Money Laundering
At the
G8 summit in 2013 that took place in Lough Erne, Northern Ireland, the leaders of the eight nations committed to a number of measures aimed at preventing the use of businesses and legal arrangements that promote money laundering, tax avoidance and tax evasion, including the G8 Action Plan.

Financial Crime and Poverty

Between April and July 2021, when the rest of the globe was in upheaval, billionaires’ wealth surged by 27.5%, even during a pandemic. Reliable estimates indicate that between $20 billion to $40 billion is stolen annually from developing nations, undermining economic growth and depriving those who need public services the most.

According to a U.N. panel study asking for a global crackdown, systematic tax violations, corruption and money laundering are keeping billions of people around the world impoverished. It claimed that up to 10% of the world’s wealth may be stashed away in offshore jurisdictions at a time when governments are facing mounting budgetary difficulties due to the COVID-19 pandemic and rising inequality. According to a panel of international presidents, governors of central banks and representatives of business and civil society, criminals launder up to 2.7% of the global GDP annually.

The Impact of Transfer Mispricing and Money Laundering on Poverty

According to the OECD, annual tax haven losses in developing nations could be three times greater than annual foreign aid inflows. As an illustration, through transfer mispricing, the Democratic Republic of the Congo (DRC) sold state-owned mines for an incredibly cheap price to anonymous “shell” corporations in the Virgin Islands, only to be sold on to major listed businesses at their market price. Such transactions cost the DRC $1.35 billion USD, which is double the nation’s budget for health and education in a place where 71.3% of the population currently lives in poverty.

Developing nations thus lack the public resources that would give people access to food, healthcare and education to help them escape poverty. Money laundering, on the other hand, has detrimental effects on the economies of developing countries through escalating crime and corruption, lowering foreign investment, weakening financial institutions, compromising the economy and private sector, thwarting efforts at privatization and losing tax revenue. All of the effects are the bricks shaping the foundations of poverty.

G8 Actions Against Financial Crimes

The G8 Action Plan calls for greater disclosure of a company’s ownership and financial details, particularly when it comes to shell corporations that help launder money from questionable sources. The nations vowed to pursue laws that can undergo robust enforcement and have support from “effective, appropriate and deterrent sanctions.”

Now that nations have made the promises that the declaration outlined, each nation will publish a national action plan outlining the specific steps to take. The G8 Action Plan supports the following key concepts that are essential to the openness of ownership and management of businesses and legal structures, subject to our varied constitutional situations and the recognition that a one-size-fits-all approach may not be the most effective.

G8 Financial Crime Principles

  1.  Companies should have adequate, accurate and up-to-date basic information, including knowledge of who controls, owns and benefits from them.
  2.  Onshore law enforcement, tax administrations and other relevant authorities, including, if necessary, financial intelligence units, shall have access to information on the beneficial ownership of firms. Countries should take steps to make it easier for financial institutions and other regulated firms to get information about a company’s beneficial ownership.
  3. Trustees of explicit trusts should be aware of the trust’s beneficial owners, including its settlor and beneficiaries. Law enforcement, tax agencies and other pertinent entities, such as financial intelligence units as necessary, should have access to this information.
  4. In order to reduce the risks to which their anti-money laundering and combating the funding of terrorism system is subject, authorities should recognize them and put in place effective and proportional measures. It is important to tell the appropriate authorities, enterprises that are subject to regulation and other jurisdictions about the findings of the risk assessments.
  5.  It is important to prevent the abuse of financial tools and specific shareholding arrangements that may impede transparency, such as bearer shares and nominee shareholders and directors.
  6. Nations should place effective anti-money laundering and counter-terrorist financing requirements on financial institutions and designated non-financial businesses and professions, including trust and company service providers, in order to identify and confirm the beneficial ownership of their clients.
  7.  Companies, financial institutions and other regulated organizations shall be subject to effective, appropriate and deterrent fines if they fail to uphold their respective commitments, particularly those relating to client due diligence.
  8.  To counteract the misuse of businesses and legal arrangements for illegal conduct, national authorities should collaborate successfully inside their own countries and across international boundaries. Upon requests from international counterparts, countries should make sure that their relevant authorities can quickly, helpfully and effectively give information on basic companies and beneficial ownership.

