Extreme Poverty is Widespread
 Over 1 billion people subsist on less than
$1 per day
 About 2.8 billion - nearly half the world’s
population - lives on less than $2 per day
 Nearly 20 countries in Sub-Saharan Africa
are poorer today than they were a
generation ago
 But poverty is multidimensional; raising
incomes is crucial but low income is only
one of the problems of poverty
Poverty is pervasiveness
of early death
 In some countries such as Angola, Congo, Liberia,
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Mali, Niger, and Sierra Leone , more than one-fifth of
all children die before age 5 from preventable causes.
Life expectancy in Sub-Saharan Africa has fallen to
below 47.
In South Asia, nearly 1 child in 10 dies before age 5.
The under-5 mortality rate is 126 per 1000 in low
income countries, 39 per 1000 in middle income and 6
per 1000 in high income countries.
Every day, nearly 30,000 children in developing
countries die from preventable causes--over 10 million
this year alone.
Poverty is Hunger and Poor Health
 17% of world population is undernourished
 Micronutrient malnutrition affects 2 billion;
Children face lifelong disabilities
 In many poor countries, parasites are
ubiquitous
 A woman dies during childbirth every minute;
almost none would die in North America or
Europe
 Nearly 3000 children in Africa die from
malaria each day
 The International Classification of Diseases
includes Code Z59.5 - extreme poverty
Poverty is the Denial of the Right
to a Basic Education
 There were about 875 million illiterate adults in
the world in 2000
 Some 40% of all adults in South Asia are illiterate
 A child in Europe, North America, or Japan can
expect more than 12 years of schooling on
average, but a child in sub-Saharan Africa and
South Asia can expect less than 4 years of school
 Nearly 100 million children not in primary school
 In at least 12 Sub-Saharan African countries a
child is more likely to die before the age of five
than attend secondary school
Poverty is the loss of childhood
 At least 180 million child laborers are
either 15 years old or younger or work
in conditions that endanger their health
or well-being according to the ILO
 73 million working children are under
10 years old
 An estimated 8.4 million child laborers
are trapped in slavery, trafficking, debt
bondage, prostitution, pornography and
other abhorrent conditions.
Poverty is also less quantifiable
but no less oppressive conditions
 Poverty is vulnerability to destitution after a shock or
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catastrophic event, such as an illness, death of a draft
animal, theft of your land.
Each year about three quarters as many fall into poverty as
escape. The struggle against poverty is often one of 4 steps
forward, 3 steps back.
But 300-420 million live in chronic extreme poverty
Poverty is the ongoing stress of desperately trying to
anticipate and adapt to vulnerability.
Poverty is lack of access to markets that could offer a way
out of poverty.
Poverty is watching the environment on which you depend
deteriorating year by year
Poverty is Powerlessness
 Poverty is systematic exploitation, theft, and
abuse not only by the rich but by the government
officials ostensibly there to help:
 The poor must pay larger bribes, as a share of
their income, than the rich-- just to survive.
 Poverty is debilitating and deliberately created
feelings of hopelessness and dependence- on
whatever minimal remuneration is offered by a
particular rich family in your sphere of life.
 Poverty is violence within the family and
without.
 Poverty is powerlessness to stop things hurting
you and your family and keeping you poor.
However alarming these indicators of
poverty, they are significantly better
than two decades ago
 This is partly due to growth in countries such as
China, but also due to effective poverty policies.
 The glass may be seen as half full or half empty.
 But the call to action is compelling:
 Development and effective poverty reduction is
not inevitable, but is possible.
 So we have an obligation to understand problems
of poverty and development, and then to act.
 Why is it so difficult for the poorest of the poor to
make further progress?
Poverty Traps
Poverty becomes a trap when a
vicious cycle undermines the efforts
of the poor, in which conditions of
poverty feed on themselves and
create further conditions of poverty.
a. Child labor traps.
 In a child labor trap, if a parent is too
unhealthy and unskilled to be productive
enough to support their family, the children
have to work. But if children work, they
can’t get the education they need; so when
they grow up, they have to send their own
children to work.
