Development economists challenge approach to ending poverty

Two development economists, Dr Trevor Manuel of South Africa and Professor Muhammed Yunus of Bangladesh, have challenged the World Bank and the United Nations to rethink their approach to ending extreme poverty in the world. 

The former Finance Minister of South Africa, Dr Trevor Manuel said the US$1.25 income a day benchmark the World Bank was using to determine extreme poverty was too low and  that 2015 set to achieve the Millennium Development Goals (MDGs) – will come and go with more people living in extreme poverty.

By this definition, about 1.2 billion people are estimated to live in extreme poverty, one-third of this number living in Sub-Sahara Africa (SSA). Another 2.5 billion people across the world live under US$2 income a day.

“The output measure – the Gross Domestic Product (GDP) approach – to measuring poverty is too misdirected. The US$1.25 income a day is too basic and this brings wide inequalities in incomes and standards of living between the rich and the poor,” Dr Manuel stated today in Washington DC, United States of Africa.

Dr Trevor and Prof Yunus, the Nobel Laureate, were contributing to a panel discussion by the President of the World Bank, Dr Jim Yong Kim and the Secretary-General of the UN, Mr Ban Ki-Moon, at the ongoing Spring Meetings of the World Bank and the International Monetary Fund (IMF).

The meetings are being attended by over 500 participants including Ministers of Finance and Economic Planning, public sector policy makers, civil society organisations, the private sector and delegates from academia and being covered by over 100 journalists from across the world.

Prof Yunus, who is known for his work in microfinance in Bangladesh through the Greeman Ban he founded, said it was time for a completely new thinking around the issue of ending poverty, where the youth, the women and the vulnerable were involved in the development process.

He said the world could harness the creative capacity of its peoples, especially the youth who were bursting with new ideas and creativity, so as to take advantage of technology to accelerate education, healthcare delivery to bridge the rich-poor divide faster.

More interestingly, Prof Yunus said, there was an overwhelming need for reforms in institutions and the world development architecture which brought about poverty in the first place, saying “the institutions that created the poverty are not good enough to end poverty.”

The Nobel laureate and visiting lecturer to many universities across the world wants a marked departure from the profit-motive disposition of the private sector in the delivery of services and infrastructure. For him, “we should have private sector that does social business, they should focus on giving income to people without focusing on profits.”

To that end, Prof Yunus called for the setting up of Social Business Funds in all countries to enable the young population to take advantage of, use their creativity to generate businesses that put money in people’s pockets.

But the President of the World Bank is optimistic that the world would end extreme poverty by 2030 by working harder to include the bottom 40 per cent of income levels in every country in the development process.

He said the World Bank would also rally all support and marshall all resources to check climate change by implementing successes in climate change among countries and ensuring that going forward all development projects should be climate and environmentally sustainable.

For his part, Mr Ki-Moon said there was no justification for the continued existence of abject poverty that made one hopeless placed them in despair and called on all developed nations to honour their pledges towards achieving the MDGs, which has less than 1000 days deadline.

“There are many Sub-Saharan Africa countries that cannot achieve the MDGs if we don’t accelerate our programmes. Pledges for Official Development Assistance are declining. We want to ensure that whatever has been pledged is fulfilled,” the secretary general said.

Meanwhile, Mr Ki-moon and Dr Kim have announced the members of the Advisory Board for the Sustainable Energy for All Initiative, kicking off a major new phase of activity for this global public-private partnership. 

The Advisory Board includes distinguished global leaders in business, finance, governments, and civil society and is co-chaired by the Secretary-General and the President of the World Bank.

It marks the first time the two leaders have jointly led such an effort, underscoring the emphasis each institution places on providing sustainable energy for all.

The Secretary-General also named the members of the initiative’s 10-person Executive Committee, which is headed by Chad Holliday, Chairman of Bank of America.  In September 2012, he designated Mr Kandeh Yumkella as his Special Representative for Sustainable Energy for All and chief executive of the effort.  

The Sustainable Energy for All initiative brings together top-level leadership from all sectors of society, drawing on the global convening power of the United Nations and the World Bank and combining the efforts of hundreds of stakeholders from around the world. 

“Sustainable energy is the golden thread that connects economic growth, social equity, and a stable climate and healthy environment. The Advisory Board has the top-flight expertise and experience needed to help us reach our goal of providing sustainable energy for all by 2030,” said the Secretary-General. 

It is estimated that more than 1.2 billion people do not have access to electricity, and another 2.8 billion use solid fuels to cook and heat their homes. 

The Sustainable Energy for All initiative is a multi-stakeholder partnership between governments, the private sector, and civil society which was launched by the Secretary-General in 2011, which anticipates riding on three interlinked objectives to be achieved by 2030. 

These are; provide universal access to modern energy; double the share of renewable energy in the global energy mix; and double the global rate of improvement in energy efficiency. 

Story: Samuel Doe Ablordeppey, Washington DC, USA/Graphic Business

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