How to turn the post-pandemic slide in poverty?
Three hits and three misses from the Economist's analysis.
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The Worldwise View
What to do about the massive backward slide in poverty is a question with no easy answer, obviously.
It followed from this week’s roundup, which opened with recent coverage of the inescapable fact that hundreds of millions are falling into starvation and poverty as a result of the pandemic.
An analysis by the Economist tackles the question in the usual cogent style, and I promised to delve into what it says a little bit more.
So here goes: my take in three hits and three misses.
The hits
The Economist’s analysis offers stat after stat to make a solid case for the problem: both the reversal in progress against poverty, and how little financial help has come from either foreign aid and developing-world governments.
This, for example, is striking:
“Governments there have handed out only $4 extra per person on social programmes—in total, not per day.”
So, the first good point.
Aid matters
Donors should help, it says—a view popular in development circles, as you might expect. In a recent Guardian op-ed Mark Lowcock, the UN’s undersecretary general for humanitarian affairs, outlines three actions that aren’t without precedent and can be taken now.
As things stand, aid from key donor countries is set to drop by a third compared with last year. We covered the estimate in this post when it first emerged back in July, and although a later analysts cast some doubt, it appears to still be the going rate.
Add to that a drop in global remittances estimated at $108 billion for this year, which we also touched on in previous posts.
The key role of aid also features in this article on the pandemic’s effect on poverty, where the Washington Post quotes Stephanie Blankenburg, head of debt and development finance at the UN Conference on Trade and Development (UNCTAD):
“The international response has been extraordinarily hesitant—way too little, way too late.”
Wise spending also matters
The next good point throws the ball back in the court of governments, saying they should act responsibly by spending the money they do have wisely.
Accountability features less than calls for aid in global development conversations, but is often a counterpoint. Corruption is part of that picture. Just this week, UNCTAD released new estimates showing that nearly $89 billion a year is lost from Africa in illicit financial flows such as tax evasion and theft—higher than previous estimates, and more than the aid money the continent receives.
The Economist rightly doesn’t limit this to corruption. Acting responsibly also means investing in the right things—services and safety nets that give people more resilience, for example. In many cases we’ve seen quite the opposite, with examples of excessive violence or discrimination, whether against women or ethnic groups.
Just give cash
What comes next is a statement that “the best way to help the poor is to give them money directly”. As a standalone statement, I’m not as confident of that as the writers seem to be—but they are probably alluding to recent evidence that has strengthened the case for giving people cash as one of the best ways to help with aid.
Reports suggest unconditional cash transfers have helped in Madagascar and in Kenya’s slums, at least, during the pandemic.
But the debate on the value of handing over cash goes all the way up to the Nobel Prize, via the ‘Randomistas’, and I’m not going to even attempt to broach it here and now.
Now, over to the other side.
The misses
The strength of the Economist’s analysis is also its weakness—and that’s a focus solely on financing by aid or government.
Let’s start with the first and more obvious omission.
Grassroots action
Anyone with their ear to the ground would have picked up the buzz around the civic action filling response gaps left by the state.
One of the first organisations that I saw profile several examples from the developing world is the charity Thousand Currents, which did so back in April via a webinar and in this blog by its executive director Solome Lemma.
The examples have kept coming for months—from organising in Latin America’s favelas (Reuters + New Humanitarian) to community networks across Africa (Foreign Policy + African Arguments) to civil society action in India and in Southeast Asia.
But this week, seeing the launch of a new initiative made me wonder about the prospect of these disparate movements amounting to something larger than the sum of their parts. That’s the Doughnut Economics Action Lab (DEAL), founded by Kate Raworth in an attempt to turn ideas around her groundbreaking Doughnut Economics framework into practice.
Raworth’s introduction of DEAL includes the language of transformation that surrounds the 2030 Agenda; which brings me to the next point.
The SDGs
The analysis makes no mention of the Sustainable Development Goals as a way out of post-pandemic poverty.
Ending poverty is Goal number one; and as we’ve seen before, key figures in this agenda argue that the framework still holds the key to recovery.
A Nature editorial expressed doubts about this in July, calling for the goals to be revised. More recently, Reuters’ Thin Lei Win asked nine experts from different sectors and parts of the world for reflections on the role of the 2030 agenda—collectively, their responses don’t convey huge belief in a key role for the SDGs.
The Economist’s omission could simply reflect the magazine’s less keen eye for social than financial matters.
Still, in practical terms, there’s just less money to go around: according to a report by two NGOs working on water issues, developing countries will have at least $400 billion less to spend on sustainable development as funds gets diverted to the pandemic.
Innovation
But governments aren’t necessarily where the money is these days, and recent reports suggest signs of innovative financing springing up.
One is a move by Goldman Sachs to issue the first bond linked to the SDGs, tying the capital cost of Enel, one of the world’s largest utility companies, to its commitment on progress against the goals.
Another is investing directly in small and medium-sized rural enterprises, a new strategy by the International Fund for Agricultural Development to support farmers in poor countries.
A third is Kenya’s unveiling of its first diaspora investment fund, expected to channel money into development projects.
And while we’re talking about innovation, it would be remiss not to mention that some countries are reaping the benefits of a long-standing push for technological advancement—through tools like like the mobile money platform M-Pesa, or the COVID-19 Triage Tool for self assessment—with fresh backing for startups growing in Africa.
Innovative financing brings us full circle (or full doughnut if you like) to the Economist’s focus on money flows. They do matter, especially in the short-term of this crisis. But the picture is skewed if we overlook the various other aspects of development, including the planetary and social foundations that economies rest on.
A final note from the week’s soundtrack 🌎
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