Archive for category: Global Poverty

Key articles and information on global poverty.

Why Sell to the Bottom of the Pyramid?

Over half of the world’s population lives on $2.50 a day or less. Yet the world’s poor constitute the world’s largest untapped market.

CK Prahalad’s 2004 book, “The Fortune at the Bottom of the Pyramid,”  brought companies’ attention to the huge profits to be made by tapping into the bottom of the pyramid, as well as the benefits this move could yield for the poor. Yet, many companies still wonder, what’s in it for us? As it turns out, that is the right question to ask. Too many altruistic endeavors have failed because companies were not business-oriented or profit-minded enough.

For example, Hewlett Packard’s project, dubbed “e-inclusion,” was founded under the noble goal of providing access to all the available modern digital, social and economic opportunities to everyone in the world. The project was quickly abandoned because it did not fall in line with HP’s overall mission. Proctor & Gamble introduced a product called PUR, which was a water purification powder, aimed at bottom of the pyramid markets. The product failed commercially and Proctor & Gamble stopped distributing it. DuPont attempted to reduce the suffering of millions of people from malnutrition by selling soy-fortified food. After a test run in India, the company gave in because it seemed impossible to make a profit.

Mark Martin is the vice president of international marketing at SC Johnson. He points out what he believes is the biggest challenge of harnessing bottom of the pyramid markets: “each consumer makes a very small purchase. You need lots and lots of consumers.” Because of the small purchasing power of each consumer, it is vital that costs of production are kept low.

Despite these challenges, advocates of Prahalad’s book, as well as the general public, feel corporations have a role to play in alleviating poverty. In a poll conducted by The Guardian, 83 percent responded that they believe corporations have an important role to play in the poorest markets. Seventy-three percent believe there is money to be made by serving the poor, and 89 percent see the importance of financial inclusion to enable poor people to participate in the economy.

In a live chat with a panel consisting of Mark Martin and other professionals in similar positions at different companies, all agreed that the primary focus of a company tapping into the Bottom of the Pyramid should be making a profit. Getting carried away by altruistic theories is neither practical nor efficient.

“Our customers design our products,” explains Donn Tice, CEO of d.light, a company that provides solar energy to poor rural areas. By entering a new market with a focus on making profits and the willingness to adapt the product to fit the needs and wants of target consumers, success can be achieved.

As many companies have become disillusioned with Prahalad’s premise, the professionals participating in the live chat concluded that the bottom of the pyramid still represents a vast market of untapped potential. The key to success is in adaptability, patience and attention to details.

Martin describes one of SC Johnson’s strategies, in which adaptability, patience and attention to detail are utilized. Farmers in Rwanda are trained in agricultural practices, sustainability and financial management. SC Johnson sources pyrethrum, a product used in Raid, from these farmers. This is accomplished through partnerships with nonprofits in Rwanda.

SAB Miller has a similar technique of adapting to local needs. The company adapts the beer it sells in a particular region to the local crops of the region. For example, in Mozambique, the beer is made with cassava, and in Uganda it is made with sorghum. By using local crops it not only tastes better to the consumers, but also supports local farmers and keeps costs low.

“The reason for focusing on profits for us is so we can demonstrate sustainability and stay in the markets to truly make a difference in the area we are focused,” Martin explains. Businesses, after all, survive off profits, and financial needs cannot be sacrificed for social gains. It may seem counter intuitive to noble-minded companies, but focusing less on charity and more on making a profit will benefit both the company and the consumers in the target area.

— Julianne O’Connor

Sources: The Guardian 1, The Guardian 2, The Guardian 3, Marketwatch, Reuters
Photo: Architonic

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World Food Program USA: What it Does

In the ever-evolving global fight against hunger, the World Food Program USA, an ally of the United Nations World Food Programme (WFP,) is leading the charge against the humanitarian issue.

With its headquarters in Washington D.C., WFP USA is thought of as the American arm of WFP. While WFP is the largest humanitarian agency fighting hunger throughout the world, World Food Program USA “builds support for WFP through fundraising, advocacy and education in the United States.”

Through its work to connect American businesses, organizations and philanthropists, WFP USA seeks to “transform the lives of hungry people across the planet.” The organization views its relationship with American citizens as key to solving world hunger.  

