THE IMPROBABLE POVERTY RACE

Carolina Sanchez-Paramo said “Imagine you are in a race …. you realize that unless you make changes you are not only not going to win, but you risk not even completing the race”, https://blogs.worldbank.org/voices/countdown-2030-race-against-time-end-extreme-poverty#comment-175441. So, let’s imagine a race with competitors and spectators: who are they? The former are those in charge to implement the SDG and the latter are some two billion people sitting and watching. According to the Blog, the projections to 2030 aren’t encouraging and the Game’s Sponsors are going to launch a new Poverty and Shared Prosperity Report “Piercing together the Poverty Puzzle” https://www.worldbank.org/en/publication/poverty-and-shared-prosperity

Is this the representation of the situation? We aren’t sure; the matter isn’t whether or not the words Race and Puzzle are appropriate, although the terminology reveals the approach of the runners.

The matter is rather substantial, on the grounds that at stake there isn’t the winner’s reward, but the end of starving, frustration and dependent status.

Calling things by name, the competitors should be the Stakeholders. During the previous Millennium Development Goals - MDG 2000-2015 Games, the CGAP and other contestants ran with the Microfinance shirt, the populist movement promising the end of poverty with the slogan credit for everybody, which although being unreliable got the sponsorship. Presently the runners wear the FinTech shirt, the Technologists being the new Populists. https://www.dhirubhai.net/pulse/microfinance-technologists-establishment-phased-out-idea-graziosi/

During the MDG Game they didn’t win and currently the same racers are competing again. The above mentioned Blog analysed the situation and emphasised six broad policy actions that have proven to work across countries at various levels of development:

• Help the poor build assets such as real estate, small businesses, and the health and education that will enable them to be productive workers * * Create and increase access to inclusive markets *** Leverage technology to broaden the access to finance **** Build resilience to shocks ***** Involve the private sector in raising opportunities for the poor including improving the business climate for private sector growth and investment ****** Strengthen macroeconomic stability and debt management.

We do agree with above, but the runners do risk, again, to fail and (quote) “risk not even completing the race”. Why? Because, in our view, the Game is plaid by the same competitors, namely the Representatives of the Financial Establishment only, although the Viewers voiced out to have other Representatives of the Communities playing the Game.

Under the current state of affairs, the Financial Stakeholders are both organisers and competitors of the Game, BUT other Development Actors (representatives of entrepreneurs, private capitalists, investors and local communities should have a seat in both the Board Room and the Arena’s lane.

Since 2015 we have been working on above (see https://ascaniograziosi.net/blog/) and recently, we applied the theory of change to provide an answer and make it an equitable game.

We found out that the matter isn’t to change the rules of the finance game, but the approach to deal with investment financing. and worked out a (A) revised methodological approach accompanied by (B) practical actions to the field the operations.

-       Methodological Approach. We have worked out a Model aiming at promoting inclusive growth via business approach, which vision has been inspired by the UN 2030 Agenda for SDGs (Objective 1 (end Poverty in all its forms), Objective 8 (Promote inclusive and sustainable growth) and Objective 17 (Partnership). The Model has been proposed the first time four years ago in our eBook “FINANCIAL INCLUSION, which sub-title “give people a job, not a loan”, well synthetized the purpose to revise the approach in favour of poor people and business https://itunes.apple.com/us/book/id1116912686. Then, the concept has been elaborated with Moving from credit-based economy to Community-based economy, as a vehicle heading to: POVERTY – An Alternative Paradigm: https://www.morebooks.de/store/gb/book/poverty-an-alternative-paradigm/isbn/978-613-8-45817-3.

-       Practical Actions. The Inclusive Growth can be really achieved when, alternatively, two conditions are filled: (B1) The Representatives of all Stakeholders (Capitalists, Entrepreneurs, Communities) get involved in the strategic decisions joining development schemes (Case: IFC billion $ 2.0 Program for Mena Countries), (B2) Capitalists & Entrepreneurs & Investors decide to establish their own FUND for their own communities. 

In our perception of the market, Option (B 1) can’t be filled in a short run, because sharing power factor does matter, besides being a real revolution. Under the circumstances, the Option (B2) could be the feasible and viable solution.

In short, a practical way to translate above reasoning into practice can be done referring to the International Finance Corporation Program in the MENA Countries. As IFC stated, the aim of the interventions is to assist the private sector by providing a variegated range of financial resources to leverage the economies’ growth: https://www.cgiaglobal.com/world-banks-ifc-grow-mena-investments-2019/. 

Referring to it, the Institution could get into the scheme truly committed national investors & entrepreneurs and provide the seed capital (even a small slice of planned $ 2 billion) for setting up a National Fund in each Country of the some twenty from Iran to Morocco. - The approach can be applied by other Development Agencies and Regions as well, of course.

To get more and detailed evidence of the Model, readers can go through THE THEORY OF CHANGE APPLIED TO FINANCE FOR DEVELOPMENT https://reader.ilmiolibro.kataweb.it/v/1252660/the-theory-of-change-applied-to-finance-for-development_1268103. Some complimentary copies are available for CGAP and other Agencies, upon request ([email protected] ).

Ascanio Graziosi Owner, FINANCIAL INCLUSION BUSINESS PRACTICE, https://ascaniograziosi.net

Founder & Owner, Group INCLUSIVE GROWTH – SVILUPPO INCLUSIVO https://www.dhirubhai.net/groups/4682884

Authored: FINANCIAL INCLUSION, Give people a job not a loan, https://itunes.apple.com/us/book/id1116912686

The Gateway to Africa Inclusive Growth - JAMBO FUND” https://www.morebooks.de/store/gb/book/the-gateway-to-africa-inclusive-growth-jambo-fund/isbn/978-620-2-28375-5 

POVERTY – An Alternative Paradigm: MOVING FROM CREDIT-BASED ECONOMY to COMMUNITY BASED ECONOMY https://www.morebooks.de/store/gb/book/poverty-an-alternative-paradigm/isbn/978-613-8-45817-3