Looking Ahead

G8’s agenda has enhanced the opportunity to advance the plan that will address illicit finance at the Lough Erne Summit despite the fact that the effects would take time to materialize. The G8’s ability to cooperate in order to launch ground-breaking international projects will determine the degree of success, though. Enhancing financial transparency, good governance, information exchange and accountability must be the main goals of these projects because doing so will significantly reduce the likelihood of criminals being able to access the global financial system.

– Karisma Maran
Photo: Flickr

Benefits of Mobile Money in AfricaOriginally designed in 2007 as a way around weak and unreliable banking services, mobile money has expanded across Sub-Saharan Africa with full force, with 1.35 billion mobile money accounts processing $1 trillion in transactions every year. What started as a simple peer-to-peer money transfer platform has transformed into a legitimate financial service in itself. Now, it is providing loans and savings and both commercial and humanitarian cash transfer systems. The convenience of mobile money has allowed many the freedom to pull themselves out of dire financial situations. Here are four benefits of mobile money in alleviating poverty in Sub-Saharan Africa.

Stable Financial Systems

Mobile money began when Vodafone’s Safaricom launched M-PESA in 2007. It is a platform that allows the transfer of money between mobile phones after being installed into the devices’ SIM. Whilst originating in Kenya, M-Pesa expanded to 10 countries in 10 years, with many other mobile money companies cropping up along the way, including OPay and Wave. Mobile money’s popularity lies in allowing people to make financial transactions without connecting to the banking system.

Technology is particularly influential in Somalia, which saw the breakdown of its financial system after the collapse of the Somali Central Bank in 2013. However, it was saved through the introduction of technology. With mobile payments free to access, marketplaces could flourish and businesses could interact with one another.

Financial Resilience

The convenience and efficiency of mobile money transactions can also be a saving grace for families experiencing unexpected difficulties, such as natural disasters and sudden health issues. One study found that Kenyan households with M-PESA did not have to reduce their spending on food or education in response to negative events, as they were better able to receive fast money transfers from family and friends. In contrast, families without M-PESA had to withdraw their children from school to pay for health expenses.

More Inclusive Marketplace

Access to mobile money means more freedom within the economy. Besides, technology has provided many women with the opportunity to change occupations. One study concluded that with M-PESA, 185,000 women moved from agriculture to retail, according to J-PAL. Mobile money also boosted consumption and lifted around 2% of Kenyan households out of poverty – especially female-headed households, as it drove up levels of savings and labor market outcomes.

Humanitarian Cash Transfer Systems

Mobile money also facilitates easy foreign aid for those facing hardship. The U.K. government is set to send £15.5 million to GSMA Mobile for the Humanitarian (M4H) Innovation Programme this year. It will help reach over 17 million people facing humanitarian crises such as displacement and hunger. The program has already provided over 8 million people with disaster-recovery services.

Togo is another example of the utilization of mobile money for humanitarian aid. Its government launched a digital mass payment platform called NOVISSI at the start of the pandemic. NOVISSI allowed for beneficiaries to receive payments within minutes and without the internet, distributing $34 million to a quarter of its adult population.

With the benefits of mobile money in Africa, people increasingly connect with each other, gaining more freedom within the economy and more financial stability. Technology has allowed millions to gain independence and build better lives.

– Imogen Scott
Photo: Flickr

M-PESA App in Kenya
In 2007, Safaricom developed the M-PESA app in Kenya, Africa. The mobile money platform aims to increase financial inclusion by allowing the impoverished access to financial services without the need to visit a bank or have a bank account. The introduction of the M-PESA mobile money app has improved the economy in a nation with about 16% of the population surviving on less than $1.90 per day in 2021.

The M-PESA App

Accessibility is one of the benefits M-PESA offers. The app is accessible to both individuals and businesses and even those living in rural villages can easily access it as long as there is mobile connection coverage. Through the app, users can send and receive money, purchase airtime and pay bills, among other services. M-PESA also “facilitates the safe storage and transfer of money.”

A study conducted by an economics professor from Georgetown University and a colleague from MIT shows that 96% of the Kenyan population used the M-PESA app in Kenya in 2016. By 2021, the app had roughly 30 million users in Kenya alone. The M-PESA app expanded to six other African countries and served 50 million users across the African continent by September 2021, making it the largest fintech in Africa.

