Publications /
Opinion

Back
To solve extreme poverty, give people money
Authors
March 4, 2024

This blog was originally published on huawei.com

 

What impact do you think ICT and connectivity can have in fighting global poverty?

At the World Bank we had a very enthusiastic and optimistic view on the potential impact of technology and ICT. Brazil had a cash transfer program for poorer families where households received money directly from the government, regardless of whether they had bank accounts. The money was not distributed by hand but done electronically: the government had built a registry of 25 million Brazilians considered to be below the poverty threshold. The money was transferred to the women of the household. It had a huge impact because it was straightforward and empowered the families, particularly the women, giving them money for basic needs. 

One of the advantages of this kind of technological registry was that we could know the poor by name. We could potentially collect information on their different needs, in terms of infrastructure, education, health care and so on, that could give the government a potential guide for specific policy interventions in particular neighborhoods. Multilateral institutions do not govern, they support; they give policy advice and finance programs. But in addition to providing funds, a major function of the World Bank is to play a hummingbird role. Hummingbirds pollinate flowers, and these multilateral institutions can also pollinate with knowledge. 

With the Brazilian experience, the World Bank was keen to learn and participate – helping Brazil to develop a system for checking whether the money was really reaching those who needed and deserved it. And it was amazing: the rate of good targeting was close to 95%, with just a 5% margin of error. The Bank was ready to disseminate the experience with other interested countries, although Asians are not fond of this kind of direct cash transfer, as it’s seen to potentially undermine the will of poor people to get out of poverty. But overall we were proud to play this hummingbird role, to be the bridge in terms of knowledge dissemination and knowledge pollination.

 

And was it connectivity that provided the ability to share the knowledge?

We knew the role ICT could play in battling global poverty, because it provides tools and solutions that empower individuals and communities. Access to information and education is facilitated by ICT, which makes it potentially easier to break the cycle of poverty. But you need certain conditions in place – the infrastructure and affordable access to it for the adoption of ICT tools – so governments and organizations need to invest in building this infrastructure. 

We did a survey in 2010 which found that, in the poorest 20% of households, seven out of ten had a mobile phone. They were more likely to have access to mobile phones than to toilets or to clean water. It’s incredible. But that allowed financial inclusion, as shown by the experience of countries like Kenya, with its M-Pesa digital payment system. Even with the old-style, more primitive cellphones, they were able to develop a network that reduced the cost of a remittance. 

I also remember meeting the former UN Secretary-General, Kofi Annan, who he talked about a project to install cell phone towers around Lake Victoria. The number of casualties because of storms taking fishermen by surprise was significant. And this network would provide weather warnings to be shared with inhabitants surrounding the lake through cellphones using visual mechanisms – so even illiterate people could be warned. I remember how enthusiastic we all became with this great example of how ICT can improve the conditions of poor people. 

 

It comes back to your point about access to information, about knowledge and being able to access these services.

Exactly. ICT can also help farmers, informing them about weather patterns, market price, where to locate their products, and also best practices in farming. I saw it in Brazil, where an agricultural engineer explained to me how he cherry-picked 18 different types of seeds appropriate to the needs of his soil. He was able to maximize his activity using equipment and weather forecasting to decide when to seed, when to collect and so on. 

There’s so much potential. But for ICT to become concrete and effective, you have to have the corresponding policies in place – that access to reliable and affordable internet infrastructure. And also promotion of digital literacy, to help those Lake Victoria inhabitants do even better, for instance. You have to have the regulatory framework, to encourage innovation, and at the same time, protect the interests of users. 

ICT with AI is a double-edged sword. It has a tremendous potential to increase productivity and to facilitate learning, but it has the potential to exclude too, with questions about security and misinformation. So it's a double-edged sword. It all depends on the presence of a regulatory framework. You have to have an environment where public-private partnerships can flourish, so as to accelerate the deployment of ICT solutions and reach the underserved. So there is potential but there is also risk.

 

Is that risk especially acute for poorer areas? 

Education is the base. We should not underestimate the potential of learning and development among poor people: once they have the basics, they can go up the ladder. And there are improvements in governance that can come with ICT. In one case, parents of schoolchildren had an app to give information to the central government about the attendance (or not) of teachers at school. With this mechanism of bottom-up monitoring, the absence of teachers dropped dramatically. This improvement was made possible by ICT.

 

The goal of SDG1 is to eradicate extreme poverty worldwide, and half of all poverty worldwide by 2030. Is it going to be achieved – and if not, why not?

We have made undeniable progress towards those goals, owing to a combination of world economic growth and policies directed at exactly that goal. More recently, however, it looks like we have stagnated, particularly in Africa. But let’s go back: do you know why the Brazilian cash transfers that I spoke about earlier went to the women?

 

Because the women will spend it more responsibly?

A survey done in the 1990s in Brazil, and replicated in other parts of the world, shows that in households where women have a strong say over how resources are used, the weight and height of babies are better than those where the male is in charge. When I gave classes in very chauvinistic or very racist places I would say: “Well, gender colleagues, the women are just better, and that's the proof.”

