Defeating Extreme Poverty
An exclusive excerpt of USAID's 2013 Annual Letter.
The summer after college, I went to work on a health project in southern India.
The first day I got there — the furthest from home I’d ever been on my own — I wandered into a neighboring village and met a young child. She was barefoot, dressed in muddied rags, and looked four or five-years-old. I believed I knew the face of poverty, until I saw that little girl.
I thought of that memory during this year’s State of the Union address when President Barack Obama called upon our nation to join with the world in ending extreme poverty. It was an extraordinary moment, as the president set forth a vision for one of the greatest contributions to human progress in history.
The president’s call presents an incredible opportunity. Today, we have new tools and approaches that enable us to achieve progress that was simply unimaginable in the past: the eradication of extreme poverty and its most devastating corollaries, including widespread hunger and preventable child death.
At the U.S. Agency for International Development (USAID), we are fortunate to have this mission as our vocation, and over the last five decades, we have made some important strides toward this goal, all with less than one percent of the national budget.
Many Americans believe that foreign aid represents roughly 25 percent of the national budget and ought to be cut. When they learn that it actually makes up less than one percent, they are astonished. And when you describe what we do with less than one percent — the millions of girls we help educate or businesses we help grow — many Americans actually believe we’re not spending enough.
The truth is that development is not a big part of our national conversation, and many people simply don’t realize what a difference we can make to the millions of children like the little girl I met in India. Every day, I find myself making this case, battling the perception that politics today cannot support great moral aspirations or that government cannot usher in innovative ways of achieving those goals.
But in my last three years as USAID’s administrator, I’ve seen just the opposite. From a church in inner-city Detroit that looks after an orphanage in Ghana to the nationwide response after the Haiti earthquake, I’ve seen the depth of passion and support that Americans have for our work. And at a time of seemingly uncompromising politics, I’ve seen leaders from both sides of the aisle stand together as champions for this global task.
I’ve also seen the numbers — the steady lines on graphs that show reductions of 42 percent in the global child mortality rate and 50 percent in the global poverty rate in the last 20 years alone. In fact, during that period, for the first time, the total number of people living in extreme poverty fell in every region in the world.
Think about that. Since we first started collecting data on poverty in 1981, that number kept rising until 1993. Between 1993 and 2005, the number of people living in poverty fell by one-third, as record growth lifted millions out of poverty in Brazil, India, and China.
Then in 2005 something remarkable happened: Africa joined the path. Between 2005 and 2008, the poverty rate in Africa fell by almost five points — the largest drop ever — and the absolute number of people in poverty also fell, reversing a trend that had been on the rise since 1981.
As we rally around the goal of ending extreme poverty, we are embracing measurable targets that help us deliver important results along the way. For instance, if we increase growth in the agriculture sector — on which most poor families rely — from roughly 3 percent to 6 percent in Africa, we can dramatically reduce hunger and malnutrition. By accelerating the global rate of decline in child morality from 3.9 to over 6 percent, we can bring global rates of child death into parity with the developed world. And if we slightly more than double the annual rate of poverty reduction, we can lift one billion people from the most gut-wrenching, dehumanizing conditions of poverty within the next two decades.
We cannot address these challenges alone, but we can mobilize movements. By working together to meet these and other targets over time, we can realize a world where every farmer has seeds; every child gets healthy food, basic medications, and a good education; and everyone has a say in their future.
We know the alterative. We know that where we see extreme poverty, extreme climate, and extreme ideology today, we are more likely to face conflict tomorrow. As we draw down from war, our future prosperity and security will be determined not only by our military might, but also by our moral actions.
That’s the vision Obama framed in his State of the Union Address. That’s the mission that inspires young people across college campuses — their moonshot. And that’s the mission that brings roughly 9,600 talented and dedicated USAID staff and countless more partners to work every day around the world.
Expanding Opportunity in the Philippines
Five years ago, the Philippines had fewer ATM machines than islands. Today, more than two-thirds of Filipinos still lack access to formal financial services, which makes it hard to get a loan or put their savings in a bank — early steps in the climb from poverty.
The truth is traditional banks do not serve poor communities well, in part because it’s just not possible to build branches in every village. Today, instead of building brick-and-mortar banks, we’re using new partnerships and technologies to enable everyone in the Philippines to send money home, pay school fees, or collect their salary right on their mobile phones. It’s called mobile money, and we’ve made it a cornerstone of our efforts to help countries leapfrog slower, more traditional paths to development.
Since we first piloted the program in the Philippines in 2004, more than 2.7 million mobile money transactions have been processed. It’s been a successful project, but scaling it requires a fundamentally new approach to finance and development, and all the pilot projects in the world won’t get us there. In order to bring mobile money into the hands of billions of people from Kabul to Jakarta, we have to do things differently.
That’s why we helped launch the Better Than Cash Alliance to encourage governments, companies, and development organizations — even USAID — to switch from cash to electronic payments, including mobile money. The Philippines was one of the first nations to sign on, and just a few weeks ago, the government of Afghanistan became our newest partner.
In the Philippines, we worked closely with President Benigno S. Aquino III to encourage policy and regulatory reforms, and move salaries and conditional cash transfers over to electronic payment for more than 3.9 million citizens. These actions helped create real demand for innovative new financial services for the poor. To meet this demand, we’re partnering with small community banks to also build out the supply side of the market, helping thousands of local businesses — from food kiosks to insurance firms — develop mobile money products and services.
This kind of systemic shift in development doesn’t just happen. Built from scratch a year and a half ago, our mobile solutions team literally exists outside the traditional development space in USAID’s new innovation lab. The team hails from across the academic, public, and private sectors and maintains a relentless focus on delivering results, not just through pilots but at scale. In recognition of our efforts, we recently received the "Best Government Policy for Mobile Development" award at the 2013 GSMA Mobile World Congress, the world’s largest mobile technology exhibition and conference.
We’re not there yet. Building partnerships at this level requires a degree of flexibility and commitment that’s simply tough to maintain. As a development institution, we’re
structured to give grants and implement projects, not persuade presidents or CEOs. But just as we’ve done with banks and telecom companies like Digicel in Haiti, Roshan in Afghanistan, or Citigroup in the Philippines, I’m confident we will continue to develop high-impact partnerships that build the capacity of individuals to lift themselves and future generations out of poverty.