Benefits of the M-PESA App

M-PESA is able to improve a country’s financial outlook by reducing poverty. The app allows users to take control of their finances and increase consumption levels of goods and services. A research article, “The Long-Run Poverty and Gender Impacts of Mobile Money,” published in Science magazine in December 2016, indicates that over six years M-PESA “increased consumption levels,” which allowed about 186,000 Kenyan families (2% of Kenyan households) to rise out of poverty.

The researchers conducted a study from 2008 to 2014 to compare households with easy access to M-PESA agents to “those without such easy access to mobile money.” The result showed that households with easy access to M-PESA agents “fared better and received more remittances from a larger network of people.” Highlighting this, when Kenyan households endured a financial shock, “there was a 12[%] difference in per capita consumption between the two groups, with consumption rising for those households near to an M-PESA agent.”

In Kenya, about 25% of the $44 billion economy goes through M-PESA, according to a 2014 article by Mobile Transaction. Furthermore, by the end of 2013, more than 79,000 people received opportunities to work as M-PESA agents. By 2018, the World Bank noted more than 110,000 M-PESA agents in Kenya.

Mr. Mungai, who operates two M-PESA shops in Kenya, told the Mobile Transaction that the app had made his life much easier and provided him with a stable job. “M-PESA has changed my life; it helps me make savings. I don’t need to travel to and from the bank every now and then because I can now deposit and withdraw from my bank account using the M-PESA platform,” Mungai added.

Evolution of the M-PESA App

The functions of M-PESA have been evolving. In 2021, M-PESA Africa launched the M-PESA Super App, which allows users access to “services they need in a typical day including shopping, restaurants and food delivery, transport services, government services” and more, without the need to install several apps. By March 2022, more than 9 million individuals and 320,000 businesses had downloaded the M-PESA Super App.

In addition, M-PESA has grown from peer-to-peer money transfers to international payments. M-PESA has partnered with MoneyGram on International Money Transfer, allowing users in more than 90 countries to transfer money across borders. Now people are able to enjoy the services and updates of the app without a SIM card. M-PESA is also collaborating with PayPal, and soon, the mobile money app intends to expand further through partnerships with other global brands.

Looking Ahead

With the M-PESA app in Kenya, Kenyans can look to a brighter future and an improved economy through easy access to financial services and increased job opportunities. Overall, M-PESA increases financial inclusion, ensuring that the impoverished in developing countries in Africa have access to the resources and services to break the cycle of poverty. M-PESA will continue to bring innovations and enable individuals to make transactions more efficiently and securely.

– Jiaying Guo
Photo: Wikimedia Commons

Unbanked Population
In 2017, the World Bank  reported 1.7 billion “unbanked” adults, meaning these individuals did not have “an account at a financial institution or through a mobile money provider.” Although there remain unbanked individuals in developed countries, most of the unbanked population lives in developing countries. Furthermore, there is a strong link between lacking financial inclusion and living in poverty.

In 2020, the Inclusion Foundation discovered that in the United Kingdom, being unbanked leads to costs of up to £500 annually as these individuals “miss out on discounts reserved for those who pay bills by direct debit.” Additionally, the financial services that institutions offer, such as tools for saving, insurance and credit, are important instruments that help people rise out of poverty and advance financially.

