Dear Bono....

In September of 2008, two entirely separate events took place which would inevitably share an extraordinary connection. The first spawned from repercussions in 2007 where United States investors lost confidence in securitized mortgages. A liquidity disaster occurred, in turn triggering the beginning of a debilitating global economic crisis. Stock markets all over the world crashed, requiring an exorbitant injection of funds to be contributed by the European Central Bank, United States Federal Reserve and Bank of England into financial markets. It would be an event which would affect everyone from middle class income earners to CEOs and shareholders of multi-billion dollar corporations. It would affect small business, big business, consumer spending and advertising dollars in newspapers, radio and television. There would even need to be millions of dollars pumped into advertising campaigns to encourage advertisers just to start advertising again. The irony seemed to be so thick you could choke on it.

The second event to take place that same September was the release of film director Danny Boyle’s Oscar-winning motion picture Slumdog Millionaire, which slashed its way into the mainstream with an uplifting story hidden buried in the milieu of destitution and despair of a group of orphans living in the slums of Mumbai. In a time when the results from good deeds carried out by humankind in relation to climate change had proved to be infuriatingly sluggish to say the least, the once fashionable political issue of extreme poverty could be refreshingly revisited. Impatient do-gooders switching off their lights during Earth Hour and riding their bikes to work one day a week were reminded of the fine mess our planet was undergoing right now in the hungry parts of the world we associated with at dinnertime when they called us to ask if we wanted to change phone plans.

As if it were a cruel joke from God, in the same year that more movie-goers had decided to donate money to the orphanages of India; sponsor children in third world countries; volunteer in the most remote villages throughout the world; and take an active role in throwing their support behind helping their fellow man after watching this film – trillions and trillions and trillions of dollars, pounds, euros, yen, gold bullion, poker chips and Pieces of Eight from the pirates of the deepest, darkest seas of the Caribbean had evaporated from the global economy. No one was spared and the Millennium Development Goals had become as much of a priority as signing up for cable TV or finally getting around to renovating the kitchen.

The World Bank stated that 129 developing countries faced a financial shortfall of $US700 billion for 2009, and warned that international institutions would be unable to fill the gap by themselves. Private sector creditors rejected emerging markets with only a quarter of the most vulnerable countries having the resources to prevent a rise in poverty. This had meant an extra 90 million people would remain in extreme poverty for 2009 with the chronically hungry topping over a billion. In other words, with every step forward in the global effort to alleviate worldwide famine, the financial crisis had meant the entire crusade taking two steps back.

In April, 2009, The Global Monitoring Report, A Development Emergency, indicated that the 2015 Millennium Development Goals were unlikely to be met. The report said efforts to cut poverty and hunger levels by half between 1990 and 2015 started off well, especially with the economic growth in India and China, but were now at risk with overseas markets drying up, and foreign investment coming under pressure. Before the sharp rise in food prices in 2007 about 850 million people suffered from chronic hunger which rose to 960 million in 2008 and was predicted to top more than a billion by the end of 2009.

African countries were among the most vulnerable in the global economic crisis which had seen investment and credit flows slashed, resulting in development gains and the prospects of poverty reduction in jeopardy. Head of the African Development Bank, Donald Kaberuka, warned that Africa would pick up even slower than other regions when the crisis had finally eased as it was not tightly integrated into the global financial system. But the crisis had hit investment immediately while credit flows had almost totally dried up. The IMF forecasted growth in Africa to plunge to 2 per cent in 2009 from 5.25 per cent in 2008 as exports slumped and investment flows shrank. The developing world was now in worse shape than it was in 2000 when the participating nations at the Millennium Summit formulated the 30-year target.

The IMF-World Bank said member states needed to meet pledges, including commitments made at the London Group of 20 developed and developing countries summit on April 2, to boost resources available for states struggling to cope. As a result of the crisis, The World Bank launched a $US55billion infrastructure investment program designed specifically to help developing countries weather the worst global slump in decades. At its launch World Bank President Robert Zoellick urged the developed world to contribute some of it economic stimulus packages to those that could not afford multibillion-dollar bail-outs.

Administrations with conservative credit ratings were borrowing money to spend on economic stimulus packages while the nations without thumbs from having previously been snapped off by loan-sharks were left to watch their economies become further and further in the red. But there was sufficient rhetoric being waved about by the World Bank to at least simulate words of wisdom to complement its noble program.

Unfortunately the ramifications from the biggest economic crisis since the Great Depression were all too predictable. The majority of reports in the media would encompass how specific countries dealt with the various industries and departments affected by the anticipated period of recession. Then there was the small percentage of news stories covering the much lesser story of (a) the underdog nations affected by recession; (b) the tragedy of their dire situation compared to more developed nations; followed by (c) the charitable solution from The World Bank or other worldly authority. It is part (c) of this story which is where the world’s media consumers breathe a heavy sigh of relief that something is being done for the poor, allowing them to go back to their lives and deal with their own financial concerns.

