Primary problem is that poverty is not going to end by some poor people, in developing countries, opening a bank account. If merely opening a bank account would alleviate poverty, then there would be no poverty in the developed world at all. But, as you may know already, that's not the case. A walk in urban areas of any metropolitan city of the developed world; Paris, London, New York, Toronto, Vancouver, Los Angeles, Chicago, Frankfurt etc., will show poor people, & the rising poverty, out in the open.
Alleviating poverty requires a much deeper, multi-faceted, radical approach. It will not happen overnight. It may take a generation or two. Social inequality requires a lot more work & participation of other social classes than merely opening a bank account.
For instance, cost of living in the developed world is constantly rising. Affordable housing in major cities from Paris & Frankfurt to Toronto & Vancouver to New York & Los Angeles is reaching out of hand of poor people. All of their other living expenses, i.e. food & utilities, keep rising, too. But, their salaries or wages are not keeping pace. Many are working in low-wage jobs, i.e. in service industry (restaurants, hotels) or retail industry, where minimum wages are way below to a level, which is understood to be required to sustain a living.
So those people are falling below the poverty line & are being classified as poor. They all have the bank accounts, & are actively using those accounts, too, but they are no use against the forces forcing these people pushing them in poverty. Capitalism, without any ethics or morals, are letting the rich get richer, at the brutal expense of making the masses further poor.
Rich keep finding ingenious ways to keep their money in their hands, for instance, loopholes in tax dodging & labour market, or greasing the political wheels with thick wads of cash, while, downloading all the expenses of government social services, infrastructure, education, healthcare etc. on to the poor masses. When the poor masses are getting a meagre salary, from which, they also have to pay rising taxes, education fees, medical bills, rising rents, increasing food prices etc., then how will they ever rise out of poverty?
Opening a bank account may help an abject poor farmer in Uganda to, perhaps, become more effective & efficient in conducting financial transactions, but it won't help alleviate poverty or eliminate social & financial inequality for billions around the world.
---------------------------------------------------------------------------------
Chabruma Luhwavi, a Tanzanian merchant, used to end his working day fearing thieves would rob him of his earnings as he drove home through Dar Es Salaam’s dark streets. But that fear vanished once he opened a bank account for his business, which he accesses through his mobile phone.
...
Chabruma’s story is one example of how hundreds of millions of people around the globe are joining the financial system. Put simply, they are getting some type of account in which they can deposit, manage & save their hard-earned money.
Why is that important? Access to banking services – called “financial inclusion” – is increasingly held up as a key tool for pulling the world’s poor from poverty. Without an account, it’s a lot harder to save money, pay bills, receive wages, or operate a business.
In 2014, in partnership with the Bill & Melinda Gates Foundation & Gallup, we set off on a year-long journey to the heart of the debate on banking & poverty reduction.
We had a long list of questions. How many people around the world own a bank account? How does account ownership vary across gender & income groups? And, perhaps most importantly, are people actually using their accounts – &, if so, how?
Which brings us to today: we recently announced our findings with the Global Findex database, based on interviews with 150,000 adults in more than 140 economies – & there’s plenty to celebrate.
Worldwide, 62% of adults now have an account at a formal financial institution (such as a bank) or a mobile money account, up from 51% in 2011, when we launched the Global Findex. The number of adults struggling to get by without an account fell by 20%, to 2 billion.
Yet we found account ownership doesn’t easily lead to use. Look at India. Under an ambitious new programme, we discovered 125 million new bank account owners there. Account ownership has nearly doubled since 2011; but 43% of them have gone unused for a year. The same is true for one-fifth of all accounts in the emerging world.
Our journey taught us that the poverty-reduction potential of account ownership flourishes when people use their account to save money or send & receive payments. Your account can’t pull you out of poverty – unless you put it to work.
For women, owning an account is doubly important. It means privacy & control over their money & how it is spent. Research shows that giving women their own account increases household spending on food, education, & other necessities – which also means less money squandered by irresponsible family members.
To pay school fees, women, especially, often must travel to the school & take time off from work, thereby losing wages. Children can be barred from class until their mother pays up. Digital payments from an account eliminate these costs. But in developing nations, more than 500 million adults with an account pay school fees in cash.
Using an account to save can also help people weather an emergency such as a job loss or health crisis. In China, more than 40% of adults & in Indonesia, 70%, save at a bank or another financial institution. But fewer than 20% of adults in other developing regions save at a bank or financial institutions – instead, storing their money in their home for the future or for emergencies or as assets, such as gold or livestock, that can be lost or stolen.
The benefits from account ownership are reflected in instances of high account use across emerging economies. In Latin America, 40% of accounts are used to receive wages or government social benefits. More than a quarter of farmers in Kenya & Tanzania receive payment for the sale of their agricultural products directly to an account. Individuals are also using accounts to share money. In Sub-Saharan Africa, more than half of account holders use their accounts to send or receive funds to friends or relatives who live far away. Keeping funds in an account is safer than keeping the money under a mattress.
Our Global Findex database points to a number of opportunities for businesses & governments to help people get more out of their accounts. As financial inclusion takes centre stage in the poverty reduction agenda, international development agencies should focus not only on expanding account ownership, but on improving account use as well.