5 Facts About the World’s Unbanked Population

  1. Women account for most of the unbanked. In 2017, about 980 million women did not have a bank account, making up “56% of all unbanked adults globally.” Even in countries with a small percentage of unbanked individuals, women account for most of the unbanked. For example, in Kenya, “where only about a fifth of adults are unbanked, about two-thirds of them are women.” In both India and China, females account for close to 60% of unbanked adults. According to a 2012 World Bank article, the gap grows larger among those in poverty, where women who make less than $2 a day are 28% less likely than men to have an account. Melinda Gates, the co-chair of the Gates Foundation, said that “Financial tools for savings, insurance, payments, and credit are a vital need for poor people, especially women, and can help families and whole communities lift themselves out of poverty.”
  2. China and India have the largest unbanked populations. About 225 million adults in China did not have a bank account in 2017 — the largest unbanked population in a single country. India came in second with 190 million, followed by Pakistan with 100 million and Indonesia with 95 million unbanked people. These four countries, along with Nigeria, Bangladesh and Mexico, accounted for close to 50% of the globe’s unbanked population in 2017.
  3. People remain unbanked for specific reasons. The 2017 Global Findex survey asked those without bank accounts why they choose not to open one. The most common reason provided, with about two-thirds of respondents citing this reason, was simply lack of money. Coming in second, 30% of unbanked adults said they did not need an account. About 26% stated that accounts are too expensive and 26% also stated an account is not necessary because a family member already has an account. Other reasons include distance, documentation requirements, distrust in the financial system and religious concerns.
  4. Providing banking services could lift people out of poverty. World Bank Group President Robert B. Zoellick said that “Providing financial services to the 2.5 billion people who are ‘unbanked’ could boost economic growth and opportunity for the world’s [impoverished].” He stated further that “harnessing the power of financial services can really help people to pay for schooling, save for a home or start a small business that can provide jobs for others.” In fact, research shows that “the more [impoverished] people are banking today, the more they are banking on their future[s].”
  5. Technology as a potential solution. The Bill and Melinda Gates Foundation is a nonprofit organization that fights poverty, disease and inequality around the world. One of the focuses of the Foundation is to reach unbanked populations with solutions to improve financial inclusion so that “people around the globe can build security and prosperity for themselves.” Its strategy is to promote the development of digital payment systems, which can allow for digital or mobile access to financial services without a bank account. This will also allow more women access to financial services, advancing gender equality. The Gates Foundation is currently supporting mobile money platforms in developing countries to increase financial inclusion for the unbanked. For example, in 2010, the Foundation granted $10 million to ShoreBank International to build a highly scalable electronic banking platform in Bangladesh to promote the financial inclusion of low-income people. In 2018, the Gates Foundation invested $3 million in Jordan’s Mobile Money for Resilience platform, which will economically empower refugees and impoverished people in the nation.

Looking Ahead

While for many, banking services seem readily accessible and almost a fact of life, for others, the inability to access such services stunts their growth opportunities. By increasing financial inclusion, institutions can help people help themselves.

– Rachael So
Photo: Unsplash

Money Lending System
Displaced women in Somalia have been using an age-old money lending system to help each other. The system is known as Ayuuto, which is Somali for “help.” The informal program allows small communities of women experiencing poverty in Somalia to access money for needs and emergencies.

How Ayuuto Works

The concept of Ayuuto exists in different countries across the globe. It is a type of informal money lending system that can help provide people in impoverished communities with money in emergencies. Ayuuto primarily functions in small groups; in this case, small groups of Somali women who live in camping settlements across Somalia. The women meet once a month in their respective camps and add a fixed amount of money to a pot. The manager of the group selects one person to lend money to each month, which is usually whoever is experiencing the direst need for funds. As Al Jazeera sums it up, Ayuuto is “an interest-free rotating savings scheme based on mutual trust.”

Since Ayuuto is an informal system, it is completely separate from any official banking system. This can make it riskier, but also faster and less complex to provide monetary help in an emergency. Aid from formal agencies has decreased and there are very few opportunities for formal work within the cities. Ayuuto allows the women to purchase day-to-day necessities and provides funds for the women to start their own small businesses.

Utilizing the Ayuuto system has also allowed women in these camps to support each other in other ways. The women come together and bond through conversation, listen to each other’s needs and support each other emotionally. Overall, the system helps foster a community of trust and security.

Poverty in Somalia

A 2019 World Bank Group report indicates that about 70% of people in Somalia live in poverty, making the country one of the most impoverished in sub-Saharan Africa. A notable number of people in Somalia are living just above the poverty line. About nine in 10 households in Somalia suffer deprivation in a minimum of one dimension, either “monetary, electricity, education or water and sanitation.” Urban areas experience less extreme poverty than rural communities and displaced people experience the most extreme poverty.

Since 1991, Somalia has experienced extreme levels of famine, political instability and droughts that have caused almost three million people to become displaced. Surveys show that the consequences of drought and the COVID-19 pandemic stand as the most significant difficulties for impoverished communities in Somalia. These conditions have forced families, most of them from rural areas, to abandon their homes and livelihoods and flee to camps that are inside and around cities in the hopes of finding a way to survive. In fact, three-quarters of displaced people live in cities. The camps that displaced Somali people settle in are often overcrowded and do not have sufficient resources of food and water for everyone.