WFP USA releases an annual report each year detailing the state of hunger throughout the world. Its most recent report noted how the effects of conflicts in certain countries, including Syria, the Philippines, the Central African Republic and South Sudan, destabilize the ability for each nation to combat hunger and food security.

WFP has recently collaborated with such organizations as Yum! Brands, India Charitable Foundation and a bracelet line called The Brave Connection. These collaborations are sought to strengthen ties with different organizations.

Moreover, WFP seeks to alleviate the hardships caused by natural disasters or other emergencies, including a lack of adequate school meals and inadequate food security. The organization also strives to make a difference for women throughout the world.

A non-governmental agency, WFP received over $20 million last year through a combination of grants and fundraising. Both WFP and WFP USA rely upon contributions made by everyday individuals in order to continue to fight against global hunger and its related issues.

Through its relationship with WFP, WFP USA is one of the foremost leaders in the fight against world hunger. By working with businesses large and small and Americans of all socioeconomic classes, WFP USA is able to make an impact worldwide.

— Ethan Safran

Sources: World Food Program 1, World Food Program 2, Franchising, Huff Post
Photo: WFP USA

Lack of Security in Kenya

Within two days of each other, recent attacks in Kenya have left at least 64 people dead. On June 15 in Mpeketoni, Kenya, at least 49 people were killed and another 12 women were abducted by the attackers. The very next day a similar attack took place in the nearby town of Lamu and killed another 15 people. These events immediately led to protests by those living in Mpeketoni, claiming that the government had been ignoring them, thus highlighting a general lack of security in Kenya.

Kenya has been increasingly targeted by the al-Shabab militant group, as the extremist Islamic group has claimed responsibility for some of the most recent attacks that have taken place in the past months. However, there are a couple of characteristics that make these most recent attacks stand out from the others, most notably the location and nature of the attack. Mpeketoni is a farming village, not known to be a tourist attraction, unlike many of the previous targets of similar attacks.

Representatives from al-Shabab have claimed credit for the attack. According to al-Shabab, the attack was done in retaliation against the Kenyan troops that had been placed in Somalia and the subsequent Muslim deaths at their hands. However, the attacks that took place in Mpeketoni and Lamu are noticeably different from other attacks launched by al-Shabab. Not only was the attack directed at a village instead of a larger town or city, but only men were killed and women were abducted. This is in stark contrast to the indiscriminate violence that the group has been traditionally known for. If it was al-Shabab that committed this crime, it could possibly be an attempt to help the group clean up their grotesque image and reputation.

The aftermath of the attacks were further complicated when Kenyan President Uhuru Kenyatta said that the attacks were not committed by al-Shabab, but instead were politically motivated. In an official statement, Kenyatta said that the attacks were “well planned, orchestrated and politically motivated ethnic violence against the Kenyan community. This therefore was not an al-Shabab attack. Evidence indicates that local political networks were involved in the planning and execution of a heinous crime.”

What’s especially intriguing about his statement is that no specific ethnicity, organization or group was named. The government under Kenyatta’s rule has been criticized for not protecting its citizens and increasing national security. Because of this, the statement could potentially be an attempt from the government to ease the pressure it has been facing recently.

However, this statement from Kenyatta could cause more harm than good. By citing political motivations, Kenyatta could potentially reignite ethnic tensions that have been simmering under the radar for many years. The potential for ethnic conflict looms large, but there are already noticeable consequences from the attack.

The tourist industry has already plummeted and negatively affected the economy, which is a major form of income for the country. In addition to the already tallied death count, these attacks could have further humanitarian consequences. It could lead to people fleeing the area, greater insecurity in the area and potential escalation of conflict in the already tense region.

All of these remain possibilities, but the public has yet to see the full effect these events will have on the government and stability of the already fragile Kenyan nation.

— Andre Gobbo

Sources: BBC, Kenya Red Cross, Reuters
Photo: War Is Boring

Russia Cuts Off Gas to Ukraine

On June 16, 2014, tensions between Russia and Ukraine worsened after Russia’s state-owned company, Gazprom, cut off gas headed for Ukraine.

June 16 was the final day for Russia and Ukraine to come to an agreement about the gas dispute. Representatives from Ukraine, Russia and the European Union met over the weekend but were unable to reach an agreement.

