NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, April 5, 2012

A new report from the World Bank brings welcome news on the global poverty front.

Despite the worldwide recession of the late 2000s, the total number of people living in extreme poverty has actually gone down in recent years — so much, in fact, that we’ve reached the first of the UN’s eightMillennium Development Goals five years ahead of schedule, a startling achievement. The number living in “extreme poverty” decreased by 100 million between 2005 and 2008.

As of four years ago, “only” 1.29 billion people lived below $1.25 a day. Preliminary data shows the trend continuing in 2010.

That’s cause for celebration, for sure. But as Bill Abrams, president of the Trickle Up, a US-based nonprofit targeting those living in extreme poverty, points out in a recent letter to The New York Times, “giant numbers and statistical conceits can conceal as much as they reveal.” The World Bank study defines extreme poverty as living on an average income of $1.25 per day, which actually lumps together a fairly wide spectrum.

The problem is the poorest of the very poor. Innovative tools like microfinance get a lot of attention, and deservedly so. The rise of micro-lending should get partial credit for our unexpected success in defeating poverty in recent decades. But among our greatest concerns should be those who struggle to survive at the lowest end of the spectrum — the ultra-poor, who remain so mired in extreme destitution that microfinance is of no immediate use to them. They can’t pay back loans, because any income they’re fortunate enough to receive goes straight toward meeting basic nutritional needs.

Disproportionately female and rural, the ultra-poor receive the least attention. Recent years have seen some promising advances, however, with innovative solutions born in the global South now spreading around the world.

Since 2006, a group of foundations and non-governmental organizations have come together under the umbrella of Consultative Group to Assist the Poor (CGAP) and the Ford Foundation, piloting local adaptations of a program, originally started by BRAC in Bangladesh, tailored to meet the unique needs of the ultra poor. Called the Graduation Program, this effort sees a number of leading names in international development cooperating to tackle this problem, including The MasterCard Foundation, which is supporting BRAC Development Institute in qualitative research and monitoring, and others like Fonkoze, Plan, Trickle Up and more.

The idea is to “graduate” people out of extreme poverty through a rigorously tested sequencing of events. These programs are a global effort to understand how safety nets, livelihoods, and microfinance can be sequenced to create pathways for the poorest to graduate out of extreme poverty, in places as diverse as Peru and Yemen. The idea is to help the poorest up the bottom rung of the economic ladder, where they can take advantage of microfinance and other more traditional programs.