“If you look across the globe, there are severe inequalities in how people access and use finance.”
As director of the Global Financial Inclusion Initiative at Yale University and Innovations for Poverty Action, Aishwarya Ratan’s goal is to ensure that the financial products, services and tools available to the poor to manage and grow their money are affordable, efficient, secure and welfare-enhancing.
“There are some problems that we can solve. But we have to be pragmatic about it and figure out what is actually working and what is not.”
Dean Karlan is President of Innovations for Poverty Action, a non-profit organization that creates and evaluates solutions to social and development problems, and works to scale-up successful ideas through implementation and dissemination to policymakers, practitioners, investors and donors. He is a Professor of Economics at Yale University.
There’s always something brewing in the PopTech community. From the world-changing people, projects and ideas in our network, a handful of this week’s highlights follows.
- At PopTech 2011, Amy Cuddy revealed that we can actually change feelings we have about our own status through the physical positions we take with our bodies. Her research participants had higher levels of testosterone and lower levels of cortisol after only two minutes in a “power pose”. Cuddy is profiled in this week’s issue of Time Magazine as a game changer who is inspiring change in America. Go go Power Poses!
- ZanaAfrica, founded by 2011 Social Innovation Fellow Megan Mukuria, empowers Kenyan girls to break cycles of poverty through simple, sustainable solutions. With sanitary pads and health education, girls can stay in school with confidence. To tell this story, ZanaAfrica teamed up with longtime PopTech collaborator Peter Durand of Alphachimp Studio to make an animated promotional video.
- Kopo Kopo, founded by 2010 Social Innovation Fellow Ben Lyon, helps Kenyans pay by mobile phone with mobile money. Kopo Kopo provides a web-based application (accessible by PC and Android) that enables small- and medium-sized businesses to accept and track purchases made with mobile money.
The elephant in the room is the question: If microfinance doesn’t accomplish anything positive, then why are 128 million poor families busy taking loans? Should we assume that poor people simply don’t know what’s in their best interest? Or do we need to look more deeply into the way poor people survive?
That’s what a number of creative researchers are doing today. One example is the collaboration between Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven that culminated in the excellent book “Portfolios of the Poor: How the World’s Poor Live on $2 a Day.” The book takes a penetrating look into 300 poor families in Bangladesh, South Africa, and India, with interviews conducted every two weeks to track expenses, earnings and cash flow at a granular level. What the researchers found was striking, and it gets to the question of what it really means for most people to be poor: to live with perpetual uncertainty.
“What the research taught us is that the problem of living on $1 or $2 a day is that you don’t actually earn $1 or $2 every day,” explained Jonathan Morduch. “That’s just an average. Some days you receive $5 and then nothing for two weeks. Life is unreliable. So the challenge for the poor is that you need to put together the right sums to deal with the right challenges in life. And what we saw microfinance was doing for people was offering them a reliable source of money. With microfinance, you get a sum of money that’s promised on the day it’s promised in the amount that’s promised. It’s often the only reliable service that poor people have — and that’s incredibly powerful.”
For more on $2 a day living, watch Daryl Collins’ 2010 PopTech talk.