What We’ve Been Reading: February 14th, 2014

Good news prevails this week on What We’ve Been Reading! Ethiopia’s latest data on its GDP and economic growth are incredibly promising for the future of the country. For the 2012-2013 fiscal year, the Ethiopian economy grew by an impressive 7.5%, which is greater than the average growth of sub-Saharan African economies of 4.9%. In fact, the 7.5% growth in Ethiopia is considered a weak performance for the country, since World Bank data indicates that economic growth has been consistently increasing at 10.6% in the last decade. Often used as an example of a country with debilitating poverty, Ethiopia proves that the struggles of the 1980s and 1990s can be overcome with a focus on economic expansion and investment in the industrial and services sectors. Furthermore, Ethiopia’s economic growth has directly affected the amount of poverty in the country. In the last decade, the number of people living under extreme poverty in Ethiopia reduced by 12%, from 38.7% of the population to 26.9% of the population. While over a quarter of the population is still affected by extreme poverty, the actions that the Ethiopian government is taking to address the problem are a step forward from a decade ago.

Speaking of poverty alleviation, microfinance organizations are also doing their part to increase financial inclusion, economic growth, and decrease poverty around the world. Lyndsey Gilpin wrote a great article for those new to the microfinance realm to understand the variety of ways organizations like Grameen Foundation and Bankers without Borders can help impoverished peoples. Starting off with a quick history of microfinance and the creation of the Grameen Bank by Muhammad Yunus, the article delves deeper into what is making microfinance more accessible and useful around the world—technology. Mobile technology and the wireless internet have made accessing banking system and payment channels much easier for those who live in rural areas and do not have physical access to financial institutions. Mobile phones in particular have become incredibly popular as a method of payment, with 68% of Kenyans having sent of received money through the phone. In addition to technology, microfinance organizations put an emphasis on having women participate in the program, empowering them to create change in their own family and community, which consequently improves economies. With the average payback rate of 97%, it is no surprise that microfinance is becoming a popular tool for poor people to pull themselves out of poverty.

From the government taking actions to grow the economy in Ethiopia to independent NGOs like microfinance institutions taking measures to alleviate poverty, it seems that all levels of society are involved in the fight to eliminate poverty. Individuals are also starting movements and companies to improve the lives of those in developing countries; the young social entrepreneurs of the millennial generation are creating a buzz with their focus on not only creating a profitable business, but also ensuring a sustainable product and model that can improve the lives of poor people. Several entrepreneurs are mentioned in this article, including Josh Nesbit, founder of Medic Mobile, which uses mobile phones to connect those in the developing world with remote medical professionals in case of emergency. Sangu Delle is another social entrepreneur who co-founded Golden Palm Investments, which invests in early stage venture and growth financing all across Africa, in hopes of fostering healthcare and agribusiness companies in the continent. Another individual improving the lives of impoverished families is Ajaita Shah, founder of Frontier Markets, which is a rural marketing, sales, and distribution company that provides affordable consumer products to low-income families in India. Many other social entrepreneurs are highlighted in the article, all of whom want to create some sort of social change in the world. These representatives of the millennial generation are hopeful reminders that the upcoming leaders of the world have social change and the plights of those in poverty in mind.