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Human Capital Investment Project Targets Poverty at the Roots

Human Capital Investment Project

In January 2025, Guinea-Bissau launched a $20 million Human Capital Investment Project with support from the World Bank. It aims to reduce poverty through education, health care and social protection investments. As one of West Africa’s most impoverished nations, Guinea-Bissau struggles with food insecurity, low school completion rates and limited access to basic services. Guinea-Bissau’s Human Capital Investment Project tackles these problems by strengthening public systems and targeting support to the country’s most vulnerable communities.

The Human Capital Investment Project

The Human Capital Investment Project initiative will deliver cash transfers to vulnerable households, helping families cover food, school costs and medical needs. It will also distribute school kits to more than 111,000 children to encourage classroom attendance and ease financial pressure on parents. These efforts aim to improve student retention in a country where fewer than 30% of students complete primary school.

The project also expands maternal and child healthcare, especially in rural regions with limited access to clinics. It funds new health workers and social service professionals who support expectant mothers and deliver care in hard-to-reach areas. These trained professionals provide care, help families navigate public services and improve trust in local systems.

The project further supports social programs and community outreach initiatives, fostering long-term development, reducing poverty cycles, and strengthening resilience among Guinea-Bissau’s most vulnerable populations.

Lessons From Similar Poverty-Focused Initiatives

Several global examples show how similar investments can improve the quality of life on a mass scale. In Mozambique, a government-led program in 2022 combined cash transfers with nutrition support, which increased school attendance and child health among impoverished households. Similarly, in Bangladesh, the Maternal Health Voucher Scheme provides prenatal care and financial assistance, helping reduce maternal deaths and increase access to health services.

Kenya also offers a strong example of the likely results of Guinea-Bissau’s project. In 2023, the government trained more than 1,000 community health volunteers who now bring basic medical care and health education to rural families. The program improves access to healthcare services and offers career paths for young professionals in underserved areas.

Guinea-Bissau’s Human Capital Investment Project takes a similar approach to these programs, using targeted investments in people to break the cycle of poverty. Indeed, Guinea-Bissau’s initiative will likely see similar successful results. The project will help build a foundation for long-term economic resilience and better quality of life by focusing on education, health care and social support.

Final Remarks

As the project continues, its success will depend on clear coordination and responsiveness to community needs. However, Guinea-Bissau’s Human Capital Investment Project signals an ongoing shift toward people-centered development. It could offer a model for other countries seeking to improve fragile public support systems and combat systemic poverty.

– Kelsey Eisen

Kelsey is based in San Francisco, CA, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Flickr

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Solidarity Income: Building Futures With Cash Transfers

Solidarity IncomeMillions of Colombian citizens live in abject poverty. As of 2022, the overall poverty rate was approximately 37%. However, the country has significantly improved in decreasing poverty over the past few decades, mainly due to its cash transfer programs, which provide regular cash assistance to low-income families.

Programs such as Families in Action, Youth in Action and Solidarity Income have proven imperative in promoting youth education and improving the health and well-being of citizens. They also provide emergency financial assistance. The nation has implemented these initiatives to support vulnerable communities in achieving long-term economic stability and building futures in Colombia.

Families in Action

In 2000, Colombia started its main conditional cash transfer program, Families in Action. The program aims to assist low-income families with consistent financial support if they meet specific conditions. These include ensuring their children attend school regularly and get routine health checkups for children aged less than 5.

Since its inception, Families in Action has helped around 2.7 million Colombian families and about 10 million people. The program has increased the use of preventive health care services. More families are taking their children to growth and development check-ups and ensuring increased diversity in rural children’s diet. The program aims to break the intergenerational cycle of poverty and help future generations lead successful lives by building futures in Colombia.

The program is supported by numerous international agencies such as the World Bank and the Inter-American Development Bank (IDB). These influential partners ensure that the program is running smoothly and has enough funding, which is crucial to continued success.

Youth in Action

Another initiative launched by the Colombian government in 2001 is Youth in Action. Aimed at easing the challenges many low-income youth face during their transition to adulthood, the program supports individuals aged 14 to 28 in college or attending vocational training programs. It provides regular cash payments to eligible students, which help pay for important expenses such as transportation, school supplies and housing. The main goal is to reduce youth unemployment and help students stay in school.

