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What Leaving Poverty Looks Like
One of Bangladesh's main exports is fish. Photo credit: USAID.
Dr. Muhammed Yunus and the Grameen Bank are well-known pioneers of microfinance -- i.e., making modest loans to poor people that enable them to create sustainable improvements in their lives, largely by building small businesses. When Yunus founded the Grameen Bank in Bangladesh in 1983, the necessity of country-led development, let alone decision-making by poor people themselves, was not recognized. Lending a woman $75 to buy a sewing machine was a revolutionary concept.
Much has been written since then about the microfinance movement, its accomplishments, continuing debates, and more. Here, we emphasize one of Grameen's contributions to our understanding of global poverty: a very concrete definition that can help educate policymakers in donor countries about its realities and solutions.
In the United States, we tend to define poverty in terms of dollar income. So we readily understand the idea of an international poverty line -- originally $1 a day, now $1.25. Donors also realize that poverty has many implications for hunger, health, education, and other spheres. But the Grameen Bank recognized early on that poverty occurs in a context, and that communities themselves must determine who is poor and what it means to leave poverty.
Yunus and Grameen developed a checklist of 10 indicators that gauge whether a microfinance participant and her family have, in fact, escaped from poverty in Bangladesh. It's a helpful counterbalance to our sometimes abstract notions of who "the poor" are and what their priority needs might be. The specifics are:
- The family home has a tin roof or is valued at 25,000 taka or more (about $300-$325). Each member of the family sleeps in a bed rather than on the floor.
- The family drinks clean water -- either from wells, or boiled, or purified using arsenic-free tablets.
- All children age 6 or older are either going to school or have finished primary school.
- The microloan is being repaid in installments of at least 200 taka a week (about $2.50).
- The family uses a sanitary latrine.
- Family members have adequate everyday clothing, warm clothing for winter (such as sweaters and blankets), and mosquito nets.
- The family has a source of additional income, such as a vegetable garden or fruit trees, that they can fall back on when necessary.
- The microloan borrower maintains an average savings account balance of 5,000 taka (about $60-$65).
- The family has no difficulty providing each member with three square meals a day throughout the year.
- The family can afford necessary medical treatment if someone falls ill.
Grameen's indicators proved to be a reliable way of identifying those most in need and gauging their progress. Later, the indicators were broadened to form the Progress out of Poverty Index (PPI). The PPI uses similar data -- including what material a family's roof is made of -- to enable development organizations to calculate how likely it is that a given family lives below the national poverty line. So far, PPIs have been tailored to conditions in 45 countries.
couple of weeks ago, Yunus was here in Washington, DC, to receive
the Congressional Gold Medal. Along with the Presidential Medal of
Freedom, it is the highest American award for civilians. In 2006, Yunus and Grameen Bank won the Nobel Peace Price. Both have clearly made major contributions to Bangladesh's significant progress against hunger. For more on how that progress is being sustained, see the introduction to the 2013 Hunger Report, Within Reach: Global Development Goals.
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