How Poverty Disproportionately Affects Women

Most displaced women in Somalia do not meet the requirements to apply for a formal bank account, such as existing credit history or financial identity. Data also shows that almost twice as many women as men have no source of income.

Since the pandemic began, an increasing number of girls have dropped out of school. Data also shows that only about a quarter of female heads of households has had any type of formal education compared to more than 40% of male heads of households.

Reports show that more than a third of girls living in camps have said that their greatest worry is experiencing sexual violence, followed by difficulty accessing resources and violence in the household. Females head about four in 10 Somali households and only 37% of women are active in the labor market in contrast to 58% of men.

All of these challenges contribute to the fact that poverty in Somalia disproportionately affects women. Ayuuto serves as a safety net for women who are experiencing many barriers to establishing a stable income and livelihood.

– Melissa Hood
Photo: Flickr

Mobile Money Services in Angola
Today, millions of people in the world face barriers in obtaining bank accounts from traditional financial institutions. Consequently, many have to turn to alternative sources to manage their finances. For many, mobile money services provide an ideal solution. Mobile money services enable people to withdraw, deposit and transfer money without a bank account. Today, Africa holds more than 55% of the world’s total mobile money services. In 2020, people from sub-Saharan Africa accounted for 43% of all new mobile money service accounts. Mobile money services break down barriers to access and the efficiency leads to more people using mobile money services. Mobile money services in Angola hope to encourage economic growth in the country and promote financial inclusivity.

Poverty in Angola

Angola stands as one of the most impoverished countries in the entire world. The World Bank Group reports that 32% of the entire population lives below the poverty line, with poverty affecting 18% of the urban population and 54% of the rural population. Furthermore, the unemployment rate in Angola is a stunning 31.6%. In addition, the country ranks 142 out of 180 countries in the Corruption Perceptions Index.

People mainly attribute these shocking statistics to government corruption and also the fact that the country is still recovering from its civil war, which ended slightly less than 20 years ago. Angola is the second-largest producer of oil in sub-Saharan Africa, producing nearly 1.37 million barrels of oil every day. Additionally, crude oil comprised about 88.% of exports in 2020. Angola has never attempted to diversify its economy away from oil to other products, which leaves its economy drastically fluctuating in an extremely volatile oil market.

Corruption is prevalent within the higher levels of government in Angola. Since oil is such a large part of Angola’s economy, politicians and the few elites in Angola reap the benefits. This is evidenced in the country’s Gini index score of 0.55, meaning income inequality in Angola is rampant. Nearly “20% of the population with the highest incomes receive 59% of all incomes,” yet the most impoverished 20% obtain only 3%.

In addition, the Angolan Civil War caused massive devastation in the country. Nearly 1 million people died in the conflict, and it caused massive damage to public infrastructure, including healthcare, schools, roads and bridges. This has caused rampant poverty, food insecurity, unsafe water consumption and inequality in education.


With Huawei’s technological support, “Angola-based mobile operator” UNITEL has created a mobile money service that allows users to make deposits, withdrawals, transfers and payments via mobile phone. Users of this service do not require a bank account. These mobile money services in Angola will be available in all 18 Angolan provinces.

UNITEL and Huawei have been working together over the past couple of years to use Huawei’s technology to develop UNITEL Money, which launched in August 2021. UNITEL aims to reach at least 3 million Angolan citizens through UNITEL Money. Nearly 14 million people in the country have access to a cellphone and 7 million Angolans have access to the internet. UNITEL Money will have a potentially strong customer base from which consumers will also benefit, given the poor financial state of many in the country.

The company says it plans to use its 6,000 contracted agents and 20,000 sub-contracted agents to ensure the success of UNITEL Money. People can make deposits, withdrawals and transfers with UNITEL Money at any UNITEL Money Store or using an agent, in a network of hundreds of branches throughout the country. With the help of agents, a UNITEL customer will be able to immediately and instantly send money to another customer to collect at a UNITEL agent closest to their location.

