Jeffrey Sachs on Poverty, Stanford conference, and some cool innovations

Courtney

This past Friday Stanford Institute for Economic Policy Research (SIEPR) held a Reducing Global Poverty Conference. I was invited to speak on behalf of Wokai with two other women, Kjerstin Erickson who started Forge , and Abimbola Dairo who founded the African Business Forum. All of us spoke about why we started our organizations and the reason why we created them the way we did.

The keynote speaker at the conference was Jeffrey Sachs who is known to be one of the leading international economic advisors of his generation. He is dedicated to alleviating poverty as his book The End of Poverty and his work as the Director of the UN Milennium Project shows. Sachs' opening address left me with two take home thoughts:

1. China is not as poor as Africa. Sachs mentioned China 12 times in his speech and each time he did, it was highlighting how relatively "unpoor" China was. He even mentioned how "many of the village huts he visited in Ningxia province had TVs and running water."
2. If you design a poverty alleviation plan, make sure the plan is context specific. That does not mean that if a plan works in Africa, you can then take that to areas of Latin America and apply it.

A couple of thoughts on Mr.Sachs' points:

1. Largely China does not have the same dire poverty as is witnessed in Africa, but does that mean that China is not poor? Here are some statistics that would beg to differ: 800,000,000 people do not have adequate access to credit; 300,000,000 people live below the poverty line; 400 dollars is the annual income of a rural inhabitant; 41 is the percentage Gini Index income gap between the rich and poor; 20 percent of total population lives below the poverty line; 1 dollar per day is the amount a rural inhabitant survives on. The income gap between the rich and poor is a huge market imperfection. Wokai sees this as an injustice, just as dire poverty in Africa is an injustice.
2. I love this recommendation as it directly fits with what Wokai is doing. The problem is that the poor in China do not have access to credit to start a small business. The markets are there, but the credit is not. Therefore, one looks to see who is offering credit. The national banks are not. The commercial banks are not. And the Rural Credit Cooperatives (RCCs) - the main rural financial institution - definitely are not. So who is? Microfinance Institutions. The one looks to see what is hindering the growth of these institutions. The answer being a lack of funding within the institution and an underdevelopment of the sector as a whole. This is why we came up with Wokai - a multilevel approach to solving the problem in China. Wokai will provide access to funding (on the fundraising platform) and work to grow the entire microfinance ecosystem with information exchange ( on the information platform).

Aside from Mr.Sachs' speech, there were many other additional moving presentations. Jim Patell, a professor at Stanford, talked about his class"Entrepreneurial Design for Extreme Affordability" - where students build low-cost products to solve th challenges faced by the world's poor.  A reason to go to Stanford in itself! Whats really cool is that many of the students bring their products to market and some even go on to bring their products to larger end markets - outside those that they originally intended to assist. For example, Jane Chen created Embrace - a $25 portable incubator to prevent low-birth weight infant mortality. David Klaus invented a $30 pump to allow farmers in Myanmar to water their crops. The most well-known success story is D.Light Design that brings recharcheable LCD lights that lasts for hours to the poor. The founders obtained start-up funding from the venture capital industry to roll out their product to India on the large scale.

The conference was a motivation. I can't wait for the next one.

Comments

[Mark Straub]

Cool blog and project - Excited that there's finally a forum and an apex org for outsiders looking into microfinance in China. For over a year I've been wondering what was going on with Mic.Fin. in the Middle Kingdom. Can't wait to hear more!