 Or, if most children work, the unskilled
wage is low, so parents making low wages
cannot afford to take their children out of
the workforce.
b. Illiteracy traps.
 Even if the family doesn’t need children’s
meager wages, parents may be unable to
afford transportation, a school uniform, and
school fees. If they had access to credit,
higher incomes received a few years later
by literate children could repay these loans.
Child labor is an alternative to credit- a
family loan to be “repaid” with the child’s
lower lifetime earnings.
c. Low skill traps.
 With no employer in the region seeking
modern job skills, there is no incentive for
individuals to invest in gaining these skills.
But if there is no workforce available with
these skills, outside investors are not likely
to invest in the region. This type of trap is a
chicken and egg problem-which comes first,
the investment or the skills?
d. Working capital traps.
 Lack of credit plays a role in other poverty
traps. In a working capital trap, a
microentrepreneur must sell door to door
with her tiny inventory that is all she can
afford to hold. But this makes the chance of
a match with what her customers want so
low that income will be so meager that she
will be unable to go out with a larger
inventory the next day.
e. Debt bondage traps.
 But the wrong kind of debt is also a trap,
when colluding moneylenders calibrate loan
and interest payments to ensure perpetual
indebtedness. Wages paid by these creditors
may be too low even to pay interest.
Although bonded workers are allowed basic
subsistence so they can work, the surplus is
extracted in an endless cycle of debt. The
children of bonded laborers may be born
into bondage.
f. Uninsurable risk traps.
 Poor farmers are unable to get weather
insurance. So, they orient their farming to
minimize the impact of a catastrophic
shock. But this approach makes it unlikely
they can take advantage of opportunities to
build assets. As a result, they are unable to
change their circumstances in a way that
would let them gain more security against
high risks in the future.
g. Information traps.
 Impoverished day laborers, housemaids,
and others among the poorest work long
hours for very low pay. Even if there are
alternatives available that pay higher wages,
one has no time or energy to learn about
what these occupations pay or how to work
in them. Of course, employers have no
incentive to help them learn about better
opportunities, and may work to prevent it.
h. Undernutrition traps.
 In undernutrition traps, an undernourished person
is too weak to work productively, so her resulting
wage is too small to pay for sufficient food to
improve her nourishment, thus she continues to
work with low productivity for low wages. A
similar vicious cycle can keep chronically ill (but
treatable) people in the bondage of poverty. These
problems could be solved if there were sufficient
demand for unskilled workers.
i. High Fertility Traps
 If most families have many children, and there are
few good jobs, then you too must have many
children, for a better chance that at least one of
your children will find a job. Otherwise you face
the likelihood that no one will have the means and
willingness to take care of you when you are too
old to work. But if all could have lower fertility,
all might be better off. For example, with lower
fertility, each family could invest more in their
children’s health and education.
j. Subsistence traps.
 Specialization is key to increasing productivity.
But if everyone practices subsistence agriculture,
there is no one to sell to-perhaps just some small
local trading. To produce for distant markets, you
must learn about them, and convince distant
buyers of quality. Middlemen vouch for quality,
but cannot be expert in many products. So for a
specialized agricultural market, there must be a
sufficient concentration of producers. But without
middlemen, there is no incentive to specialize…
The result can be an poverty trap in which a region
remains stuck in subsistence.
k. Farm Erosion Traps.
 In farm erosion traps, the poor are so desperate for
food that they overuse their land even though they
know the result will be lessened fertility next year.
Even though you know you are overusing your soil
and it will degrade if you do not rest it or plant less
aggressively, these problems are in the future… So
any gains in productivity can be negated by poorer
soil quality. This is just one example of an
environmental degradation trap.
l. Common Property
Mismanagement Traps
 Lakes are over-fished, forests are not
managed sustainably, land is overgrazed, in
part due to a breakdown of community
management of common-pool resources. “If
I do not fish today even at unsustainable
levels, someone else will catch those fish
instead of me; either way, I will catch fewer
fish tomorrow.” Once broken down,
cooperative social agreements on use of
shared resources are difficult to restore.
Keys to Capability: A Schema
 1. Health and nutrition for adults to work and
children to grow to their potential.