 

So, when it comes to tackling extreme poverty, basically go through women. Looking after them should be your starting point?

That’s exactly right. They prioritize the use of resources, and this could have long-term implications. Children who are better fed, and with better school and health attendance – and the money is conditional on that – will be higher human capital when they become adults.

RELATED CONTENT

  • Authors
    February 20, 2019
    Ce papier évalue les effets asymétriques des cycles économiques sur le chômage et la pauvreté au Maroc, à travers un modèle VAR estimé sur des données trimestrielles allant de 2003 à 2012. Ce modèle inclut les composantes cycliques de quatre variables à savoir : l’output-gap, le salaire minimum réel, le taux de chômage et le taux de pauvreté. Afin de tester la robustesse des résultats, deux versions du modèle VAR ont été estimées, en utilisant les composantes cycliques calculées se ...
  • Authors
    Olalekan Samuel
    Mma Amara Ekeruche
    Adedeji Adeniran
    February 12, 2019
    This study was carried out within the framework of the Global Economic Governance Africa (GEGAfrica) funded by the UK Department for International Development. The GEGAfrica programme is a policy research and stakeholder engagement aimed at strengthening the influence of African coalitions at global economic governance forums and increase, inter alia, the visibility and the outreach of African views at the regional and worldwide levels. Policy Center for the New South was requested ...
  • Authors
    February 6, 2019
    Ce papier examine la plainte initiée par la Turquie devant l’Organisation mondiale du commerce (OMC) contre le Maroc au sujet des droits antidumping appliqués aux produits d’acier laminés à chaud. La plainte de la Turquie constitue à la fois un précédent et une opportunité. Un précédant d’abord, car jamais le Maroc n’a été impliqué, ni en qualité de partie plaignante ni en qualité de partie défenderesse, dans une affaire devant le GATT ou l’OMC. Une opportunité ensuite, par ce que l ...
  • Authors
    February 6, 2019
    This paper examines Turkey's case against Morocco before the World Trade Organization (WTO), over anti-dumping duties on hot-rolled steel products. Turkey's complaint constitutes both a precedent and an opportunity. First, it is a precedent in that Morocco was previously never involved in a case before GATT or WTO, neither as a plaintiff nor as a defendant. Second, it is an opportunity as the evaluation of the legal process of the complaint enables an assessment of adequacy of Moroc ...
  • Authors
    January 31, 2019
    Without reforms, financial markets’ optimism may crumble – and bring the house down. Judging by the reaction of financial markets, the Brazilian economy started the year at high speed. The real is among the world’s best-performing currencies so far in 2019 and the main stock market index Ibovespa hit a string of record highs leading into last week, when it broke the 97,000-point mark. Future interest rates have fallen sharply.  Foreign investors are buying in as well. The premium ...
  • Authors
    Mouhamadou Moustapha Ly
    January 30, 2019
    En l’espace d’une année, la Banque mondiale (BM) a enregistré deux démissions parmi son top management. Il y a douze mois (Janvier 2018), Paul Romer quittait la Banque mondiale pour retourner dans le monde académique. Au début de ce mois de janvier 2019, Jim Yong Kim annonce son départ de la présidence de la même institution pour rejoindre une autre spécialisée dans le financement des infrastructures.  Pour Paul Romer, les critiques à l’endroit du classement Doing Business, et la r ...
  • Authors
    January 16, 2019
    The trade war between China and the United States roils stock markets, and the World Trade Organization is at risk of extinction because major players ignore its rules. But the fierce controversy surrounding the Global Compact on Migration, a mild and non-binding document which several of the countries gathered in Marrakesh – including about one-third of EU members - refused to sign, shows that migration is even more radioactive than trade. As they face a backlash against globalizat ...
  • Authors
    January 14, 2019
    Last week Jim Yong Kim, president of the World Bank, unexpectedly announced his resignation, effective as soon as next month and three and a half years prior to the end of his second mandate. Given the current environment of challenged and weakened multilateralism, the aftermath of his succession has a relevance that transcends the limits of that institution. While an analyst has alluded to President Kim as “voting with his feet” on the World Bank's loss of significance in investme ...
  • Authors
    Michael Baltensperger
    January 13, 2019
    China’s Belt and Road Initiative (BRI) is an international trade and development strategy. Launched in 2013, it is one of the ways China asserts its role in world affairs and captures the opportunities of globalisation. The BRI has the potential to enhance development prospects across the world and in China, but that potential might not be realised because the BRI’s objectives are too broad and ill-defined, and its execution is too often non-transparent, lacking in due diligence and ...
  • Authors
    Nancy Lozano-Gracia
    Eduardo Germani
    Renato S. Vieira
    Shohei Nakamura
    Emmanuel Skoufias
    Bianca Bianchi Alves
    January 7, 2019
    Good connectivity within cities is an essential input for productivity and livability in cities, but the distributive impacts of improvements in within-city mobility are not well understood. This work aims at filling this gap by exploring the impacts of alternative infrastructure investments and mobility policies on economic growth, income distribution of households and internal distribution of economic activity. This paper focuses on the estimation of the impacts of transportation ...