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
    Mouhamadou Moustapha Ly
    April 6, 2020
    Covid-19 has a far-reaching impact and is imposing a slowdown on the world economy, raising fears of the worst consequences on production, jobs and the immediate future of developing economies. Fiscal and monetary authorities around the world are engaging in policies to support their economies with unprecedented funds and initiatives. The African continent, also affected by the pandemic, is pursuing courageous economic (fiscal and monetary) policies, but the main question is what ne ...
  • April 6, 2020
    Depuis l'entrée en vigueur de l'Accord de libre-échange (ALE) entre le Maroc et l'Union européenne (UE), il y a près de deux décennies, les performances des exportations marocaines vers les marchés de l'UE ont été plutôt décevantes, tandis que le déficit commercial du Maroc avec l'UE a augmenté de manière significative. Cela a conduit de nombreux observateurs à percevoir l'accord d'un oeil critique. Cependant, les balances commerciales bilatérales ne sont pas toujours suffisantes po ...
  • April 6, 2020
    Why every country in the world is facing a challenge of flattening coronavirus curves? Which policies to contain or at least slow the spread of coronavirus have been applied? What must be done to mitigate the recession accompanying containment policies? Is "doing-nothing" economically b...
  • Authors
    April 6, 2020
    The global reach of COVID-19 is now clear. In a short time, country after country has suffered outbreaks of the new coronavirus, with each facing a three-fold shock: epidemiologic, economic, and financial. In addition to dealing with their own local coronavirus outbreaks, emerging market and developing countries have faced additional shocks from abroad. Flattening pandemic curves saves lives The coronavirus crisis is primarily a public health issue, demanding containment policies ...
  • Authors
    April 3, 2020
    Using a Structural vector auto-regression analysis, this paper attempts to answer the question of the feasibility of a currency union in the Economic community of West African states (ECOWAS). The study focuses on a particular criterion of the theory of optimum currency area (OCA) i.e. the similarity of business cycles. The main results suggest important discrepancies between countries that are already within the WAEMU (CFA Franc) arrangement and countries that have their own arrang ...
  • Authors
    April 3, 2020
    His delicate, almost floating touches created a hitherto unseen aesthetic perfection: the enigmatic face the Mona Lisa. The mysterious woman, captured on a panel of poplar wood, is the work of a genius, possibly one of the greatest minds in human history: Leonardo da Vinci. But Da Vinci also had another obsession: the art of war. In a letter to the court of Ludovico Sforza, then ruler of Milan, the celebrated maestro wrote, “I will make covered vehicles, safe and unassailable which ...
  • Authors
    April 3, 2020
    La crise engendrée par le COVID-19 a bouleversé l’ordre de l’économie mondiale. Elle montre à quel point les économies sont très interdépendantes, vulnérables et ne sont pas préparées à faire face à un choc sanitaire de cette ampleur. Même les pays développés et les grandes puissances économiques mondiales en ont été très négativement impactés. Cependant, l’impact de cette pandémie est à géométrie variable et son issue dépendra de la capacité des Etats à réagir et à y faire face le ...
  • Authors
    Amanda O. Mathe
    April 3, 2020
    The Mara Group, producer of the Mara smartphone, has set up manufacturing facilities in two key strategic countries, Rwanda and South Africa, with a total estimated investment of $100 million. On the back of political shifts in South Africa, President Cyril Ramaphosa embarked on an investment drive, announced in his state of the nation address in 2018. This was followed up with an investment conference, at which Ashish Thakkar, CEO of Mara Group, announced a $100 million investment ...
  • Authors
    Youssef El Jai
    April 1, 2020
    « Economists have a bad track record in predictions, so I will not try my hand at predicting the effect of the novel coronavirus (COVID-19) on the global financial system or the global economy. » Thorsten Beck */ /*-->*/ /*-->*/ Comme le dit si bien Thorsten Beck, il serait illusoire de prévoir à ce stade, compte tenu de l’information disponible, un impact chiffré de la crise sur l’économie. A l’issue de son Conseil du17 mars 2020, Bank Al-Maghrib a annoncé une baisse du taux d ...
  • Authors
    Carolina Zuheill Rosales
    April 1, 2020
    The Multidimensional Poverty Index provided for the UNDP (United Nations Developed Program) looks beyond monetary income and shows how poverty is the experience of multiple and simultaneous deprivations. People can fall behind in terms of health, education, and living standards, with challenges including lack of access to drinking water, sanitation, adequate nutrition, or primary education. Those who are deprived of at least one third of the index’s components are classified as mult ...