With no agreement about the unpaid $2 billion debt installment the company demanded for June 16, a portion of the $4.5 billion total debt that Ukraine owes the company led Gazprom to declare that  it will only deliver gas that has already been paid for.

Ukraine disputes the amount that Gazprom has stated it owes and also requests a new future price.

The main cause for the dispute can be traced back to the conflict between Ukraine and Russia that led to an 80 percent price increase of gas, reaching $485.50 per thousand cubic meters of gas in April. Although some reductions were made following recent talks, they were still above the average $377.50 per thousand cubic meters Gazprom charged other European countries in 2013, and more still than the previous $268 per thousand cubic meters Ukraine used to pay.

Russia has stated that it will continue to provide oil for the rest of Europe. More than 30 percent of Europe’s demand is supplied by Russia, of which half must pass through Ukraine.

Since the cut off has occurred in June, the vulnerability of Ukraine and the rest of Europe to a possible shortage are low. However, as the cut off continues, the urgency to find a resolution increases. When July comes around, Ukraine and the rest of Europe generally begin to completely fill their storage tanks in preparation for the winter.

Tensions between Ukraine and Russia have continued to increase in the backdrop of the failed deal. In addition to escalating violence in Ukraine, Gazprom has attracted controversy with its decision to build an exclusive gas route despite violating Europe’s open access laws.

With the continuing escalation, it is unlikely a resolution to the gas crisis will occur in the near future. Although E.U. leaders are expected to discuss the crisis during the summit in Brussels on June 26, the E.U. has told its members to conduct stress tests to examine the potential effects of a disruption.

A potential disruption could bode poorly for those in poverty throughout Europe, especially in the winter months. Hopefully an agreement will emerge before the cold comes.

— William Ying 

Sources: CNN, New York Times, The Wall Street Journal, BBC
Photo: CNBC

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Islamic Relief USA

Founded in 1993 in California, Islamic Relief USA is a relief organization that works toward alleviating many of the issues that plague developing countries. Their mission statement explains that they work to “alleviate suffering, hunger, illiteracy and diseases worldwide regardless of color, race, religion or creed, and to provide aid in a compassionate and dignified manner.”

With partner organizations in over 35 countries worldwide, Islamic Relief USA supports projects revolving around health and nutrition, orphans, water and sanitation in close to 30 countries. The organization emphasizes implementing campaigns in response to problems like natural disasters and children in need, hoping to establish a more stable world.

Despite their humanitarian efforts, connections to the Muslim Brotherhood have pointed to possible corruption within the organization. The parent organization, Islamic Relief Worldwide, was founded by Hani Al-Bana, a former trustee of a group called Muslim Aid. There is question about how deep-seated the Muslim Brotherhood influence is within the organization.

In addition to possible corruption, the financial practices of Islamic Relief USA have come into question in the past few years as discrepancies in their reported numbers came to light. Prior to 2011, the organization claimed that 93.8 percent of its contributions were spent on charity, while the remainder was left for overhead. In reality, however, only 74 percent of the contributions were spent on charity.

As of 2012, Charity Navigator reported Islamic Relief USA had a score of 70 out of 70 for transparency and accountability, indicating that since the issues involving their finances, things appear to be on the mend. With a total contribution of $62,288,900 in 2012, 88.8 percent of this total went to charity.

With information about possible corruption and financial discrepancies competing with charity success stories, Islamic Relief USA is a challenge to decipher. The improvements in transparency and percentage of donations funneled toward charity are promising, however, for the future of Islamic Relief USA and its methods of aiding the world.

— Maggie Wagner

Sources: Charity Navigator, Islamic Relief USA 1, Clarion Project, Forbes
Photo: Islamic Relief USA 2

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AMIGOS de Las Américas

Amigos de Las Américas
Amigos de Las Américas (AMIGOS) was founded by youth pastor Guy Bevil in 1965 when he and a small group of young adults landed in Honduras to administer polio vaccines in isolated, rural communities.

He knew that people lived off the beaten path, and wanted to provide health services for those who would not normally have access to them. Nearly 50 years later, his philosophy is strongly upheld in the organization.

Amigos de Las Américas has a mission: to make young people leaders and improve underdeveloped communities while doing so. Volunteers are high school or college aged. Summer programs are generally four to nine weeks in length, though college students can take a gap semester or year. All must have a base level of Spanish and an interest in changing the world.

