THE POVERTY PROBLEM
The World’s Working Poor
Nearly one half of the world’s population lives on $2 a day or less, often unable to meet even their most basic human needs. The majority of these poorest are women and children. Malnutrition, lack of healthcare, substandard housing, and illiteracy result in desperation, disease, and daily suffering.
Lacking stable job opportunities, the world’s poor are largely self-employed. Their unpredictable day-to-day existence forms a vicious cycle of poverty that leaves little room for hope or opportunity. When proper nutrition or healthcare is out of reach, children grow up at greater risk of contracting life-threatening or disabling diseases. If a family can’t afford to educate their children, they have few avenues for a better life than that of their parents. And if a mother can’t afford to buy property or livestock, there are few opportunities for her to build assets that will last over time.
What’s Holding Them Back?
Beyond obvious employment challenges, the vast majority of the world’s poor have no real access to the financial products and services that help those in the developed world bridge the gap when times are tough.
Without life or health insurance, diseases and illness go untreated and the death of an income earner becomes a dramatic hardship for a family. Without access to loans or credit, shop owners can’t buy products in bulk and farmers can’t buy machinery—or even seeds—after a natural disaster or a poor yield the season before. Without access to savings accounts, money is hidden in walls or floorboards where it can be stolen or lost in a flood or fire.
In many cases, local money lenders are the only available source of capital. They provide loans to smooth incomes during rough times or to help individuals improve their small businesses, but they do so at exorbitant annual interest rates, often from 300 to 3,000 percent. Under this system, virtually all of a borrower’s financial gains are passed directly to the money lender. Individuals are unable to reap the rewards of their own hard work.
> Learn more about the causes and effects of poverty