It is these smaller stories which outline partial neglect and little support from the developed world that is much more dangerous than if the world’s poor was receiving zero support and total neglect. As long as the people reading the newspapers and watching the news are informed that something, no matter how little, is being done about the world’s poorest countries, then that is enough for their consciences to ease leaving charity to the business of others. The worst thing that can happen to extreme poverty is for the middle class people of the first world to believe they have it nearly as tough. There is no similarity between having to tighten one’s belt and living under extreme poverty conditions. And the answer in the end might be, dramatically, an end to charity.

Anglican priest and social entrepreneur Nic Frances is an extraordinary human being who thinks outside the box when it comes to his analysis of charity. Anyone who can combine religion with creativity in the business world to achieve practical results among philanthropic ventures warrants the privilege of having people listen to what they have to say. His take on both the domestic and global systems of welfare is unorthodox to say the least, envisioning a world without charity as the inevitable answer to non-profit organizations’ continual dependence on unreliable handouts. In his book, The End of Charity, Frances discusses ways in which money and value can be redefined. He explores the value of non-tangible entities that are never estimated such as poverty or homelessness and correlates them within the principles of social enterprise. Frances states:

"Social business is about using market values: identifying a problem, understanding the costs and the benefits of both the problem and the solution, and selling the benefits at a greater value than the costs. If you can get that mix right, and there is a profit margin, entrepreneurs will come in and fill that market gap. The problem will be addressed and eventually solved. When entrepreneurs or businesses use market forces to deliver goals of social or environmental change that is social business. If fundamental and lasting change is to occur in the areas traditionally occupied by charities it will be done within the structure and dynamics of markets. Charity will always be a marginal activity; it will have to badger, beg or borrow in order to survive and further its agenda. Charities may argue that a for-profit model is not appropriate when you’re trying to achieve something as vital as the eradication of AIDS. But I believe packaging the solution to a particular problem as a product or a service and then offering it to customers is the most efficient way to effect change." (The End of Charity; Frances N; Allen & Unwin; p57)

Therefore, what Frances gets at is aiming for a future where charities branch out into private enterprise. His vision illustrates non-profit organizations such as Oxfam, The Cancer Council, SIDS 4 Kids and the Starlight Foundation investing in markets linked to its founding objectives in order to boost profit margins traditionally gained by donations and fundraisers. The end result looks something along the lines of turning charities into for-profit enterprises and commercial enterprises into partners of credible and trustworthy charities. Frances uses the Ronald McDonald Children’s Charities institute as a perfect example of a not-for-profit organization separate to McDonald’s restaurants, having formed a partnership with McDonald’s with the objective to make money from the corporate giant, in return for supplying McDonald’s restaurants the reputation of being an upright and respectable business.

In a period of economic turmoil and global recession, there appears to be no time like the present to introduce Frances’ system of merging charity and commercial viability. Frances coins the term ‘spirited sustainability’ to best describe ways of working towards the target of creating a sustainable future and implementing decision-making based on social values and placing monetary value on things like the price we would each be willing to pay, to live in a world without extreme poverty. Frances even goes as far as to say that the media can help lobby this structure in the same way it lobbied climate change as an issue for concern if we wanted our grandchildren to have a similar planet to the one we have now.

Although this book is reluctant to provide the media with much praise, Frances addresses the media’s effort as a triumph in winning over public perception of what is a serious problem. My motivation for including it here is to reinforce his opinion of the power of the media:

"The media have finally embraced global warming as an issue to be campaigned on in terms of the future of the planet. It’s in this context that one can truly say there is now an opportunity to align the values of government in a way that could allow markets to work, operate and succeed, and therefore deliver change on this issue. The issue of climate change and global warming has now gathered momentum to the extent that it can no longer be ignored (although in the US concern is still nowhere near as widespread as in the rest of the world). While there is a desire for carbon emission reduction and other strategies to ameliorate the effects of global warming, there is confusion about how to achieve the necessary change. Social business and social entrepreneurs can provide models and solutions using existing market structures. Traditionally, commercial enterprises have not been concerned with delivering social or environmental change. Yet the market is the only mechanism that can deliver the scale of change needed at the pace required in this area." (The End of Charity; Frances N; Allen & Unwin; p 126)

There’s something about a clergyman talking market structures that fills me with an invigorating sense of exhilaration. There are several other entrepreneurs with individual ideas on how to alleviate extreme poverty through various business strategies. American psychiatrist and social entrepreneur Paul Polak also agrees development organisations need to work on their profitability portfolio. Polak founded International Development Enterprises in 1981 and these days, spends his time formulating practical solutions to assist in the eradication of poverty. But Polak’s distinctive ideas have never been more appropriate than now in a time of global economic uncertainty.