Over 700 volunteers received training in leadership and specific community development projects annually. Volunteers are placed with host families, which gives them a chance to improve their Spanish, learn about the host culture, share their own culture and further integrate into the community.

Accepted applicants to the program must pay a program fee; 80 percent of this goes to cover travel, additional housing and meals. The remaining 20 percent is used for the organization’s administrative expenses.

AMIGOS operates in nine different countries: Paraguay, Panama, Nicaragua, Peru, Mexico, Ecuador, The Dominican Republic, Colombia and Costa Rica. Community development projects cover a wide range of services, but are largely dependent on AMIGOS partners.

AMIGOS partners with locally based organizations, often nonprofit, to ensure that its volunteers are doing effective and needed work within a community. There are 25 partners in total.

Organizations like Servicios de Salud de Oaxaca in Mexico and Prodia of Peru, work mainly in health services, sanitation and nutrition awareness. Fundación Paraguaya and Panama’s Ministereo de Deasarollo Social provide investment services in local projects and individual enterprises. Fútbol con Corazón provides workshops on nutrition and life skills to more than 2,000 children in Columbia. This is in addition, of course, to soccer training.

Some might ask why AMIGOS focuses its efforts on Latin America when there is poverty still in the United States. The organization says it builds leaders, and that the compassion and leadership skills learned while on programs abroad are brought back to the U.S.

— Olivia Kostreva

Sources: AMIGOS, Go Overseas , US Gap Year Fairs
Photo: Vimeo

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5 Ways the World Cup Has Failed to Relieve Poverty

Destitute life in the slums of Rio de Janeiro has changed very little over the years. The streets may be currently adorned in green and yellow, but the quality of life continues to be the same.

1. The Most Expensive World Cup in History

The projected cost for hosting the games is more than $11 billion, which makes it the most expensive World Cup since it began 84 years ago. Citizens are complaining that the government of Brazil is spending so much money on the World Cup while many of its citizens are living in poverty. Paying for this World Cup has come out of these citizens’ taxpayer dollars.

2. Spent Billions of Dollars; Are There More Important Endeavors?

The money that was spent on the World Cup, on structures like stadiums and other sporting infrastructure, takes away from money that could have been spent on basic needs that many Brazilian citizens lack, such as education, better health care and adequate housing.

3. Corruption in the Brazilian Government and FIFA

The Brazilian government has been accused of overspending and corruption. The cost of building the Mane Garrincha Stadium came out to be $900 million, triple the original amount, largely due to fraud and corruption. FIFA, which has always been known for corruption, will be gaining all profits from the World Cup, while Brazil is paying the costs. The gains will not go to the people who really need it in Brazil, even though the Brazilian government has spent so much money on the World Cup. Many Brazilians can’t afford tickets to the games, or even afford to travel to protests against the World Cup, while their taxpayer dollars have gone towars paying for the World Cup.

4. Providing More Business For Sex Tourism

Sex tourism is encouraged in Brazil, and hotels and taxis are even part of the network that links clients with women and young girls. In Recife, one of the World Cup sites and also one of the poorest parts of Brazil, 120,000 soccer tickets were sold to foreigners. The women and young girls know that foreigners coming have a lot of money and “they come to Brazil to have fun.” A handful of sex workers have even taken English classes in order to negotiate better. The World Cup was originally sold to Brazilians as an economic boost because of the rewards of greater tourism. Unfortunately, one of the facets of tourism in Brazil is the sex industry, and this increase in tourism is perpetuating the sad cycle of abuse in the industry.

5. Encouraging Child Exploitation

Sadly, the sex industry in Brazil exploits children as well. Recife has one of the worst records in the world when it comes to child exploitation. In Sao Lourenço, where the Recife stadium is located, some of the street vendors not only sell food, but also their children for sexual exploitation. Child exploitation is so out of control in Brazil that officials are worried that tourists coming to Brazil for the World Cup will not respect their legislation on sex tourism.

— Colleen Moore

Sources: A.V. Club, WNCN, CBC, Philly.com, CNBC
Photo: Forbes

Top 10 Celebrities from Africa

Here is a list of the top 10 celebrities from Africa. They all put their fame to good use to help people in need who are from their hometowns and throughout Africa.

