Poverty Reduction Strategies
Poverty affects a great number of the world's people: over a billion people exist on less than one U.S. dollar a day, and many more have little or no access to quality drinking water and food, medical assistance, education, and employment. Poverty is a crippling condition that both destroys lives and keeps people from bettering their lives. Because poverty is such a universal concern and is particularly high in many developing countries, numerous organizations and governments around the world are activity seeking to eradicate it. Many large organizations such as the United Nations and the World Bank are providing financial assistance and action plan formation services to impoverished countries, and countless other smaller organizations and individuals are also working to reduce poverty levels. In working with non-government and government organizations, many countries have established poverty reduction strategies to pinpoint the causes of poverty in areas and formulate solid goals in order that poverty may be reduced, or even eradicated.
Keywords Developed Country; Developing Country; Extreme Poverty; International Monetary Fund; Millennium Developmental Goals; Non-Government Organizations (NGO); Poverty; Poverty Reduction Strategy Papers; Structural Adjustment Programs; World Bank
Despite the numerous technological and societal advancements made in recent decades, a good percentage of the world's people live in poverty, unable to obtain their basic needs. Poverty, though, is a deceptively complex concept. A poor person in a developed country such as the U.S. might still have access to electricity, basic sanitation, medical care, and food, necessities that millions of others across the globe do without. While an impoverished person in an industrialized country may be quite different than an impoverished person in Haiti or Kenya, both people share many characteristics.
Some of these characteristics are malnutrition, illiteracy, death, disease, and hopelessness; however, the World Bank (2007) poignantly expressed other not-so-obvious consequences of poverty by stating, "Poverty is powerlessness, lack of representation and freedom." Poverty is the helplessness of a mother watching her child die because she cannot afford a doctor. Poverty is the frustration of a man that cannot afford a lawyer to seek justice for him. Poverty is the oppression of parents who cannot afford to move to a better area where their children can be safe and have the chance of an education. Additionally, Kozolchyk (2007) stated that, "despair and distrust for social institutions (are) predominate feelings among the poor" (p. 729). This distrust is particularly troublesome because it isolates the poor from the very people and institutions that can best help them.
Extreme poverty is particularly dire. It is defined by the World Bank (2007) as the state of living on less than one U.S. dollar a day, which accounts for about 1.1 billion or 1/5th of the world's population. People living in extreme poverty cannot afford to provide for their basic, daily needs such as food, shelter, clean drinking water, and sanitation. An additional 2.7 billion people survive on less than 2 U.S. dollars a day. Although these people technically are not at the extreme poverty level, this significantly low income hinders them from seeking medical care and education and traps them into a usually shortened life with a very low standard of living.
Reducing Extreme Poverty
International indicators show that extreme poverty is improving in many areas. According to the World Bank (2007), from 1990-2001, there was a 7% reduction in the rate of people living in extreme poverty. These more promising numbers indicate that the dedicated efforts of numerous non-government organizations (NGOs), government initiatives, international charities, and concerned individuals are helping. In particular, poverty reduction strategies are being formed and implemented around the world, and these action plans and efforts are helping lift many people out of the oppressive lifestyle of poverty.
However, reducing the levels of poverty in the world is an extremely complex goal because poverty stems from many causes. Unemployment is often the main factor of poverty, and there are many reasons for unemployment such as a lack of education or vocational training skills, a poor economy where jobs are scarce, gender discrimination, and physical or mental disability. Poverty is often directly linked to environmental issues: drought, famine, or disease can destroy the livelihood of farmers and agricultural workers and place a huge premium on food and water. War and violence tears people from their homes and disrupts lives, leaving many impoverished.
Therefore, in order for poverty to be eradicated around the world, these issues of drought, terrorism, lack of water, illiteracy, and discrimination must be eradicated so that people have the resources and the power to better their lives. Poverty reduction strategies are focused on these very issues. Many of these strategies recognize that simply providing financial assistance is not enough; often, doing so can aggravate conditions. Instead, poverty reduction strategies focus on equipping people so that they can take charge of their own futures and have the resources to improve their lives, not merely live better on charity. Education, vocational training, job creation, small loans, and entrepreneurship assistance are just a few of the many opportunities that are offered to people through the efforts of poverty reduction strategies.
The United Nations and its well-known organization UNESCO (the United Nations Education, Scientific, and Cultural Organization) is one of the champion fighters in the battle to overcome poverty. In particular, the UN (2005) has established eight Millennium Development Goals to be accomplished by 2015. These goals are:
• Eliminate extreme hunger and poverty,
• Ensure that everyone has access to a primary education,
• Eliminate gender disparity and promote women's rights,
• Reduce the rate of child mortality,
• Reduce the rate of maternal mortality and poor health,
• Fight to eliminate serious diseases such as aids and malaria,
• Work to sustain the environment, and
• Create global partnerships.
All these goals work together to eliminate poverty and the difficulties that both create and accompany poverty.
UNESCO and the UN are not the only major worldwide organizations who are directly focused on targeting poverty. The World Bank and International Monetary Fund (IMF) have joined forces to develop poverty reduction strategies in low-income countries. These countries are those who are seeking to be covered under the Enhanced Heavily Indebted Poor Countries Initiative, and both the World Bank and IMF decided that as a prior requirement of the initiative, these countries needed to establish poverty reduction strategies based on five determined principles (Canagarajah & Van Diesen 2006). In particular, a country that wants to be considered for HIPC (Heavily Indebted Poor Country) relief must create Poverty Reduction Strategy Papers (PRSP). These papers essentially function as action plans to overcoming poverty and ascertaining that resources will be used effectively. These papers are mandatory before World Bank and IMF will grant financial assistance to a country. The use of these papers was introduced in 1999 (Imboela, 2005).
Types of Financial Assistance
Obviously, financial assistance to an entire nation, particularly HIPCs, is often crucial to helping a country create jobs, fund public assistance programs, and develop education structures, all important in overcoming poverty. However, financial assistance on a smaller or individual level is also a crucial need. One of the difficulties of poverty is that it traps people into a day-by-day survival mode and does not allow them to devote resources towards more long-term goals such as receiving an education or starting a business, and small or micro-level loans are often the only way poor people can start their own businesses or obtain secure housing.
Financial institutes that loan money to the very poor face a high possibility that these loans will not be repaid: this has the overall effect of driving up interest rates (Kozolchyk,...
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