While Frances’ suggestions to alleviate poverty lie in revolutionizing the non-profit organization, to quit being the weak and passive-aggressive charities, an quit having to beg in order to stay afloat; Polak leans more towards the charity needing to build entrepreneurial skills in order to teach others to make the money. In his book Out of Poverty: What works when traditional approaches fail, Polak writes:

"From grassroots village organizations in India, with budgets of a few hundred dollars, to giant international organisations such as World Vision, with an annual budget of $1.1 billion, there are thousands of development organisations in the world working on poverty issues. Their main shortcoming is that few of them know anything much about how to make money, and they have little or no motivation to learn how to do so. The problem with this is that helping poor people to make money is the single most important thing anyone can do to end poverty." (Out of Poverty; Polak P; Berrett Koehler Publishers; p195)

Again we come back to sustainability as being paramount in the struggle to help the poor. The moral to the story behind any philanthropist’s endeavour to end extreme poverty appears to be that any sort of money that comes from foreign aid; charities; donations; government programs; Gross National Product; fundraising; or not-for-profit organisations will unavoidably be useless if that money does not finance the education and infrastructure that contributes towards enhancing self-sustainability. But it is important not to forget that the most convenient relief to the public’s guilty consciences is awareness that handouts are not the solution. The mere knowledge that ‘things are not that simple’ boosts complacency and feeds superficial beliefs; beliefs that there is no solution, therefore, we have to worry about something else.

One of the most frustrating realities is that the economies of poverty-stricken India and China looked to be mildly on the way up prior to the financial meltdown. Textile manufacturing for instance was a prime example of an industry that benefited millions of Indians to climb their way from the bottom rung of Jeffrey Sachs’ ladder of self-sustainability. After agriculture, textiles is India’s second largest resource for employment, providing jobs for close to 40 million people. Workers in the textile belt of Tamil Nadu in Southern India saw their incomes plummet from $9.50 to approximately $1.50 a day, as factories hit by declining exports and tight credit cut production were forced to reduce payrolls and close down.

From 2004-2007 textile production grew an average of 9.4 per cent a year and then slipped to 4.9 per cent when stock markets crashed in America, resulting in shoppers decreasing their spending. India could not compete with China, which accounted for 35.9 per cent of US textile imports compared with India’s 5.4 percent. From September 2008, 27 of India’s largest textile companies reported an aggregate loss of $14.8 million, compared to a profit of $43.1 million in the same period in 2007. Consequently, India is moving backwards, heading towards its all too familiar position of being knee-deep in debt.

As the global financial crisis has hurt the western world’s middle income earners’ ability to purchase their first home or buy their groceries at a reasonable price, its affect on those living on a dollar a day has been deadly. The ongoing reminder in this book that 25,000 people die each day from extreme poverty has only ever been an average. Some government bureaucrats estimate the figure to be closer to 20,000 where various UN statistics and NGOs approximate between 30,000 and 35,000. However, this global economic crisis has added an extra 2,000 to 4,000 people each day. If we average this figure again, an extra 3,000 people dying each day is a number similar to the body count at the World Trade Centre terrorist attacks in 2001. Yet there are no news stories mourning this actuality as there were none prior to the global markets collapse.

A few news stories which have surfaced pertaining to poverty have revealed even further impairment on its way to our poorer countries. In the first half of 2009, richer countries were seen opting to save their own skin instead of getting behind the underdog in what was a time of sheer desperation. New Zealand for instance made no secret about their decision to pull out altogether of the 0.7 per cent obligation of Gross National Product for overseas aid promised at the Millennium Summit. What was intended to be a 30-year pledge will now be re-evaluated in 2013 and will indicate approximately NZ$194 million stripped from United Nations poverty funds, contributing to the 25,000 daily death tally to increase even further.

In the Philippines, government ministers and national banking executives called on the Millennium Development targets to be adjusted to accommodate the current economic climate. But the Philippines have their own domestic targets to meet, having aimed at reducing families living in poverty from a rate of 26.9 per cent, measured in 2006, to a figure less than 20 per cent by 2010. However, the repercussions of international markets in conjunction with a steady population increase have meant the Philippines will most likely exceed even its 2006 poverty levels. With the country’s population growing faster than its economy, per capital income has been inexorably reduced.

Syria also experienced discouraging results six months into the global crisis. At its annual economic forum in Damascus, an economist evaluated the success of Syria’s current economic plan which was anticipated to be good news for the poor. However, results demonstrated a vast increase in extreme poverty as a result of inflated food prices. Therefore, the Arab state’s economic plan failed to meet its target to reduce extreme poverty by 8.7 per cent and general poverty by 23 per cent by 2010.