1. Chinua Achebe —  Nigerian Novelist, Publisher and Educator

Achebe was born in Nigeria on November 16, 1930. He recently died at the age of 82 on March 21, 2013. He taught at different universities in America and is known for his book, “Things Fall Apart,” one of his earlier pieces of writings that was published in 1958. “Things Fall Apart” is what led him to be called the “patriarch of the African novel.” Many of his writing pieces go back to his Nigerian roots.

2. Youssou N’dour — Senegalese Musician

N’dour was born in 1959 in Dakar, Senegal. His most popular music came out in the late 1980s and 1990s. In 2004, the Rolling Stone Magazine wrote that he was “perhaps the most famous singer alive.” N’dour had the tendency to mix pop and rock with sabar, which is the traditional dance music of Senegal. N’dour has toured with stars like Sting, Bruce Springsteen, Tracy Chapman and Dido. He has been the subject of two award-winning films: “Retour à Gorée” and “Youssou N’Dour: I Bring What I Love.” He also owns a night club, a radio station and a television station. N’dour is a UNICEF ambassador to help bring an end to the humanitarian crisis in the horn of Africa.

3. Didier Drogba — Ivorian Soccer Player

Drogba is a world-pronounced soccer player, but he is most well-known for helping end war during the civil war in Cote D’Ivoire. Drogba fell to his knees on live television after his team qualified for the World Cup, pleading that Cote D’Ivoire give up the war, and it worked. In 2009 he donated $5 million to help with the construction of a hospital in his hometown of Abidjan.

4. Angelique Kidjo — Beninoise Musician

Kidjo is a Grammy award-winning musician. She has collaborated with Alicia Keys, Josh Groban and Carlos Santana. Kidjo owns her own nonprofit organization, Batonga Foundation, which is based in Washington. It promotes and funds education for African girls. She is also a UNICEF Goodwill ambassador.

5. Akon — Senegalese Musician

Akon has sold millions of his three studio-recorded albums. He co-owns a record label called Kon Live that helped get Lady Gaga and T-Pain’s career started. He also owns Konvict clothing, and he founded Konfidence Foundation, which promotes education and health causes in Senegal and elsewhere in Africa.

6. Wole Soyinka — Nigerian Playwright

In 1986, Soyinka became the first African to win the Nobel Prize in Literature. Soyinka has produced “The Lion and the Jewel,” “A Dance of the Forests,” “The Strong Breed” and 17 other plays.

7. Salif Keita — Malian Musician

Keita was denied by his family because he decided to pursue his career as a musician, which was considered beneath his noble family’s status. He was banished when he was 18 years old because of the superstition that albinos were bad luck. His latest album was decimated to stop discrimination against albinos in Africa and the rest of the world.

8. Yvonne Chaka Chaka — South African Musician

Chaka Chaka is known as the “Princess of Africa.” She was known for her girly pop music. She now devotes her time to her work as a United Nations Goodwill ambassador and representative of Africa.

9. Oumou Sangare — Malian Musician

Sangare often performed music known as Wassoulou. Wassoulou is often sung by women. This music consists of lyrics having to do with women’s rights issues and feminism. Sangare is a United Nations Goodwill ambassador and was named an official ambassador of the Food and Agriculture Organization of the United Nations in 2003.

10. Femi Kuti — Nigerian Musician

Kuti uses his music to downsize corruption, poverty and other socioeconomic issues prevalent in Nigeria and Africa through his lyrics. In his album, “Fight to Win” (which sold over 500,000 copies,) he collaborated with Common, Most Def and Jaguar Fight.

— Priscilla Rodarte
Sources: All Music, Biography, Forbes, NY Times
Photo: The Economist

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Free Markets Can Reduce Poverty

The development of free market economies has been accompanied by a large decrease in poverty around the globe. Extreme poverty is virtually nonexistent in the most industrialized countries.

Many people believe that after the fall of the Soviet Union more than 20 years ago, the world went through a wave of globalized development. Capitalism spread and free markets were adopted in numerous countries. Industries became a focus of countries everywhere.

Thirty years ago, 50 percent of people in poor nations were living in extreme poverty. Since the development of global markets, however, 21 percent of people in poor nations around the world are considered to be living in extreme poverty.