Over time, UNITEL says it plans to increase the functionality of its Mobile Payments system as well. Overall, UNITEL Money may potentially serve as a useful tool for those experiencing financial barriers in Angola, particularly unbanked people without access to traditional banking services and financial resources. Mobile money services in Angola will bring about financial inclusivity for marginalized and impoverished Angolans while igniting economic activity through ease of access.

– Matthew Port Louis
Photo: Flickr

COVID-19 in Cambodia
The IDPoor card is a critical resource in the United Nations’ new COVID-19 Cash Transfer Programme. This program aims to support socioeconomically disadvantaged citizens who COVID-19 in Cambodia has impacted. The IDPoor card, which the country implemented in October 2020, is a form of payment to impoverished families and individuals that helps them access essential resources like food, housing, healthcare treatment, education and more.

IDPoor Card in Action

The Cash Transfer Programme provides Cambodians with financial resources for housing security and healthcare access. The Cambodian government registers individuals in need of economic assistance and indicates how much aid they can receive. With financial support from the U.N. and UNICEF, the Cambodian government has significantly improved the daily lives of impoverished Cambodians.

Yom Malai is a Cambodian woman who received the IDPoor card and described her experience in a U.N. News Article: “We collect the money from a money transfer service,” she says. “During the COVID-19 pandemic, it has been a great help for my family. In addition, if we ever need to go to the hospital, we get medical treatment, care and medicine free of charge.”

Malai also explained the review process necessary to receive a card. It includes interviewing applicants and recording details about each household. By doing this, the government gains a holistic picture of each family’s financial resources and needs. Malai’s experience demonstrates the necessity of the IDPoor card in reducing global poverty, particularly in regions that are suffering economically due to COVID-19.

Poverty on the Rise

Even before COVID-19, Cambodians faced a disproportionately high amount of poverty. The U.N. calculated the hypothetical rise of poverty in this region in 2019, predicting that the impoverished population would increase to 17.6%, more than two times the impoverished count in 2019. Moreover, COVID-19 exacerbated many Cambodians’ financial disadvantages as the country’s economy limited jobs and healthcare needs increased. Specifically, the unemployment rate in Cambodia in 2020 was 3.2%, much higher than the 2019 rate of 0.7%.

The Cash Transfer Programme provides financial assistance to citizens registered with an IDPoor card. Each monthly payment depends on a household’s specific situation and needs. The already existing Cash Transfer Programme received further funding and spread to include as many impoverished Cambodians as possible. This act is a ray of hope amid the impact of COVID-19 in Cambodia.

For individuals who qualify, the card also acts as a form of medical insurance. It allows registered Cambodians to receive healthcare treatments or consultations without being charged. This healthcare coverage is extremely helpful to families as medical bills and incurred costs are large components of poverty.

In a UNICEF article, a young woman named Leont Yong Phin conveyed how her IDPoor card has helped her. “I’m still paying back a loan from when I got bad typhoid,” she says. “This money means I can repay and afford food. We’ve never had help like this before, it’s so reassuring.”

Encouraging Equity

In addition to providing necessary economic support and medical access, the IDPoor card program is essential for encouraging equity in Cambodia and reducing the disadvantages that come with certain socioeconomic conditions. By reviewing applicants’ economic history and family situation, the government can adequately provide the support necessary to address all citizens’ needs. In this way, the Cash Transfer Programme helps Cambodians with daily expenses and works to end inequity across the country.

Although the impact of COVID-19 in Cambodia has been significant, the IDPoor card and Cash Transfer Programme are greatly improving life for many Cambodians. With more support from international organizations like the United Nations, nonprofit organizations and even individuals, the program can provide even more resources to impoverished Cambodians.

– Kristen Quinonez
Photo: Flickr

Microlending Organizations
In the fight against global poverty, one hot-button issue is how to provide aid without the implication of paternalism, the idea that one person or group knows the interests of another group better than that group knows its own interests. Tariq Fancy, the founder of the nonprofit The Rumie Initiative, recalls hearing a Kenyan relative’s view on problems with international aid, saying “don’t walk in assuming that from your perch in North America you figured out all the answers for Africa.” Putting resources and power in the hands of communities both provides aid and acknowledges that they can make decisions about local interests. Microlending organizations have the power to do just that

Microloans are small loans at low-interest rates. Individuals living in poverty often have difficulty securing loans from traditional financial institutions due to a lack of borrowing history and assets to use as collateral. Even when people can get loans, interest rates are often high. People often use microloans to finance small businesses in their early stages, enabling people to overcome barriers and progress toward lifting themselves and their families out of poverty.