The initiative has been able to help approximately 300,000 young people through job training in semi-skilled trades, particularly in major cities where many struggle with unemployment. The program also connects these students with essential career services and job placement programs, guaranteeing their education leads to future opportunities.

The program has helped increase earnings and employment. For example, earnings for women increased by almost $18 per month (at the time of the evaluation). Additionally, 20% of program beneficiaries work in government-recognized firms, compared with 17.4% of other women. Overall, Youth in Action is an investment in Colombia’s future workforce and a strategic tool for building futures in Colombia through a fairer society.

Solidarity Income

Social inequalities among informal workers and families excluded from traditional social safety nets were exacerbated by the COVID-19 pandemic. In response, the government launched Solidarity Income in 2020 to provide unconditional cash transfers to support families not protected by other assistance initiatives.

Unlike Families in Action, Solidarity Income has no conditions. Instead, it is specifically designed to quickly help struggling people who lost jobs and could not afford food during the pandemic. The program used data from government databases and financial institutions to pinpoint exact households, allowing them to send money, even to those in remote areas.

In only a few years, the initiative reached more than three million families, with most in extreme poverty. An example is Heidy Barrera, who said, “this money will allow me to buy food for my household.” Solidarity Income was crucial during the height of the pandemic, when many other forms of financial support were unavailable.

Conclusion

Colombia’s Families in Action, Youth in Action and Solidarity Income programs show the impact of how organized cash transfer programs can positively influence millions of lives. These initiatives provide short-term relief and long-term development by helping people grow through education and health, which are essential in preventing regression and help build futures in Colombia. Strengthening and expanding these programs will be of utmost importance to create a more equitable society for the future generation of Colombians.

– Rafe Photopoulos

Rafe is based in Gainesville, FL, USA and focuses on Good News for The Borgen Project.

Photo: Flickr

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Innovations in Poverty Eradication in Cambodia

Cambodia is a rapidly developing country that has seen vast improvements in its economic and social development over the years. While the number of Cambodians living in extreme poverty has dropped from 36.7% in 2014 to 16.6 % in 2022, multidimensional poverty remains at the forefront of life for many, specifically those living in rural areas. Although much of the population of Cambodia is not classified as living in extreme poverty, almost “three-quarters of the population still live on less than $3 a day” and 90% of those hovering just above the poverty line are located in rural areas.

There are many explanations as to why poverty exists in Cambodia, many of which trace back to the country’s troubled history during the Khmer Rouge regime in the ’70s. Pol Pot’s regressive regime exacerbated poverty, condemning developments and modern advancements that would allow individuals to train in skilled, higher-income jobs. Coupled with inadequate funding for education, health and transport and an unfair distribution of wealth, poverty in Cambodia continues to run rife. However, here are some ways governments, foreign aid and nonprofit organizations are working to improve the situation in Cambodia.

National Poverty Reduction Strategy in Cambodia

In 2002, the Cambodian government introduced the National Poverty Reduction Strategy (NPRS), which established a vision with objectives and measures to tackle the issue of extreme poverty. Poverty mapping was the first step in the program, allowing policymakers to identify areas with the highest levels of poverty and coordinate their antipoverty efforts more efficiently. The NPRS also focused on providing social protection and equity to civilians, ensuring equal access to land, basic amenities and economic resources.

Focusing antipoverty efforts on boosting non-farm earnings and developing growing industries like tourism, garment manufacturing and construction has been a critical driver of poverty reduction in Cambodia. Providing workers with training for more skilled, higher-paying jobs has facilitated a shift away from low-wage farming, further promoting trade and investment-led growth in the country. Moreover, by opening its borders to international trade and investment, Cambodia has attracted foreign direct investment (FDI) to support these growing industries and to expand the economy further.

Between 2013 and 2022, “the average annual value of FDI rose to 12.1% of gross domestic domestic (GDP),” with garment and electronics industries dominating the flow of inbound FDI. In 2023 alone, FDI created more than 307,000 jobs through 268 approved investment projects.

