By Connor J. Wangler
Implementing robust and comprehensive development schemes across Sub-Saharan Africa has required a myriad of reforms and innovations. The path to self-sufficiency may seem clear to some, but, in reality, it is marked by tension and obscureness. There have been several small-scale successes, but the large-scale reforms and initiatives have seen mixed reactions.
One of the small-scale efforts to bring greater Sub-Saharan independence has been in the form of micro-financing networks, such as the Grameen Bank. The group works all over the world reforming conventional banking practices by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. The organization’s founder, Muhammad Yunus, said, “These millions of small people with their millions of small pursuits can add up to create the biggest development wonder.” The bank works throughout Sub-Saharan Africa to deliver solutions via mobile technology focusing on improving livelihoods through health and agriculture projects by providing vital start-up capital. Mobile phone technology represents an emerging opportunity for Sub-Saharan African financial institutions to access impoverished communities. One example of this is the Mobile Technology for Community Health (MOTECH) in Ghana; the initiative is a partnership between the Ghanaian government, Columbia University, The Bill and Melinda Gates Foundation, and the Grameen Bank. The project works through mobile phone devices to improve the transfer of information between community health workers and to provide health education to local communities. This includes collecting data to identify local medical trends and providing important neonatal care information to women. Here is a piece that gives more details on the impact of the MOTECH project on local communities:
Another example of a Grameen-supported project is the e-Warehouse Initiative in Kenya. Smallholder farmers in Kenya are often detached from financial services and markets. This lack of access to markets often force farmers to lose much of their crops due to spoilage before they can sell them, and the lack of access to financial services force them to remain in the dark on economic conditions, causing them to sell their harvests at sub-optimal prices. The e-Warehouse initiative focuses on using mobile phone technology to build much needed linkages, such as disseminating financial information to local farmers to improve harvest management or building a network of local financial service agents that extends beyond the normal market areas. Another micro-finance institution working in Sub-Saharan Africa is the World Bank’s International Finance Corporation. The IFC has been working in micro-finance projects in Africa since 1990 and, at the end of 2012, its total micro-finance portfolio in the region totaled $67 million, with 24 clients in twelve countries.
As noted, however, the broader systematic reforms that must be made, economically and politically, are much more complicated than these small-scale financial innovations. In Dead Aid, Zambian-born economist Dambisa Moyo presents three broad stages that African countries must navigate in order to break the cycle of poverty. First, she calls for countries to build economic strategies that reduce reliance on structural aid. Governments must focus on financial belt-tightening by cutting back on expenditures or increase revenue sources. Lastly, they must strengthen institutions responsible for providing public goods and fostering transparent private sector growth. While many agree with Moyo that financial responsibility and institutional integrity are vital parts of improving economic conditions in Sub-Saharan Africa, many disagree with her call to end structural aid. American economist Jeffrey Sachs says that aid should continue; however, this aid needs to be handled more responsibly and invested in social and economic infrastructure that promotes economic strengthening.
Nevertheless, while the path forward is controversial and difficult, some commonalities have emerged. The importance of innovation and inclusion on the local level is recognized now more than ever. It is critical that we do not give up the poverty conversation simply because it is too hard. Our own interests lie in the push to eradicate extreme poverty. While research has negated the idea that poverty breeds terrorists, there is support for the claim that poverty makes it easier for terrorist organizations to operate. Support for terrorist organizations, or other political movements, stems from the status quo’s inability to provide basic necessities. Terrorist groups, such as HAMAS in Lebanon, can step in to provide these basic necessities, or at least promise to, to gain community support; the saying, “One man’s terrorist is another’s freedom fighter,” exists for a reason. Therefore, for our own safety and prosperity demand that we continue the fight against extreme poverty.