 2. Basic education to build the foundations for
self-reliance.
 3. Credit and basic insurance for working capital,
and defense against risk.
 4. Access to functioning markets for income and
opportunities to acquire assets.
 5. Access to the benefits of new technologies for
higher productivity.
 6. A non-degraded and stable environment.
 7. Personal empowerment to gain freedom from
exploitation and torment.
 8. Community empowerment to ensure effective
participation in the wider world.
Keys to Unlocking
Poverty Traps
The 8 keys are basic capabilities the
poor often lack, that facilitate escape
from a range of poverty traps.
Table 1: Some of the relationships
between the keys and the poverty
traps they can help unlock.
Key to Capability
Poverty Traps the key helps
address
1. Health and nutrition for
adults to work and children to
grow to their potential.
2. Basic education to build the
foundations for self-reliance.
h Undernutrition traps.
i High Fertility Traps.
3. Basic insurance, and credit
for working capital, family
emergencies, and other needs.
4. Access to functioning
markets, with opportunities to
acquire productive resources.
d Working capital traps.
e Debt bondage traps.
f Uninsurable risk traps.
e Debt bondage traps
g Information traps.
j Subsistence traps.
5. Access to the benefits of new
technologies for higher
productivity.
c Low skill traps
g Information traps
6. A non-degraded and stable
environment.
k Farm erosion traps
l Common Property Traps
m Collective action traps
7. Personal empowerment:
Freedom from coercive
exploitation and torment.
8. Full participation as a
member of an empowered
community.
o Poverty Entrapment
e Debt bondage traps.
a Child labor traps.
b Illiteracy traps
g Information traps
m Collective action traps.
n Powerlessness traps.
NGOs are private, voluntary
organizations serving a social purpose
 The book primarily features NGO programs (though
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also some government and for-profit activities)
NGOs are formal organizations within the citizen
sector (or civil society), having a social purpose
Governments rely on authority to achieve outcomes
Private sector firms rely on market mechanisms to
provide incentives for mutually beneficial exchange
In contrast, civil society actors utilize independent
voluntary efforts to promote their values and aspects
of social, economic, or political development
NGOs are the equally important third leg of the stool
on which development and poverty reduction rests
NGOs are steadily growing in prominence
Comparative Advantages of
NGOs in Hunger and Poverty
 1. Innovation in hunger and poverty program design and
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implementation
2. Flexibility in designing and modifying hunger and
poverty programs to suit local conditions; and greater
opportunities for rigorous evaluation
3. Serving as repositories of specialized knowledge
4. Providing targeted public goods for poor communities
5. Common property resource management design and
assistance with program implementation
6. Greater trust and credibility of NGOs by participants,
and by perhaps developed country donors and firms
7. Representation and advocacy, based on affiliation
with poor, socially excluded peoples
NGOs also have limitations, when government
or the private sector is more appropriate, or in
the face of “voluntary failure”
 For-profit firms have comparative advantage in private goods
 Government has comparative advantage in public goods
 NGOs and CBOs have comparative advantages in intermediate
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goods, situated between these poles
But “voluntary failures” can also prevent the citizen sector from
realizing these comparative advantages in practice. Examples:
1. Institutionalization, causing loss of flexibility and participation
2. Goal deflection: displacement of ends by means, e.g.
fundraising
3.Minority rule, in which NGO priorities reflect their own
organizational origins rather than their participants’ priorities
4. Ineffectuality, or “philanthropic amateurism”
5. Philanthropic insufficiency, due to limited scale and resources
6. Philanthropic particularism, reflecting NGOs’ choice of
clientele and projects, possibly neglecting greater needs
Identifying organizational comparative
advantages of NGOs
Typology of Goods within the Two Dimensions
Of Rivalry and Excludability
ExcludType IV Goods
abilityClub Goods, Ideas
Type III
Goods
Public Goods
Rivalry
Type I Goods
Private Goods
Type II Goods
Common
Property
Resources
How the cases were selected
 Screen 1. Existence of a rigorous program
evaluation study, especially using randomization,
with identified high program impact
 Screen 2. Winning of a major juried poverty
program prize
 Screen 3. Snowball sampling, starting with chiefs
of evaluation or equivalent, of high-rated PVOs,
emphasizing programs cited by peer PVO/NGO
organizations
Type of Response
Type of Trap
Areas of NGO
Comparative
Advantage
Innovation,
Flexibility,
Advocacy
Specific NGO Programmatic
Activities
Program Examples
Designing school programs to reach
child laborers; advocating improved
work conditions and regulations
BRAC- NFPE, STC CHANCE;
Peru STC school for street
children; ILO affiliate programs
Illiteracy traps
Innovation,
Flexibility
Designing effective literacy
programs for the very poor
Pratham accelerated learning,
India
Low skill traps
Club goods,
Knowledge
Develop training programs targeted
to low skill marginalized groups
SEWA, Mother Child Day Care
Center Services
Working capital traps
Innovation;
knowledge
Microfinance, alone or with training,
services such as health, solidarity etc
Grameen, FINCA, BRAC, FFH
Debt bondage traps
Advocacy;
Innovation;
Flexibility
Raising awareness, lobbying;
Identifying bonded laborers and
groups, developing alternative work
Affiliates of Anti-Slavery
International; Sankalp, India;
Kamaiya FMMC, Nepal
Uninsurable risk traps
Innovation, Club
goods
Knowledge,
innovation
Innovating targeted microinsurance
for farmers
Providing information about
alternative livelihoods, and training
BASIX/KSB, India
Undernutrition and poor
health traps
Advocacy,
Knowledge
Targeted food supplements;
advocacy for affected areas
Playpumps, BRAC, IRC, CRS
High Fertility traps
Innovation,
flexibility
Community mobilization and family
planning ‘cultural transformation’
CARE, ICRW, various family
planning and population NGOs
Subsistence traps
Knowledge, club
goods
Helping villages identify and market
alternative crops
Africare, Africa Now, BRAC,
Technoserve, Heifer
Farm Erosion traps
Knowledge,
flexibility
Providing targeted packages of
credit, training, and inputs
TechnoServe and partners
Common Property
Mismanagement traps
Common
property resource
Community organizational
development and training
Suledo, Tanzania; Gram Vikas,
India
Powerlessness traps
Trust, flexibility,
innovation
Self-esteem building, legal and
comprehensive training
ADEW-Egypt, Child HelplineIndia, World Vision
Child labor traps
Information traps
Grameen phone ladies program,
BRAC TUP, Africare, ICS
Illustrative Programs Building Assets &
Capabilities for Escaping Poverty Traps
 1. Illness and Undernutrition: Playpumps; Deworming
 2. Child Labor and Illiteracy: Nonformal Primary Schools;
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Pratham tutoring and computer based learning; Oportunidades
3. Working Capital, and Information Traps: Grameen Bank/
Phone Ladies
4. Subsistence Traps: Access to markets through BRAC’s
Targeting the Ultrapoor Program and BRAC Enterprises
5. Low Skills and Limited Access to Technologies: SEWA,
India; Endeavor, South Africa
6. Common Property Mismanagement, and Subsistence Traps:
Honey Care/Africa Now/CBOs in Kenya; Suledo in Tanzania;
Fundecor in Costa Rica
7. Individual Powerlessness Traps: ADEW Girls Dreams Project
in Egypt; Childline in India
8. Community Empowerment Needs (with Environmental
Sustainability): Heifer, Peru; Africare in Uganda, Burundi
Three broad conclusions
 Extreme poverty is a hard problem because: many are
caught in poverty traps; high growth is hard to ignite
and sustain; and the poor may not benefit from growth.
 Practitioners know much about how to help the poor
escape poverty traps even in countries without good
prospects for high growth. Much good can be done
with relatively little money, by identifying and
supporting effective and innovative programs that
develop key assets and capabilities, and utilizing
rigorous evaluation.
 Development and poverty reduction rests on a three
legged stool of private, government, and citizen sectors.
The citizen sector including NGOs hold comparative
advantages in addressing poverty traps, and so can
play a central role in ending extreme poverty.
Working together we can help
unlock poverty traps and
eradicate poverty, hunger, and
deprivation.
Thank you.