The third world Republic of Zambia was also looking forward to a life without poverty in 2015 but was made to sit down and brace itself in May of 2009 when the Civil Society for Poverty Reductions had to break the news that Zambia would not be poverty-free as was aspired by the targets proposed in the Millennium Development Goals. According to the society’s Information Management and Networking Officer Patrick Nsindano, there had been an "insufficient effort by all stakeholders to eradicate poverty at a household level". Nsindano stated that the government should be ensuring all corporate investment into Zambia should adopt a sense of social responsibility as it was the only way to help poor communities.

Nsindano said six years prior to 2015, stakeholders had done next to nothing in addressing the high poverty levels which are most prominent in rural areas. He also attributed the rising prices of food and job cuts in Zambia contributed to a negative impact on the efforts which were aimed at increasing the number of people having three meals a day. His suggestion to get the program back on track rested in the government’s need to revise the nation’s Fertilizer Support Programme, in turn, enhancing the food security situation and tackling high food prices. Nsindano emphasized that Zambia had the potential to grow enough food to feed the whole of southern Africa and supporting enhanced food production and the distributions of food security packs to vulnerable groups, would help ease hunger.

Therefore, there will never be any light at the end of any tunnel unless self-sustainability is treated as central to developing economies, especially in rural areas. What Frances was talking about was the vast difference between monetary value and infrastructure cost and the situation in Zambia is a good example of this sort of comparison. The networking officer was talking about further subsidizing the cost of fertilizer as a way of helping alleviate the hardship experienced by farmers. Fertilizer is a mixture of chemical compounds which can either be organic or inorganic. Organic fertilizer consists mostly of manure. Manure is a compound which consists of mainly animal excrement and straw. Animal excrement and straw tend to be disposable scraps found in the first world which no one wants. Hence, the Zambian government are stressing over subsidizing vital resources for the third world that people in the first world wouldn’t even want to step in. This cultural difference is also a significant economic difference.

But these were desperate words from the African bureaucrat. The global financial crisis meant life was going back to an ‘every man for himself’ mentality for the humanitarian world. UN signatories of the Millennium Development Goals were backing out of their foreign aid promises and announcing it. Usually they would just fail to meet their pledges and not say anything hoping no one would notice – but actually announcing they would not be attributing their 0.7 per cent meant these were definitely troubling times indeed.

The Asian Development Bank’s (ADB) solution to extreme poverty taking a backseat during the global financial crisis was to establish a $AUS4.14 billion fund to boost developing member countries’ fiscal spending capacity. ADB President Haruhiko Kuroda announced in April 2009 plans for the new facility at the bank’s annual meeting in Bali, saying it would provide short-term loans more quickly and more cheaply than existing programs. Mr Kuroda said the emergency loans would protect the poor from the worst impacts of the crisis. The bank also revealed plans to increase its overall lending assistance by more than $A13.79 billion in 2009-2010 bringing a total of ADB assistance during the year to about $A44.13 billion.

Such a solution however, is only another temporary fix to our planet’s poorest of the poor. While it is good to see heads of nations thinking laterally, third world countries finding themselves in more debt will only mean the need for them to have to pay off more debt. Meanwhile, desperate administrations manifest desperate people. In Australia, Deakin University has predicted the global economic crisis will bring more asylum seekers to our shores. Academic Jonathan Ritchie said rich countries should increase their overseas aid budgets if they want to stop a fresh influx of asylum arrivals. He said economic factors will push more people to flee developing countries for more stable economies.

"The collapsing world economy, with its dire consequences especially for developing countries, will see more and more people taking a chance on a better life in rich nations like Australia, even at the risk of terrible incidents like the SIEV 36 explosion." (ABC News Online, June 5, 2009).

Yesterday authorities intercepted a boat carrying around 50 asylum seekers off the coast of Western Australia, the 11th such boatload to reach Australian waters since the start of the year. Ritchie said there was a risk that commitments like the G20’s Millennium Development Goals, which aimed to halve the number of people living in extreme poverty by 2015, may be swept under the rug because of the global economic crisis. Ritchie also said it would be dangerous to ignore measures to increase foreign aid. He also acknowledged that a proposal created by Nobel Prize winning economist Sir James Mirrlees and philanthropist Renu Mehta, could be implemented as a simple start to the added boost the developing world needs. The proposal outlined a private-public partnership with the Federal Government matching donations made by individuals and businesses to projects like the Millennium Development Goals.

The problem with these individual proposals and suggestions is that very few of them are actually employed. The biggest problem the financial crisis has brought upon us is erasing all the work which had been done since 2000. Extreme poverty is even further out of the public spotlight now and has been moved back behind other newer global issues that affect us all gravely. Climate change, financial turmoil, obesity and oil prices are all competing with the old new extreme poverty maintains. In order to spark interest again in the ‘great cause’ that is third world famine, we need to re-tell its story.