Capitalism has some clear effects on a country’s economic system, and therefore on its citizens. Free markets open up trade opportunities, increase competition for jobs and extend life expectancy.

When countries use free markets, they immediately become a global partner in trade. They are more able to import and export their products to a larger market, thus increasing their economic wealth greatly. Countries with higher economic success generally see less poverty in their citizens.

In a capitalistic system, jobs are given to those who work for them, and the workers only get paid when they complete their requirements. When there are more people than positions available, people will increase their efforts to rise above the rest and claim that position. Creating a competitive environment can increase the effort people put forward. Efforts to alleviate poverty must come from a system that rewards productivity and industriousness.

With the increase of economic prosperity in countries with many people living in poverty, they can move from the lowest global income bracket to the middle-income bracket. Data shows that by moving up in economic status, life expectancy increases. When people are in the lowest bracket, life expectancy is around 40; however, in the middle bracket, it increases to 60.

As seen in past experience, developing the free market system may be the best solution for the countries that are facing large amounts of poverty.

Ismael Hernandez, a writer for News-Press.com, said, “Wherever culture and institutions focus on creative and productive activity, you put in motion processes where great civilizations emerge and the lives of people are enhanced.”

— Hannah Cleveland

Sources: Market Oracle, News-Press
Photo: BlogSpot

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UN Undercounting World’s Poor

Human Poverty Index
The Oxford Poverty and Human Development Initiative (OPHI) released a report on Tuesday, looking at the state of poverty in the world today. For more than a decade, the United Nations Development Program measured world poverty by its Human Poverty Index (HPI.) The HPI defined poverty as making less than $1.25 a day.

However, the HPI counted countries as one whole mass. Therefore it was unable to pinpoint different degrees of poverty within a country and locate the worst pockets. Also, it put all the importance on income, failing to consider other indicators like health and education.

The report from OPHI created a new index for counting those living in poverty around the world. The Global Multidimensional Poverty index (MPI) is designed to capture the severe deprivations that each person faces at the same time.

It reflects both the incidence of multidimensional deprivation and its intensity (how many deprivations people experience at the same time.) In order to classify a household as poor, the MPI requires that the household be deprived in multiple indicators at the same time.

The MPI identified overlapping deprivations and collected 10 needs beyond the ‘basics’ in three broad categories: nutrition and child mortality under Health; years of schooling and school attendance under Education; and cooking fuel, sanitation, water, electricity, floor and assists under Living Conditions.

The new index also allows for degrees of poverty, instead of focusing on one sole aspect.

One of the consequences of the new index is that the world is more impoverished than had been previously believed. Since the multidimensional poverty approach can be adapted using indicators and weights that make sense at the country level, it can be used as a guide to help governments tailor a poverty measure that reflects multiple local indicators and data.

Instead of 1.2 billion people living in poverty, as had been calculated under the HPI index, there are approximately 1.6 billion people.

More than half of the impoverished population in developing countries reside in South Asia, and another 29 percent live in Sub-Sahara Africa. A total of 71 percent of the poor in the MPI index live in what many consider to be middle-income countries, or countries where development and modernization in the face of globalization are in full swing, but some people are left behind.

Niger is home to the highest concentration of the multidimensionally poor, with almost 90 percent of the population lacking in MPI’s socioeconomic indicators. Most of the poor live in rural areas.

Even in light of this news, there are some bright areas. In five years, Nepal has reduced its MPI numbers from 65 percent of its population living in poverty to 44 percent. Other classically poor countries, like Rwanda, Ghana, Bangladesh and Cambodia, are also improving, both economically and in narrowing the gap between rich and poor.

Yet there are some drawbacks to the new index as well. The indicators that the MPI uses include both outputs (years of education) and inputs (cooking fuel) as well as one stock indicator, child mortality, which does not take into account how recent the death was because flow data is not available for all dimensions.

Another drawback is that the health data is relatively weak and overlooks some groups’ deprivations, especially for nutrition. In addition, under the MPI index, families must be deprived in at least six standard of living indicators to be considered poor. This system makes the MPI less sensitive to minor inaccuracies.

— Monica Newell 

Sources: OPHI, The Atlantic
Photo: Kuldip