Growth for All: Including the Poor in Strategies for Economic Growth

Michael Castellano is a graduate student at The George Washington University, studying International Affairs and Development. He interned with Bankers without Borders^® at Grameen Foundation during the spring of 2012.

In the years following the global financial crisis, politicians and policymakers across the globe have harped on one cardinal goal: economic growth. Without a doubt, plans for growing the economy will dominate discussions in the upcoming U.S. presidential election. It seems as though we as a society have collectively determined that if only the economy would turn around, conditions would certainly improve across the board. If only we could enact legislation to spur economic growth, inevitably we would all be better off.

Fortunately, statistics show that the United States has seen steadily climbing annual growth rates since the nadir of the “Great Recession.” Developing countries and emerging economies have, on the whole, experienced average growth rates of more than 5 percent thus far in 2012 and will continue to propel the world’s progress, according to financial forecasts. So – this is good news for everyone, right?

Not necessarily.

Although a country’s national economy may grow, the poorest of the poor often remain completely disconnected from the financial, political and social systems in place. Without active bank accounts, the poor cannot easily save or access other financial services. In rural villages, people may not have easy access to healthcare and can quickly fall victim to external shocks such as disease or natural disaster. Without these services, poor people around the world cannot reap the benefits of overall economic growth.

During my time at Grameen Foundation and through my studies in International Development during this past year, one fundamental lesson has stood out: Though economic growth is certainly important, growth does little to reduce poverty if the poor lack access to essential services. This illustrates a key principle that development practitioners dub “pro-poor growth.”

Michael Castellano, shown here during a trip to Australia, served as an intern at Grameen Foundation this spring.

Pro-poor growth involves forming development policies and strategies that target the poorest of the poor and offer new ways of connecting them to financial markets. Professor Muhammad Yunus, Nobel Prize laureate and founder of Grameen Bank, stated, “The direct elimination of poverty should be the objective of all development aid. Development should be viewed as a human rights issue, not as a question of simply increasing the gross national product.”

Giving Back: A Simple and Powerful Idea

Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.

On Wednesday, May 9, I had the pleasure of attending a book signing event at the Museum of Art and Design in New York City.  Meera Gandhi, a long-time Grameen Foundation donor and volunteer whose husband Vikram sits on our Board of Directors, has come out with a beautiful and moving book.  It is titled simply Giving Back.  I was fortunate to arrive early enough that I was able to get my copy signed early, and didn’t have to wait in the long line that formed later.

The book tracks the long philanthropic journey that Meera has been on by profiling 75 organizations – including Grameen Foundation – that she and her family have backed.  It is a diverse group that she divides into four broad categories: women’s rights, children’s issues, protecting the environment/battling disease and poverty, and promoting culture and the arts.  She believes so deeply that those of us who are blessed should give back to society that she has created the Giving Back Foundation to help carry on the work described in the book and a related film of the same title.

Grameen Foundation is proud to be one among so many outstanding organizations profiled in Giving Back.  Walking through the Museum’s atrium, I met many people who are involved in organizations that have been touched by Meera over the years.  It was a uplifting and humbling experience.

I was also interviewed twice on camera, including once by International Television Broadcasting, Inc. (ITV).  I met a woman associated with the Birch Wathen/Lenox School, which is profiled in the book.  My brother attended this school in the 1980s, and I was pleased to be invited to speak there this coming fall.  (Meera spoke there previously and the students loved it!)

One of the best sections of the book is a brief one titled, “How to Find a Charity that Speaks to You.”  I’d recommend her advice to anyone, especially those just beginning their own philanthropic journey.  In this mini-chapter, she asks the reader a series of questions about their preferences in such areas as gift-giving, and then suggests how different answers might affect the way that someone can engage most productively and enjoyably in philanthropy.  Her basic message is this: Find both a cause and a way of engaging with it that excites and motivates you.  It’s a simple and powerful idea.

What is clear from Meera’s writing and actions is that “giving back” – when done thoughtfully and in the right spirit – does not leave the donor with less, but rather with more.

Panel Explores the Power of the Mobile Phone in Fighting Poverty

Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.

I first met Isobel Coleman, Senior Fellow for U.S. Foreign Policy and Director of the Civil Society, Markets and Democracy Initiative at the Council on Foreign Relations, through one of our greatest Grameen Foundation Board members, Lucy Billingsley.  When Isobel and I were introduced to each other, she was running a small program at the Council focused on women’s issues.  She has since grown it into a flagship initiative of this prestigious institution, and her reputation as a researcher and thought-leader has naturally grown along the way.

I was therefore very pleased when she invited me to speak as part of her Women and Technology series last week, alongside Ann Mei Chang, senior adviser for women and technology, Office of Global Women’s Issues at the U.S. Department of State (and formerly with Google), and Scott Ratzen, Vice President for Global Health at Johnson & Johnson.  The title of the session was “mDevelopment: Harnessing Mobile Technology for Global Economic Growth.”  We had a planning call with Isobel, Scott and Ann Mei the week before and I realized I was joining some extremely knowledgeable and articulate people.  To prepare, I read up on all of Grameen Foundation’s many programs that work to alleviate poverty by leveraging the mobile phone revolution, as well as some related research on inclusive business models.

Alex Counts makes a point while (from left) Isobel Coleman of the Council for Foreign Relations, Ann Mei Chang of the U.S. State Department and Scott Ratzan of Johnson & Johnson listen.

The event was kicked off with remarks by Suzanne McCarren of ExxonMobil, which sponsors this speaker series.  Suzanne, whom I sat next to during lunch, explained why women’s economic development is a high priority for their company’s foundation, which has made more than $50 million in grants so far, according to my notes.  Then Cherie Blair, the former first lady of the United Kingdom and the founder of a foundation that bears her name, spoke.  She announced the release of an important new report titled, “Mobile Value-Added Services: A Business Opportunity for Women Entrepreneurs.”  I had met Cherie several times through Meera Gandhi, whose book Giving Back features the Cherie Blair Foundation for Women, as well as Grameen Foundation.

Can trust and reciprocity within social networks play a role in rural financial systems?

Julius Matovu is the Research and Program Coordinator for Grameen Foundation’s AppLab Money Incubator.

Let me introduce two interesting petty traders based in Owino market – the busiest market in downtown Kampala. They are Akim, a secondhand-shoes trader, and Patrick, a secondhand-clothes dealer.

Last weekend I visited this market for a variety of reasons – including buying some “new” secondhand clothes to revamp my wardrobe. As I wandered through the market I came across these two different petty traders; because each of these individuals had something that I may need at some point, I had a good entry point for an in-depth interaction with each of them, to understand what they do. During my interactions, I observed a huge business potential based on the high number of people who visit Owino market every day. I also realized that for someone to tap into this opportunity, they must have sufficient capital. Most petty traders do not have adequate capital and can not turn to formal financial institutions because they do not meet current requirements to access credit.

However, my newfound friends have found a solution to this problem. They have developed a network of people who run similar businesses within Owino, and rely on people in these networks to extend quick credit to each other in times of deficits.

Read the rest of this post at our AppLab blog >>