Microlending organizations can also issue loans for community projects, like building wells or funding schools. Microlending organizations typically, but not always, issue loans funded by individuals rather than by banks or other financial institutions. Here are four companies and organizations that use microlending in different forms to empower people living in poverty.

Four Microlending Organizations that Empower the Poor

  1. Kiva: Kiva crowdfunds loans from people around the world and uses partners to issue them. The nonprofit has enabled the funding of more than $1.33 billion in loans. Kiva emerged in 2005 and has partnerships with financial institutions throughout the world, where it transfers the crowdfunded money. The local field partners then loan money to Kiva’s lenders. Kiva has a 96.8 percent repayment rate and operates in 78 countries. On Kiva’s website, lenders can sort loans by region or category, such as agriculture, women and eco-friendly.
  2. Zidisha: Zidisha is the first direct person-to-person microlending service that focuses on entrepreneurs and job creation. Its name” comes from the Swahili word meaning “grow.” Unlike Kiva, Zidisha does not loan through financial institutions but facilitates direct lending between people. Zidisha’s loans total more than $16 million and have financed more than 240,000 projects.
  3. Building Resources Across Communities: Building Resources Across Communities (BRAC) is the largest non-governmental development organization in the world in terms of number of employees. Hasan founded BRAC in 1972 and it employs more than 120,000 people in 11 countries. BRAC has a microfinance program, primarily in Bangladesh, which has loaned to 5.6 million borrowers, 87 percent of whom are women. Unlike Kiva and Zidisha, which operate person-to-person lending services, BRAC distributes loans to lenders on its own using donations and other funds. BRAC also does work unrelated to microfinance, investing in schools and in water, hygiene and sanitation services.
  4. Women’s Microfinance Initiative (WMI): Women’s Microfinance Initiative (WMI) began issuing loans in 2008 and trains local women in managing loan hubs. WMI has loaned more than $4.5 million to rural women in amounts of $100 to $250 at an interest rate of 10 percent. According to WMI, 99 percent of its borrowers report doubling their income within six months of being involved in the program. WMI reports a 98 percent repayment rate.

The efficacy of microlending in pulling people out of poverty is up for debate, but some cases have shown promising results. A microfinance program in Uzbekistan resulted in 71 percent of participants reporting an increase in food intake quality. One study showed that when a microfinance program was put in place, there was an 18 percent decline in extreme poverty. While different studies report differing results, microlending organizations like Kiva, Zidisha, BRAC and WMI have certainly been a success.

– Meredith Charney
Photo: Flickr

Fighting Global PovertyPeople helping people. Country helping country. Giving back to the world is not a strange concept and is a welcomed idea in most societies. A popular form of global help is foreign aid. The umbrella term commonly refers to monetary assistance provided by outlying or foreign governments. The funds are generally distributed through humanitarian organizations, non-profit groups or directly from a foreign government. As such, the aid is given to citizens in an abundance of forms, such as money, food or shelter. While some can afford to provide more than others on a purely numeric comparison, the amounts are measured or valued differently depending on the country’s economic standing. This list consists of five countries fighting global poverty who outshine the rest.

