- Knowledge base
- Policy question
Economic growth is the main driver of poverty reduction. But the eradication of extreme poverty will require policies targeting the most vulnerable groups. Dutch development co-operation can help countries identify and implement effective policies such as conditional cash transfer programmes, microfinance initiatives, peace processes and industrial, educational and agricultural reform to assist the most vulnerable people.
Poverty has been halved in less than 25 years. The enormous global progress over the past few decades has been unprecedented in human history. This has mainly been a result of the rise of the South and rapid economic growth. China’s economy grew by 10% over several decades and 600 million people were brought out of poverty as a result.
Economic growth in poor nations is crucial. But it will not be possible to end extreme poverty by 2030 through economic growth alone, even if South Asia and Africa manage to grow at 10% for the next 15 years. Poverty eradication will require specific policies targeting the poorest. Poverty is increasingly widespread among women, ethnic and religious minorities, indigenous peoples and the disabled. Poor people are increasingly living in the countryside and in countries in conflict. Policies that have worked in other parts of the world must target the remaining pockets of poverty.
There are many success stories to learn from. Rather than inventing the wheel again, let us scale up and make the success stories global. Here are my suggestions:
Brazil managed to grow rapidly while the incomes of the poor grew faster than the rich. Key to the success was the Bolsa Familia cash transfer program to poor families given in exchange for enrolling children in school and ensuring vaccinations. Similar conditional cash disbursements schemes have contributed to poverty reduction across Latin America. The challenge for governments in Africa and South Asia will be to mobilize the required resources and to put in place systems and safeguards to implement such cash transfer schemes. Can we think of a Bolsa Familia Global?
The microcredit revolution was started by Nobel Peace Prize winner Muhammad Yunus in Bangladesh. Microcredit has since spread across the world and given millions of poor, in particular women, the chance to start small businesses and get out of poverty. Bill Gates has made a bet that mobile banking will be the next big microfinance revolution to benefit the poor. The challenge will be to direct development assistance and private investments to scale up successful microfinance initiatives.
No country has reached a high state of development without industrialization. Rapid development and manufacturing have made young Koreans of today 390 times richer than their grandparents. Chinese people in Zhejiang industrial province are 200 times richer than their parents were. Chinese companies are now moving and investing in manufacturing in Ethiopia and Rwanda, helping provide some of the 1 million new jobs required every month across Africa. Development assistance can help mobilize more investments into manufacturing, industrial development and clean energy. Development aid is also successfully used to improve education and skills training to minorities and other vulnerable groups struggling to find work.
Most of the world’s extremely poor people live in rural areas. Vietnam went from a big rice importer to the second biggest exporter in the world by implementing property rights, building roads to markets and introducing better rice varieties. Africa needs a similar agricultural revolution. Grow Africa is a coalition of companies, civil society, governments and aid donors coming together to green the agricultural systems, feed the planet and improve poor farmers yields and incomes. We need more such coalitions for action!
Soon half of the world’s poor will live in fragile states and countries in conflict. Conflict can reverse national development by as much as 30 years. Minorities are often targeted and the poorest suffer the most in war. The international community must do more to prevent and stop conflicts. The key is to come behind a common strategy and use aid and political involvement to support peace processes.
Rapid sustainable economic growth combined with targeted policies for vulnerable groups will make it possible to eradicate extreme poverty by 2030. The challenge will firstly be to identify and implement the most effective policies. Secondly to mobilize enough aid, investments and domestic taxes to pay for it. And thirdly to mobilize the political will to just do it!
ADD YOUR COMMENT