Cash Transfers

The COVID-19 pandemic introduced a myriad of problems and setbacks for Cambodia, reversing prior poverty reduction efforts and pushing approximately 460,000 individuals into poverty. The closure of factories and markets led to job losses. Additionally, the shutdown of borders diminished income from tourism and trade. As a result, Cambodia’s GDP contracted by 3.1%. However, its government responded swiftly, introducing cash transfers to deliver emergency aid and support to those most vulnerable.

Building on the success of previous cash transfer programs, these new transfers were influential in the post-pandemic recovery strategy. They helped people experiencing poverty accumulate savings and purchase necessities for their survival. In total, 700,000 impoverished households have gained access to the cash transfer program, benefiting approximately 2.8 million people living in poverty.

Habitat for Humanity

Habitat for Humanity is just one of the nonprofit organizations helping to alleviate poverty in Cambodia, “focused on long-term development, aid and poverty alleviation.” The organization operates in six provinces, where poverty is most abundant, building safe and durable shelters for those living in impoverished and unsanitary conditions. Thus far, it has helped more than 22,000 families to create long-lasting shelters with new standards of hygiene in its water and sanitation interventions.

Habitat for Humanity not only focuses on building housing for low-income families but also provides education and training in financial literacy and livelihoods. The organization collaborates with various partners, including authorities and microfinance institutions worldwide. Through their collective expertise, they offer technical guidance in housing solutions and well and latrine construction. They also provide micro-loans to help communities initiate these projects.

Final Note on Poverty Eradication in Cambodia

While much remains to be done to eradicate extreme poverty in Cambodia permanently, the important steps outlined in government plans and the remarkable efforts of nonprofit organizations, such as Habitat for Humanity, serve as a model for ongoing positive change.

– Sofia Bowes

Sofia is based on the Isle of Skye, UK and focuses on Good News for The Borgen Project.

Photo: Flickr

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Innovations in Poverty Eradication in Mozambique

Innovations in poverty eradication in MozambiqueMozambique is a land of contrasts where poverty and plenty coexist. While the continent is home to untapped natural resources, it also remains home to a very large poor population. Mozambique currently ranks sixth from the bottom on the UN’s Human Development Index. Approximately 68% of its population lives in extreme levels of poverty. Moreover, Mozambique is one of the world’s most climate-vulnerable countries, facing significant environmental challenges and the rapid population growth of the country, ranking third highest in Africa, is increasingly straining public services. However, GiveDirectly is working to change this by employing innovations in poverty eradication in Mozambique through direct cash transfers.

What Is GiveDirectly?

GiveDirectly is a non-profit organization that sends money to the world’s poorest households. By sending money by direct cash transfer, GiveDirectly immediately eliminates the need for intermediaries and significantly impacts global poverty.  

While GiveDirectly currently operates to alleviate poverty around the world; its work in Mozambique has seen them delivering cash to families on the frontline of climate disasters since 2021 and has placed GiveDirectly at the forefront of innovative poverty eradication in Mozambique. 

Innovations in Poverty Eradication in Mozambique

GiveDirectly is alleviating poverty in Mozambique by giving no-strings-attached cash to people living in extreme poverty across the country. In the last decade, GiveDirectly has delivered $900M+ to more than 1.48 million people across nine African countries. It is clear how cash transfers play a significant role in moving the needle of people living in poverty from one point to another. 

In Mozambique, GiveDirectly has made a significant impact, raising over $7.4 million. This funding has been directed towards crucial programs like Cash+ Resilient Agriculture and Livelihoods. These initiatives aim to reduce poverty by empowering households to invest in their farms, thereby improving their economic stability. Moreover, the Climate Disaster Recovery and Food Security program further aids poverty alleviation by enabling families to invest in their homes, businesses, education, and health. 

Benefits of Cash Transfer

Many individuals may be skeptical of a “no-strings-attached” cash, believing that unconditional cash is spent on “temptation goods” such as drugs and alcohol. In fact, there is little evidence to suggest better outcomes come with conditionality. Actually, there are many benefits to alleviating poverty through cash transfers. The main benefit is that a cash transfer enables people to achieve their own, personal goals. 