Top Five Countries Fighting Global Poverty

  1. Norway begins the list as it provides the largest amount of foreign aid in comparison to its GDP. The government put 1.11 percent of its GDP towards global humanitarian aid, spending NOK 455 million as of 2018. The country utilizes organizations such as the U.N.’s CERF (Central Emergency Response Fund), the Red Crescent Movement and the Red Cross. Recently, Norway channeled much of their funds into CERF in order to assist Venezuela in its growing refugee crisis. Norway’s contributions towards these programs effectively fight against global poverty and prove the nation should be in the top five, as its generosity in comparison to its national budget is the highest in the world.
  2. Luxembourg also contributes a significant portion of their GDP towards humanitarian and foreign affairs. Approximately 1 percent of their national budget, or about USD 413 million, is used for aid. Some of Luxembourg’s projects include poverty reduction through community development in Laos, education improvement in Burkina Faso and health care in Nicaragua. These countries receive specific help from various agencies and organizations like LuxDev and the Directorate for Development Cooperation and Humanitarian Affairs. These groups and projects, though just a few select examples, show how much effort Luxemborg puts in fighting poverty.
  3. Sweden comes forward as another example of a smaller country with a smaller budget who still makes a grand impact in the world. As about 1.04 percent of its GDP, or about USD 5.8 billion, is used for humanitarian and foreign aid, Sweden holds a top ranking. While the money touches on a broad range of topics, from civil rights to education, specific Swedish projects focus on poverty issues. For instance, Sweden recently provided aid to Somalia for drought relief through the United Nations Children’s Fund (UNICEF) and the Somalia Humanitarian Fund. Sweden makes a mark on the world by not only tackling larger, conceptual issues, but by also responding quickly to disasters and world events. Such assistance highlights the country’s proficiency in the fight against global poverty.
  4. The United States is a leader in fighting global poverty as it contributes the most money towards humanitarian and foreign aid. Within the past few years alone, the U.S. contributed USD 30 billion towards various forms of international aid. The nation utilizes several different federal agencies, non-profit groups and other organizations to distribute aid. The U.S. commonly works with popular organizations such as UNICEF or the Red Cross. A prime example of the U.S. effect on the world is with the sheer number of countries it provides for, as it touches nearly 40 different nations, including Pakistan and Mexico.
  5. Germany also provides a significant amount of aid with nearly USD 20 billion contributed towards humanitarian projects in recent years. This accounts for nearly 0.70 percent of the national budget. Popular organizations and agencies include the World Food Program, which Germany utilized to provide relief to Africa. In addition to such organizations, Germany is known to donate large amounts of money to other countries, a notable example being Syria in recent years due to their ongoing crisis. Germany’s monetary generosity also makes it the second-largest donor in the world to foreign aid, falling in just behind the U.S.

Whether it’s a natural disaster or political turmoil, when a country is in need, surrounding neighbors will often step up to help.

– Eleanora Kamerow
Photo: Flickr

Demonetization in India has been one of the most discussed topics since 2016. It became the center of attention after its sudden implementation in a declaration by India’s Prime Minister, Narendra Modi, in November 2016. In simple terms, demonetization means ending the use of existing currency (in this case, 500 and 1000 rupee notes) as the legal currency of a country.

Though demonetization in India has shocked millions across the country, it has occurred before, once in 1948 prior to India’s independence and then again in 1978. In both cases, as in the current case, the goal was to prevent counterfeit and black money.

The process of demonetization in India started six to eight months before the date of its announcement. However, it was declared with no prior warning, and the Reserve Bank of India (RBI) provided a window of only 50 days for the exchange of 500 and 1000 rupee note after its declaration.

Where does India stand after one year of demonetization? What is its effect on common people as well as on the overall economy after one year? So far, the negative aspects of demonetization far outweigh its positives. However, it is important to recognize the positive outcomes:

  • Since the beginning of 2017, there was an increase in the number of digital transactions. According to a report by the National Payments Corporation of India (NPCI), digital transactions spiked from 0.1 million in October 2016 to 76.96 million in October 2017. Digital transactions will help to eradicate illegal transactions and bolster tax collections.
  • Due to the deposit of unaccounted money in the form of Rs.500 and Rs.1000 in cash, which increased liquidity, banks are offering home and business loans at a cheaper interest rate that will boost both the real estate and the small industry sectors, bringing new employment opportunities.
  • Over 200,000 shell companies suspected of money laundering and fraud were closed.
  • The steel industry and auto sector, which both took an initial blow, are performing better than anticipated and are expected to maintain their gradual upward trend.

Unfortunately, citizens like farmers, small traders and daily wage earners, who mostly deal with cash in their everyday lives, have been dealt the hardest blow. It is predicted that almost 100,000 people became unemployed due to the Prime Minister’s sudden decision. Luckily, several minor monsoons had a positive impact on agriculture, which increased income and public consumption in the rural sector.

In the midst of all speculation and controversy, many think demonetization in India has stricken the very core of corruption, and will help make major change in the nation. It’s impossible to know for sure as of yet, but with more time, there is hope that India will see long-term positive effects.

– Mahua Mitra

Photo: Flickr