By some estimates, poverty has been reduced in recent years from 1.3 billion people in 2005 to fewer than 900 million in 2010. That’s about half a billion people in just five years – a truly impressive achievement. The talk is now of aiming for poverty eradication in the global development framework that will replace the Millennium Development Goals when they ‘expire’ in 2015. This, however, is likely to be a tricky challenge for at least two reasons. First, China and India can take credit for most of the recent reduction of poverty. As they largely achieved this without help from the international development community, it raises the question whether an international focus on direct poverty reduction will generate the greatest benefits. Creating an enabling environment centred on equitable investment, peace and security and sustainable development may be more productive – and contentious.
Second, estimates from experts like Andy Sumner and Homi Kharas suggest that a significant number of the remaining poor live and will live in fragile environments. This is problematic for effective poverty reduction because their governments have not necessarily demonstrated great commitment to this objective, while international aid to such countries is often not fit for purpose (consider the 2011 survey on monitoring the Paris Declaration on Aid Effectiveness, the 2011 monitoring report of the Fragile States Principles or the New Deal for Engagement).
Hence, a global, political push for poverty eradication through the post-2015 framework is likely to benefit from parallel bottom-up social innovation and mobilization. Modern technology can be a real game changer in this regard and two initiatives currently on-going in India and East-Africa have great potential.
India is setting up a biometrical system that will enable direct cash transfers to the country’s poorest. In one fell swoop this will eliminate layers of overhead and corruption by ensuring benefits reach intended recipients directly through a fairly foolproof system. Costs have been kept low by combining an open policy in selecting devices and software, and stimulating competition between private vendors.
Another example of modern technology at work is M-Pesa (mobile money in Swahili), the world’s most developed mobile-phone based money transfer and payment system. It uses national ID cards or passports as its basis to easily deposit, withdraw, and transfer money. It’s widely in used in Kenya and Tanzania in particular.
Now imagine linking a person’s identity – as established and stored in a biometrical database – with an internet-enabled, mobile-phone based platform that hosts (financial) services and information at global scale. Such a system would allow both accurate transfers at the level of individuals, including peer-to-peer, and authentication of beneficiaries. With internet-enabled mobile phone penetration rates rising fast everywhere, even remote corners of the world are reachable. This kind of technology can also be put in the service of development in fragile and conflict-affected countries, in at least two ways.
One application could be to use such mobile-phone enabled databases to share royalties resulting from natural resource extraction directly and more widely with local communities. A major problem with natural resource extraction in many fragile environments is that a significant part of the revenue that states receive gets stolen by those in power. Local communities don’t tend to see much of it, which results in a sense of injustice, marginalization, and occasionally, violence.
In fact, the Centre for Global Development is already exploring an Oil2Cash scheme that would see resource-rich governments make direct cash transfers to the accounts of individual citizens via modern technology. Apart from the merits and demerits of direct cash transfers, this scheme faces an important obstacle: why would governments that can currently spend this revenue at their discretion suddenly want to share it with their citizens? An alternative might be to make energy companies responsible for distributing part of the revenue directly to citizens that live in the relevant area. This probably requires creating a global norm – enforceable through national legislation – that ensures every exploration contract concluded in a fragile environment features a clause stipulating that energy companies will set up appropriate mechanisms to transfer a certain percentage of the revenues. The challenge here is of course how to make it stick globally and avoid creating competitive advantage for countries that do not sign up.
One option is to use the momentum of the new post-2015 development agenda to build on existing initiatives like the UN’s Global Compact and the Extractive Industries Transparency Initiative to create a global natural resource charter that, among other things, commits oil companies to share part of exploration revenues directly with local communities – corporate social responsibility in direct action. Another option is to follow in the tracks of regulatory efforts to improve due diligence of mineral supply chains, which faces similar collective action dilemma’s, build on its experiences and learn from its lessons (for OECD work click here).
A second application of modern technology to reduce fragility could lie in the area of disaster management. Several recent reports suggest that the frequency and intensity of natural disasters are increasing. While some of the largest, most deadly and most costly disasters have affected highly developed countries with the means to recover (such as Japan and the US), many affect populations living in fragile environments that are far less resilient to deal with their catastrophic consequences. The coastal zones that will absorb most of Africa’s population growth over the next decades are especially vulnerable.
It should be possible to register these populations in a biometrical system – akin to what India is piloting – so that when disaster strikes, global peer-to-peer transfers can be made directly to empower individuals to start rebuilding their own lives. In 2011 Kenyans already mobilized €171,000 in two days through M-Pesa contributions for the “Kenyans for Kenya” fundraiser set up to respond to famine and deaths from starvation in its Turkana District. Image what such a system might accomplish at a global scale by way of a ‘social protection floor’ in cases such as the Haiti earthquake or the recent droughts and famines in Ethiopia, Kenya and Somalia.
While such systems require significant one-off investments, do not solve more structural barriers to development, and still have to be made to work politically, they hold promise to move away from traditional rich-to-poor, Official Development Aid flows and can capitalize on a global world in which development is a rapidly changing notion and social empowerment on the rise.