For instance, GiveDirectly points out how cash transfers to individuals in Mozambique allowed kids to go back to school, individuals to reinforce their houses and people moving away from elephant crop raids. What is innovative about the way GiveDirectly alleviates poverty is that they empower recipients to make their own decisions. 

GiveDirectly stands out in innovatively alleviating poverty in Mozambique through its evidence-based approach and its rigorous standards of evaluation when it comes to implementing its programs. GiveDirectly is a standout NGO that effectively combats poverty through its innovative and highly scalable approach. By utilizing mobile money, GiveDirectly can swiftly provide cash assistance to tens or even hundreds of thousands of people. This means the charity can deliver aid rapidly and efficiently, making a significant impact in eradicating poverty. 

– Lara Inglis-Jones
Photo: Wikimedia Commons

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Digital Innovation Empowering Rural Entrepreneurs

Empowering Rural EntrepreneursIn the face of rapid digital advancement, innovative solutions are emerging as powerful tools for alleviating poverty worldwide. The development sector is increasingly utilizing digital innovation to support rural entrepreneurs, thereby forging a path toward sustainable poverty reduction through technology. This article examines the transformative impact of online commerce and direct cash transfers by organizations like GiveDirectly and GiveWell on empowering rural entrepreneurs and sparking economic development in underserved areas.

The Power of Direct Cash Transfer

As technological advancements gain popularity in urban settings, rural communities are not left behind, due to aid from organizations like GiveDirectly. This organization equips people in rural areas with phones, enabling contributors to send funds directly to those in greatest need. GiveWell and GiveDirectly have demonstrated the success and sustainability of grants over loans in reducing poverty, through tracking and analyzing cash transfers. These grants, with few or no strings attached, have not only shown a proven track record of success but also represent the most ethical giving method, granting recipients complete control over their paths out of poverty.

Microloans vs. Unconditional Wealth Transfer

Assuming impoverished people cannot manage their finances overlooks the structural and systemic nature of poverty. This perspective has fueled the popularity of microloans as a poverty reduction strategy. When donating to an organization, contributions often cover staff salaries, outreach costs and more, stretching funds to support not only the target populations but also the organization’s sustainability. Meanwhile, loans risk entrenching people in a cycle of poverty, with the burden of repayment potentially falling on their children if the parents fail to pay off the debt.

For this reason, GiveWell has invested in the analysis of GiveDirectly, a study that compares microloans to unconditional cash transfers. According to GiveWell, “It requires far more overhead to run a microlending operation than to run a cash transfer operation.” Additionally, many microloan agencies operate as for-profit businesses rather than humanitarian nonprofits like GiveDirectly. This distinction often means there’s less incentive for them to avoid indebting the people they aim to assist

The Case for Direct Cash Transfers

Organizations have rigorously studied cash transfers, finding strong evidence they reduce monetary poverty. A 2016 report from the Department for International Development highlights cash transfers as among the most thoroughly researched development interventions. However, only 2% of major government funding goes toward direct cash transfers.

Global Market Access for Rural Artisans

Technological innovation, particularly online marketplaces, is advancing global development by opening access to the global market. People in low-income, rural areas often create sought-after artisanal products, but traditionally they could sell them only to tourists at local prices. For-profit and nonprofit companies are emerging to offer entrepreneurs technology access and digital business strategies. These initiatives empower rural women’s groups to develop websites or use existing platforms to sell their products at fair prices, reflecting the hours of labor invested in their creation. Digital platforms connect rural producers directly with consumers and markets, eliminating intermediaries and ensuring fair prices for their products. The ongoing trends show that collaborating through websites fosters community-led development.

The Future of Technology in Development

Digital innovation and solutions, such as direct cash transfers and global market access, are reshaping the landscape of poverty alleviation, empowering rural entrepreneurs to take charge of their economic futures. These advancements promise a sustainable pathway out of poverty, leveraging technology to bridge gaps and foster inclusive growth.

– Kiera Gorman

Kiera is based in Santa Cruz, CA, USA and focuses on Technology and Solutions for The Borgen Project.

