To some, Sharia-compliant financial services offer a promising path towards expanding financial inclusion among Muslim adults. To others, these services – which avoid charging interest and seek to conform to Islamic principles of profit- and loss-sharing – do not address the root causes of financial exclusion. But most agree that there is a dearth of empirical research that measures the degree to which Muslims are using Sharia-compliant financial products, their demand for it, and the extent to which they refrain from using conventional financial systems. Without data and related analysis, policymakers and private sector leaders are often speculative in framing the role of Islamic finance within the financial inclusion agenda.
The Sunday before last I woke up to a couple of articles in the New York Times Magazine and The Economist. In the first article, the New York Times ethicist was asked a question about Halloween candy: Are dentists who purchase candy from kids (thus protecting their teeth) and donate it to poor families engaging in “thoughtless, unethical and unprofessional” behavior? The Economist article summarized research on cash transfers to the poor, concluding that “Giving money to poor people works surprisingly well. But it cannot deal with the deeper causes of poverty”. In both articles, the fundamental question is how we measure and judge improvements in welfare based on what people consume. But while the ethicist takes the question head on, The Economist does not even get the question right.
To see this, recall that in welfare economics there are two rationales for government interventions to make people better off. First, governments fix market failures. If the market does not produce efficient outcomes, the government can use taxes and subsidies to make things better. Externalities are classic examples. I don’t worry that my pollution makes others worse off and therefore “over pollute”. But the government can tax that pollution to the point where I behave “as if” I care about others.
Second, governments redistribute income by giving cash to the poor. If, in society’s judgment, an alternate distribution of consumption is better, government could achieve that distribution by redistributing “endowments” or cash from one party to another.
Urbanization is the most powerful force shaping the planet today. This can be good news as urbanization is the best bet we have to meet our global poverty reduction targets. Cities generate our wealth, our culture, and our innovation. This is also bad news since cities generate the lion’s share of the world’s GHG emissions, and cities are responsible for most of the planet’s current decline in biodiversity. Cities also generate solid waste; lots of it and the amount is growing fast.
‘Peak waste’ – that point in time when all the waste from all the cities finally plateaus around the world, and then slowly starts to decline, is not on track to happen this century. Estimates are that it will peak at three-times today’s current waste generation rate. Peak waste is an excellent proxy for humanity’s cumulative global environmental impact; therefore we are on track to triple today’s overall global environmental impact. Our ‘assault on the planet’ will start to subside on the other side of peak waste. Therefore we must move peak waste forward and reduce its intensity when it finally does arrive.
The Economist this week has an excellent article on giving cash transfers, conditionally or unconditionally, to poor people to alleviate their poverty. Calling it “possibly the single best piece of journalism on cash transfers that I’ve seen so far,” Chris Blattman—one of the scholars whose research has provided grist for this mill—laments that such writing “tends to make the Pulitzer committee fall asleep in bed.” Maybe so, but the idea is potentially transformative.
That cash conditional on sending your children to school or taking them for a medical checkup improves health and education outcomes has been established for some time now. More recently, some studies show that unconditional cash transfers could have the same effect. Chris’s work demonstrates that giving cash to idle young people leads to higher business earnings than if the money were used to run vocational training courses for these people.
In parallel, Todd Moss at the Center for Global Development and my colleague Marcelo Giugale and I (along with several others) have been exploring the idea of transferring oil revenues to citizens as cash transfers, as a way of reducing the resource curse that afflicts many resource-rich countries, especially in Africa. Gabon for instance, with a per-capital income of $10,000 has the second-lowest child immunization rate in Africa. Marcelo and I show that, with just 10 percent of resource revenues’ being transferred directly to citizens (in equal amounts), poverty can largely be eliminated in the smaller resource-rich African countries.
VATICAN CITY — Like many people around the world, I've been closely following Pope Francis' comments on the importance of serving the poor. When I had a chance to meet the His Holiness at the Vatican, I had the privilege to talk to about it — and about helping lead a social movement to end extreme poverty. Watch the video blog to learn more.
Las organizaciones no gubernamentales (ONG), los organismos de crédito y el sector público están trabajando duro para cumplir la meta mundial de saneamiento. ¿Pero qué ocurre con el sector privado?, ¿y qué ocurre con las familias que no quieren esperar a la próxima ONG que golpee a su puerta con un mejor retrete? Durante los últimos años, la estrategia de Marketing Sanitario del Programa de Agua y Saneamiento (i) (WSP, por sus siglas en inglés) en Bangladesh (i) ha intentado abordar estas preocupaciones estimulando la oferta y la demanda de instalaciones sanitarias higiénicas a través de la movilización de empresarios locales. El objetivo del Marketing Sanitario es que las familias tengan el deseo y la facultad de autogestión para ascender en la escalera de saneamiento por su propia cuenta.
El programa piloto comenzó en 2009 en cinco aldeas del distrito de Jamalpur y se lo ha ampliado ahora hasta alrededor de 230 aldeas en todo Bangladesh con el apoyo de la Alianza Holandesa WASH, Empresas para el Desarrollo Internacional y la Fundación MAX. El WSP también crea estrategias e implementa el proyecto con Esperanza para los más pobres (HFP, por sus siglas en inglés), una ONG local de Bangladesh, y de la Asociación para el Progreso Social (ASA, por sus siglas en inglés), una institución de microfinanciamiento.
Our journey to the remote region of Gabura in Bangladesh took us down unpaved roads, through meandering rivers and to the edges of the Sundarban mangrove forest. The first thing that struck us was the near absence of trees in the village. During cyclones Sidr and Aila, saline water had destroyed agricultural land and although the place was surrounded by water, it was unfit to drink. The embankment, which was built to protect the area from tidal surges, was in severe disrepair. To make matters worse, once the aid funds had dried up in the aftermath of the cyclones, almost all the NGOs had left and there was little assistance coming from the government.
A few months ago, I journeyed to Lao Cai, a predominantly ethnic minority area in Vietnam’s Northern Mountains, to supervise a pilot survey. One older man I encountered—typical of many we saw—was a subsistence farmer with minimal education who spoke only his native language and had barely ventured beyond his village.
Members of ethnic minority groups make up 15 percent of the country’s population but account for 70 percent of the extreme poor (measured using a national extreme poverty line). During Vietnam’s two decades of rapid growth, members of ethnic minority groups in the country have experienced overall improvements in their standards of living, but their gains have lagged behind those of the Kinh majority.
Why is ethnic minority poverty persistent? This has been the subject of numerous studies, including a 2009 study on ethnicity and development in Vietnam as well as a chapter in our more recent Vietnam Poverty Assessment. This is also one piece of the research my team is currently pursuing.
In a conservative society where the majority of men believe that the role of women should be confined to domestic work within the household, Yemeni women are attempting to break the chains of social and cultural constraints.