system and protect taxpayers from another “too big to fail” situation. Banks and investment firms remain too big and too intertwined, risking another episode similar to the 2008 crisis. The risk of big banking bailouts using taxpayers’ money remains very much alive.

According to the report, regulations implemented by western governments could be “mutually destructive” and undermine their ability to address future bank failures. Moreover, policymakers have failed to make banks stand on their own. Through implicit subsidies and coordinated rescue plans, big financial institutions remain tethered to the government. In fact, accounting for the various subsidies these institutions perceive, brings the total bill close to the 2008-09 government bailouts. While in the U.S. these implicit subsidies have been limited to 70 billion a year, in the Eurozone they reach 590 billion.

The IMF acknowledges that there is substantial progress towards making the global banking system more secure, especially by forcing them to hold more capital. However, to prevent another crash, this should be coordinated along more structural reforms across countries. If not, the IMF predicts that another financial crisis could cost the Eurozone another 300 billion in bailout and the rest of the world much more in a weakening economy.

In a world where state economies are highly interconnected and interdependent, this translates in funds being diverted away from foreign assistance. While governments have to be ready to spend billions of dollars to remedy a failure in the financial system, foreign aid funding is in constant danger of being reduced. Indeed, the U.S. foreign aid budget has been reduced by almost 20 percent in the last 15 years.

To put things in perspective, between 2008 and 2009, bailouts of various banks and investment firms reached a total of 204 billion dollars, out of which only 90 billion has been repaid. This is equivalent to the annual budget of the Gates Foundation, USAID, UNICEF, PEPFAR, UNDP, World Food Program, UNCHR and the Millennium Challenge Corporation all together.

G20 member countries remain committed to creating a climate of economic stability. In preparation for the Brisbane summit next November, they aim to specifically map out reforms in response to the 2008 global financial crisis. This would entail more resilient financial institutions, ending “too big to fail,” and making the world of derivatives safer.

– Sahar Abi Hassan

Sources: The Guardian (1), The Guardian (2), CNN Money
Photo: Modernize Aid

acumen
Jacqueline Novogratz, head of the Acumen Fund held a press conference to announce the implementation of ‘Eradicating Poverty through Entrepreneurship in Pakistan.’ The Acumen Fund is teaming up with Bank Alfalah to launch a 40,000 dollar loan program to establish sustainable businesses within Pakistan.

The Acumen Fund provides long term loans to try to establish sustainable infrastructure within a region through entrepreneurship. Acumen rejects the old idea of just giving a lump sum of money to a foreign government and telling them how it needs to be spent. Instead, Acumen raises funds and invests money in local enterprises that can be expanded to benefit the owner as well as the community. Since its beginning, Acumen has invested millions of dollars in countries all over the world to improve overall health and quality of life.

Bank Alfalah comes into this project by implementing its ‘Beyond Philanthropy’ initiative. The bank aims to invest in business while keeping the greater good of the community in mind. With Acumen’s experience in investing to alleviate poverty and Bank Alfalah’s firsthand knowledge of the community, this pairing is expected to be a successful one.

Alfalah CEO Atif Bajwa says, “Given Acumen’s demonstrated expertise in the fields of entrepreneurship and poverty alleviation, we are confident that this program will help us play a small part in creating an ecosystem which seeks to address chronic socio-economic issues in the country.”

The Acumen Fund and Bank Alfalah are investing money into several companies including Pharmegen, a company that is devoted to bringing clean drinking water to urban cities. Another company that received investment money is called Microdrip, a company that distributes water conserving drip irrigation equipment to communities dependent on farming. The program is expected to be implemented in a multistep process over several years.

So far Acumen has invested over 14 million dollars in infrastructure in Pakistan. It is estimated that businesses funded by Acumen have positively impacted over four million Pakistani lives. The investments have also created and supported over 3,500 jobs which helps improve the overall livelihood of people in the region.

Colleen Eckvahl

Sources: Acumen: Pakistan, Acumen: Bank al Falah, Dawn
Photo: Giphy.com

Federal_Reserve_Spending
Under the Federal Reserve’s stimulus program known as “quantitative easing,” the government has been spending approximately $85 billion per month in bond purchases. The quantitative easing program was intended to slowly heal the United States economy and improve the country’s fiscal debt situation. In 2009-2010, many countries began aggressive fiscal stimulus initiatives in an effort to recuperate the global economy across the board.

After multiple cycles of quantitative easing, the Federal Reserve’s goal is to slowly halt monetary injections into the economy, hoping that that growth will continue as the government takes a step back. However, it is unclear whether growth can continue in the wake of cutting back government involvement. There are also effects that may be seen more quickly than others.

Part of the quantitative easing initiative involves favorable interest rates for banks as an incentive to save bank funds in Federal Reserve accounts. To slow down the need for government action through quantitative easing, the Federal Reserve may no longer continue to provide the interest rate that banks currently enjoy. Banks argue that the Federal Reserve should not stop making these incentive interest payments because banks rely heavily on those payments to break even on other services they already provide. If the payment program ends, banks may begin to charge private individuals higher fees for savings accounts, in addition to the fee that some accounts and bank services already require.

Without the Federal Reserve interest payments that banks already receive, there is also the possibility that banks will look to riskier investments. Banks will no longer be able to rely on safely investing their money with the federal government, and bank investment strategies will have to be restructured in order to maintain consistent bank profits.

Daren Gottlieb

Sources: Financial Post, Huffington Post
Photo: CNN

Private_Sector_For_Common_Good
In the wake of the destruction following Typhoon Haiyan, reconstruction strategies in the Philippines are starting to gain headwind. Budgets, however, remain limited. In fact, proposals for funds from the Philippines’s Congress are still inconclusive and critically slow to respond to relief efforts.

But there is some good news: the cooperation between private sector and international aid funding has provided a combined supplementary budget to the Philippines government at an estimated $5.8 billion. The Philippine Disaster Recovery Foundation, headed by private sector donors, raised $310 million for the recovery effort.

The World Bank Group has recently adopted a new strategy in ending the problem of world poverty by its goal of 2030: reaching out to the private sector. According to Bank Group estimates, expunging social inequality and closing large infrastructure gaps in developing countries will cost $1 trillion per year through 2020. Currently, official development assistance (ODA) from NGOs and agencies such as the Bank Group reach $125 billion per year.

At a meeting at the United States Chamber of Commerce, President Kim of the World Bank stressed the private sector’s necessary role in global development: “There is no way ODA is going to be anywhere near adequate. If you have high aspirations for poor people in the world, you have no choice but to embrace the private sector.”

The anxieties associated with private sectors invested in low to middle-income countries are astounding thanks to the high risks involved — so high as to turn most investors away from seeing the potentialities of opening up new markets. Private sector investments are responsible for 90% of the world’s economic growth. Focusing money into a developing country’s infrastructure would create new classes of middle-range consumers in the poorest of countries.

The World Bank, IFC (the Bank Group’s private sector arm), and the Multilateral Investment Guarantee Agency will work together to mitigate the risks involved in private sector ventures into global development. The organizations aim to act as financial advisors between public and private sectors of business in developing countries.

– Malika Gumpangkum

Sources: The World Bank Group: Private Sectors, Voice of America, The World Bank Group: Support the Philippines, International Finance Corporation
Photo: WordPress