Photo: Flickr

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Prospera: Mexico’s Successful Conditional Cash Transfer Program

Prospera: Mexico's Successful Conditional Cash Transfer Program Prospera, which was formerly known as Oportunidades and Progresa, was the world’s first national conditional cash transfer program, originally launched in Mexico in 1997. The program, which ran between 1997 and 2019 and involved multiple rebrands, focused on incentivizing and improving access to education, nutrition and health for poor families.

Conditional cash transfer programs are government welfare programs that provide residents in poor communities with funds as long as they meet the conditions of the program. Common requirements for programs like Prospera typically include mandating school enrollment for children and ensuring regular health check-ups.

After the 1995 Mexican peso crisis drastically devalued the peso, Mexico launched the Prospera program to combat poverty and inequality. Targeting particularly impoverished areas, Prospera proved notably effective in Mexico’s poorest regions, such as Chiapas, where a poverty rate of 74.7% prevails. In La Gloria, Chiapas, about 93% of families benefited from the program’s stipends. Hence, Prospera aimed to alleviate poverty in both urban and rural areas across the country.

Poverty and Education

Prospera targeted poverty reduction by emphasizing school enrollment. In Mexico, where families often depend on extra income, children are pushed to work, undermining their education. This issue is more acute in the South, where children frequently leave school to work in agriculture, exacerbating educational neglect and perpetuating the cycle of poverty.

Under Prospera, families would receive grants every month for each child attending school. As children progressed in school, the grant amount would increase. For girls, the grant amount would range from 105 pesos or $9.50 in third grade to 660 pesos or $60 by high school. The stipend for girls was higher than the stipend for boys because on average, girls were more likely to leave school at a younger age.

Additionally, children participating in Prospera from their earliest days show a higher likelihood of pursuing higher education. A study found children enrolled within their first 1,000 days were 67% more likely to attend college compared to those enrolled after 6th grade. Prospera’s emphasis on continuous school attendance played a crucial role in its success. Education plays a pivotal role in poverty reduction according to Childfund, who claim education is the “catalyst needed to pull families and communities out of the cycle of poverty.”

Health and Nutrition

Prospera provided families with health-related monetary transfers to ensure regular health checks for both parents and children. These funds, aimed at improving food consumption and nutritional health, came with no spending restrictions. The program tailored its conditions to meet specific demographic needs, such as organizing health and nutrition sessions for mothers and high school students. Notably, Prospera contributed to a 17% decrease in infant mortality rates in Mexico, highlighting its critical role in addressing health-related poverty and malnutrition issues.

Effects of Prospera

Mexico’s conditional cash transfer program, though scaled back in 2019 to focus on education, continues to significantly influence global poverty reduction strategies. Its model has inspired dozens of countries worldwide to implement similar programs, benefiting impoverished communities. While debates exist over Prospera’s long-term poverty impact, its achievements in reaching millions in Mexico’s needy urban and rural areas, enhancing educational outcomes and reducing child health issues stand out.

– Marley Wilson
Photo: Unsplash

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GiveDirectly’s Cash Transfer Project for Kenyans

GiveDirectly’s cash transfer projectIn March 2020, GiveDirectly launched The Kenya Emergency Cash Fund to protect vulnerable Kenyan communities by sending recipients cash through mobile wallets. GiveDirectly is a nonprofit organization operating in East Africa that works to alleviate extreme poverty. Since its founding in 2009, GiveDirectly has given over $160 million to 170,000 families in the region, eventually earning a 100% rating from Charity Navigator. GiveDirectly’s cash transfer project is an initiative to help low-income Kenyans, especially during COVID-19.

Kenya Emergency Cash Fund

The Kenya Emergency Cash Fund, also known as the Kenya COVID-19 Fund, was formed in partnership with the Shikilia Initiative, which is a collaboration between the Kenyan private sector and nonprofit organizations. In coordination with GiveDirectly’s cash transfer project, Shikilia’s goal during the pandemic is to provide 200,000 people with monthly transfers of $30 for the next three months.