Leora Klapper is a lead economist at the Development Research Group, World Bank, & one of the authors of the Global Findex 2014.
Alleviating poverty requires a much deeper, multi-faceted, radical approach. It will not happen overnight. It may take a generation or two. Social inequality requires a lot more work & participation of other social classes than merely opening a bank account.
For instance, cost of living in the developed world is constantly rising. Affordable housing in major cities from Paris & Frankfurt to Toronto & Vancouver to New York & Los Angeles is reaching out of hand of poor people. All of their other living expenses, i.e. food & utilities, keep rising, too. But, their salaries or wages are not keeping pace. Many are working in low-wage jobs, i.e. in service industry (restaurants, hotels) or retail industry, where minimum wages are way below to a level, which is understood to be required to sustain a living.
So those people are falling below the poverty line & are being classified as poor. They all have the bank accounts, & are actively using those accounts, too, but they are no use against the forces forcing these people pushing them in poverty. Capitalism, without any ethics or morals, are letting the rich get richer, at the brutal expense of making the masses further poor.
Rich keep finding ingenious ways to keep their money in their hands, for instance, loopholes in tax dodging & labour market, or greasing the political wheels with thick wads of cash, while, downloading all the expenses of government social services, infrastructure, education, healthcare etc. on to the poor masses. When the poor masses are getting a meagre salary, from which, they also have to pay rising taxes, education fees, medical bills, rising rents, increasing food prices etc., then how will they ever rise out of poverty?
Opening a bank account may help an abject poor farmer in Uganda to, perhaps, become more effective & efficient in conducting financial transactions, but it won't help alleviate poverty or eliminate social & financial inequality for billions around the world.
---------------------------------------------------------------------------------
Chabruma Luhwavi, a Tanzanian merchant, used to end his working day fearing thieves would rob him of his earnings as he drove home through Dar Es Salaam’s dark streets. But that fear vanished once he opened a bank account for his business, which he accesses through his mobile phone.
...
Chabruma’s story is one example of how hundreds of millions of people around the globe are joining the financial system. Put simply, they are getting some type of account in which they can deposit, manage & save their hard-earned money.
Why is that important? Access to banking services – called “financial inclusion” – is increasingly held up as a key tool for pulling the world’s poor from poverty. Without an account, it’s a lot harder to save money, pay bills, receive wages, or operate a business.
In 2014, in partnership with the Bill & Melinda Gates Foundation & Gallup, we set off on a year-long journey to the heart of the debate on banking & poverty reduction.
We had a long list of questions. How many people around the world own a bank account? How does account ownership vary across gender & income groups? And, perhaps most importantly, are people actually using their accounts – &, if so, how?
Which brings us to today: we recently announced our findings with the Global Findex database, based on interviews with 150,000 adults in more than 140 economies – & there’s plenty to celebrate.
Worldwide, 62% of adults now have an account at a formal financial institution (such as a bank) or a mobile money account, up from 51% in 2011, when we launched the Global Findex. The number of adults struggling to get by without an account fell by 20%, to 2 billion.
Yet we found account ownership doesn’t easily lead to use. Look at India. Under an ambitious new programme, we discovered 125 million new bank account owners there. Account ownership has nearly doubled since 2011; but 43% of them have gone unused for a year. The same is true for one-fifth of all accounts in the emerging world.
Our journey taught us that the poverty-reduction potential of account ownership flourishes when people use their account to save money or send & receive payments. Your account can’t pull you out of poverty – unless you put it to work.
For women, owning an account is doubly important. It means privacy & control over their money & how it is spent. Research shows that giving women their own account increases household spending on food, education, & other necessities – which also means less money squandered by irresponsible family members.
To pay school fees, women, especially, often must travel to the school & take time off from work, thereby losing wages. Children can be barred from class until their mother pays up. Digital payments from an account eliminate these costs. But in developing nations, more than 500 million adults with an account pay school fees in cash.
Using an account to save can also help people weather an emergency such as a job loss or health crisis. In China, more than 40% of adults & in Indonesia, 70%, save at a bank or another financial institution. But fewer than 20% of adults in other developing regions save at a bank or financial institutions – instead, storing their money in their home for the future or for emergencies or as assets, such as gold or livestock, that can be lost or stolen.
The benefits from account ownership are reflected in instances of high account use across emerging economies. In Latin America, 40% of accounts are used to receive wages or government social benefits. More than a quarter of farmers in Kenya & Tanzania receive payment for the sale of their agricultural products directly to an account. Individuals are also using accounts to share money. In Sub-Saharan Africa, more than half of account holders use their accounts to send or receive funds to friends or relatives who live far away. Keeping funds in an account is safer than keeping the money under a mattress.
Our Global Findex database points to a number of opportunities for businesses & governments to help people get more out of their accounts. As financial inclusion takes centre stage in the poverty reduction agenda, international development agencies should focus not only on expanding account ownership, but on improving account use as well.
Leora Klapper is a lead economist at the Development Research Group, World Bank, & one of the authors of the Global Findex 2014.
No comments:
Post a Comment