“We currently have enrolled 11,000 adults into the program and have disbursed around $300 to these recipients,” Director of Recipient Advocacy, Caroline Teti, told The Borgen Project. Teti joined GiveDirectly in 2016. She hopes to put an end to the devastating and disempowering nature of poverty across Africa through innovative projects such as GiveDirectly’s cash transfer project.

GiveDirectly has already launched settlements in Mathare, Kibera, Korogocho, Mukuru and Kawangware. This is crucial since resident families of these settlements live on $2 or less and are therefore expected to take the hardest economic hit as a result of the pandemic. For example, Teti reported that as a result of COVID-19, 95% of people in Mathare are eating less.

Recipients barely had savings before the pandemic. So, without GiveDirectly’s cash transfers made available to low-income communities by the Emergency Cash Fund, Teti believes that “families would have snuck back to the villages, increasing transmission risks to older people living in the countryside.”

Making Cash Transfers Efficient

In order to ensure that these cash transfers made to recipients are efficient, GiveDirectly is partnering with Shining Hope for Communities, a grassroots movement that catalyzes large-scale transformation in urban slums in Kenya.

Methods GiveDirectly and SHOFCO use to reach recipients more rapidly include using existing databases of low-income households, using rosters provided by local vetted NGO partners and using rosters of mobile money subscribers recruited through partner mobile network operators.

Project 100

Though GiveDirectly’s priority is getting cash to hard-hit families in extreme poverty in Kenya, it also organized Project 100 to raise funds for U.S. families impacted by COVID-19. For this project, GiveDirectly partnered with Propel, a company that helps recipients of the Supplemental Nutrition Assistance Program manage their benefits. The project aims to raise a total of $100 million for recipients.

The Road Ahead

According to the World Bank, poverty in Kenya may still remain above 20% by 2030 if it continues on a minimal growth path. More job opportunities for youth and infrastructure investments that improve transportation and service deliveries would be necessary to raise Kenya’s productivity.

Through GiveDirectly’s cash transfer project, an efficient and simple method of delivering cash, small-scale businesses will have the opportunity to grow, especially when food insecurity is no longer an obstacle. As Teti says, “We must rethink recipient empowerment and consider cash as a model for changing the lives of people living in poverty.”

– Joy Arkeh
Photo: Flickr

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Combating Extreme Poverty: Nigeria to Grant Millions

Combating Extreme Poverty, Nigeria to Grant Millions
Almost 50 percent of Nigeria’s 180 million inhabitants live in extreme poverty, which is defined as living on less than $1.90 a day. However, the nation, noted for having the world’s largest population of people living in extreme poverty, is set for some distinctive paydays. In a show of national redemption, 300,000 households of Nigeria’s poorest will be gifted $14 per month for six years.

Recuperated Funds Put to Good Use

The unconditional cash transfers will come from the more than $322 million in recuperated funds, money originally looted by former Nigerian military ruler Sani Abacha, that had been recovered by Swiss authorities. The cash remittance was set to begin in July 2018 and will be administered to 19 of 36 states in Nigeria.

The redistribution of embezzled funds is a part of The National Social Safety Net Program (NAASP), operated by The World Bank. NAASP is a project that administers cash transfers to Nigeria’s poor and vulnerable households. Of the reported $2.2 billion that Abacha stole from the Nigerian state treasury during his five-year reign that ended after a fatal heart in 1998, Switzerland has so far returned an estimated $1 billion to Nigeria over the last 10 years.

The World Bank currently administers 475 social safety net programs in 146 countries, serving over 1 billion people in developing countries. However, only 345 million people living in extreme poverty are covered by social safety nets. According to the World Bank, unconditional cash transfers occur in 118 total countries worldwide with school-feeding programs being the most common type of social safety net. Cash transferred to women is said to influence the reduction of sexual and domestic violence and curtail the spread of sexually transmitted diseases.

These cash transfers have had noted successes in alleviating social ills that accompany extreme poverty. A 2016 study by The Overseas Development Institute reports associations with improved health service use and school attendance. The Nigerian government will also provide public primary schools with free meals in an effort to provide food and education to the nation’s underserved population.

Alleviating Poverty Through Small Loans

Beginning in August 2018, the Nigerian government will issue the equivalent of $28 to petty traders through its Government Enterprise and Empowerment Program. The collateral-free loan initiative called Trader Moni aims to reach 2 million recipients by the end of 2018. Three states, Abia, Kano and Lagos will be Nigeria’s first beneficiaries. The state of Lagos will lead the way in August with thousands of loan recipients across five markets.

The Trader Moni loan stipulates that beneficiaries are eligible for additional loans between $42 and $138 providing that the initial $28 is paid back within the original six-month term. There are several requirements for the Trader Moni loan—the applicant must be a Nigerian citizen, 18 years old or above, a business owner or trader and be a member of a market cooperative union. Furthermore, applicants must have valid identification, a bank verification number and valid phone number registered with a service provider.

Supporting Micro, Small and Medium Enterprises

In addition to Trader Moni, a new government initiative for Nigerian business growth is underway. Vice President Yemi Osinbajo announced that the government will provide Micro, Small and Medium Enterprises (MSME) with a credit facility between $5,567 and $27,837. Osinbajo established the MSME Clinic in 2017 as a means to promote economic growth in Nigeria.

Partnering with The Central Bank of Nigeria and commercial banks, MSME loans have terms of five to seven years, an interest rate of 5 percent and require little to zero collateral. The Nigerian government also plans to provide MSMEs access to cluster-style facilities. The facilities are said to have affordable usage fees.

Cash transfers, though a short-term solution, accessible loans, and economic diversification are tools for extreme poverty alleviation and, to some extent, maintain President Buhari’s mission of reducing poverty through diminishing unemployment rates and supporting small and medium-sized businesses in Nigeria.

– Thomas Benjamin
Photo: Flickr

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How to Eradicate Extreme Poverty and Hunger

how to eradicate extreme poverty and hunger
Poverty is like a cancer for society — it is debilitating and does not have a cure-all solution. People in extreme poverty live on less than $1.90 a day and face poverty traps due to factors such as geographic location, malnutrition, effort required to meet daily needs, lack of education and poor governance. With so many ways for people to become poor, it’s not surprising that different regions need to focus on different issues when determining how to eradicate extreme poverty and hunger.

Poverty Eradication Across the Globe

According to the 2017 World Bank Annual Report, Europe and Central Asia focused 41 percent of the $5.3 billion they borrowed from the International Bank for Reconstruction and Development as well as the International Development Association on energy and extractives but only two percent on education.

In contrast, South Asia concentrated 14 percent of the $6.1 billion they borrowed on energy and extractives, and 12 percent on education. Despite such disparities between these two countries’ prioritization of their energy and education sectors, both areas took action to build resilience to climate change, invest in human capital and improve infrastructure.

Benefits of Migration

For poor households trapped by low-productivity and in oftentimes remote, rural locations, migration could be a viable solution to increasing their standard of living. Such families may not be willing to migrate because it would put their sources of subsistence at risk. However, there are large potential gains from migrating to a highly productive country like the U.S.

According to a study by Clemens, Montenegro and Pritchett in 2016, the annual gain from working in a high-productivity environment is more than four times the total lifetime value of the most successful anti-poverty program.

Cash Transfer Solutions

On the policy side, well-targeted and structured cash transfers have been an increasingly popular tool for alleviating poverty in low-income countries. Cash transfers not only provide safety nets by raising the incomes of the poor, but they also help them escape from ‘psychological poverty traps.’

Contrary to the common concern that welfare programs can discourage work, a study done by Banerjee et al. in 2016 found no systematic evidence that cash transfer programs affect the overall number of hours worked nor the propensity to work among the men and women in the seven programs carried out in the Honduras, Indonesia, Morocco, Mexico (which had two programs), Nicaragua and the Philippines.

There are also solutions that require the consideration of measuring poverty based on other factors besides income and consumption. One example would be the offshoring of low-skilled jobs. While these jobs do provide a steady source of income, they are often also unpleasant, risky and may lead to adverse health effects. So, although these jobs can provide a short-term safety net, they are not a long-term solution to poverty.

Small Changes, Big Outcomes

Specific strategy government programs that have lasting effects countering poverty involve multifaceted household-level interventions. In one study by Banerjee et al., implementation of an anti-poverty program at the household level in India, Ethiopia and Pakistan (as well as both the village and household level in Ghana, Honduras and Peru) led to at least a year’s worth of lasting impact after the short-term intervention of the program.

Statistically significant impacts were made in the areas of consumption, food security, productive and household assets, financial inclusion, time use, income and revenues, physical health, mental health, political involvement and women’s empowerment. The intervention consisted of six elements: a productive asset grant, temporary cash consumption support, technical skills training, high frequency home visits, a savings program and health education and services.

Pros and Cons of Policy Change

On the other hand, governments also need to be careful when deciding on policies that involve low-income countries. Bill Clinton admitted in 2010 that his policy to dump American tariff-free rice in Haiti was a mistake. By forcing Haiti to drop tariffs on imported subsidized U.S. rice, the damage done to rice farming severely hindered Haiti’s ability to be self-sufficient.

In response to the incident, Oxfam recommended that food aid should be bought in local markets inside the country receiving aid.

Oxfam also said the Haitian government should decentralise services away from the capital, make sure farmers have credit access and improve their land tenure system where farmers could be cheated by judges able to transfer land into the hands of ‘whoever offers the biggest bribe.’

Eradicating Extreme Poverty and Hunger

The same goes for humanitarian organizations in deciding what kinds of resources and assistance to provide. To answer the question of how to eradicate extreme poverty and hunger, these organizations need to first determine what consequences their intervention would lead to. By looking for methods to complement local capacities to combat poverty, humanitarians can prevent their efforts from displacing local businesses.

A great example is The Hunger Project — a global nonprofit organization dedicated to ending world hunger. With programs throughout Africa, South Asia and Latin America, this organization empowers women and men in rural villages to sustainably overcome hunger and poverty. Members of the community accomplish this feat by mobilizing and fostering effective partnerships to engage local government.

In conclusion, there are many factors to consider in different parts of the world when looking at how to eradicate extreme poverty and hunger. Auspicious solutions to poverty traps include migration, conditional cash transfers and multifaceted household-level programs. On the side of humanitarian organizations and the government, much deliberation is essential to providing goods, services and policies that complement and protect rather than displace local needs and markets.

– Connie Loo
Photo: Flickr

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Highlighting the Benefits of Cash Transfers

Cash TransfersCash transfers are one of the most thoroughly evaluated types of humanitarian aid that have been shown to effectively reach individuals and families in developing countries and can be provided with accountability. This form of aid has proven effective in reducing suffering by increasing limited household budgets and providing for basic needs.

According to a report by the Center for Global Development (CGD), cash transfers may come in the form of “an envelope of cash, a plastic card, or an electronic money transfer to a mobile phone, with which [recipients] can buy food, pay rent and purchase what they need locally.”

This report also suggests that these transfers should be complemented by services such as immunization and sanitation, where cash transfers may not be sufficient.

Other benefits through transfers include the transparency provided. They allow precise measurement of how much aid is arriving to the desired target population.

Receivers are granted the benefit of being able to choose what the aid is spent on. This decision making process further empowers communities and allows them to receive what they really need.

Despite the benefits, the CGD states that cash transfers are still often overlooked in favor of other forms of assistance. Today, cash payments make up only six percent of aid. Evidence from global crises, in Ethiopia, for instance, has proven that “cash was more effective than food aid by 25-30 percent,” says the CGD.

There are also challenges in the distribution of cash transfers. According to the World Bank, one challenge is ensuring that cash directly reaches needy recipients, avoiding corrupt processes and opportunistic elites.

Overall, cash transfers are practical. They can also reduce administration and operating costs. Respected nonprofits such as Give Well assert that unconditional cash transfers help the poor begin to create a better life on their own terms.

Giving the impoverished the freedom to utilize cash payments means they have the ability to meet individual needs and accelerate progress in their developing countries.

– Mayra Vega

Sources: Center For Global Development, World Bank, The New York Times
Photo: Flickr