End poverty in all its forms everywhere
Poverty exists everywhere, and that’s where the first UN Global Goal wants to end it – all over the world. Digital transformation has the incredible potential to cure intractable diseases, ensure sustainable consumption and production, and equip people with the knowledge and skills to improve their lives. By managing the shape of digital transformation, we can ensure the end of poverty – all over the world – once and for all.
The cost of an iPhone would lift one person out of extreme poverty for almost two years. About 8.6% of people worldwide live with their families on less than US$1.90 per person per day, according to the latest estimates by the World Bank. Few of us can fathom what that life would be like. Four college friends – Chris Temple, Zach Ingrasci, Sean Leonard, and Ryan Christofferson – chose to live in rural Guatemala one summer break. Their award-winning documentary, “Living on One Dollar”, gives us a small taste of poverty’s harsh reality.
While rates of extreme poverty have declined substantially, falling from 36% in 1990, the 2018 “Piecing Together the Poverty Puzzle” report from the World Bank demonstrates the magnitude of the challenge of eradicating it. In 2015, over 1.9 billion people, or 26.2% of the world’s population, were living on less than $3.20 per day. Close to 46% of the world’s population was living on less than $5.50 a day.
Yet, with the COVID-19 crisis as well as the oil price drop, poverty is on the rise again in 2020. There will be a disproportionate impact on the poor due to job loss, loss of remittances, rising prices, and disruptions in services such as education and health care because of COVID-19. Poverty rates will go up for the first time since 1998 as the global economy falls into recession. All progress that has been made in the last five years is at risk to be erased by the ongoing crisis. The World Bank estimates that as a result of COVID-19 and depending on assumptions of the magnitude of the economic shock, 40 million to 60 million people will fall into extreme poverty (under $1.90/day) in 2020. The global extreme poverty rate could rise by 0.3 to 0.7 percentage points, to around 9 percent in 2020.
The economic transformation of the Industrial Revolution led to a higher standard of living for most. People from rural areas living in abject poverty moved to cities in droves to find work in factories that were started by entrepreneurs and fueled by innovation. Over time, the quality of everyone’s life improved.
Can we replicate the success of Europe and North America in the 19th century, and more recently of China in the 20th century, with an entrepreneurial awakening for hundreds of millions stuck in extreme poverty?
“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” Microfinance a man who fishes and you lift him out of poverty.
According to the World Bank, more than 1.7 billion people lack access to simple financial tools, such as bank accounts and loans. Experts recognize that financial services are crucial to ending poverty. Many poor people have the desire and knowledge to “fish” for themselves, but without even basic financial tools, they lack the tiny amount of capital needed to turn their dream into reality.
Accessing financial services is a major barrier for many of the poorest because banks rarely build branches in slums or remote rural villages. Up until now, doing so has been cost-prohibitive, but this is changing. The widespread availability and use of mobile phones among the poor together with mobile financial services offered by institutions such as UBank and Standard Bank, creates new and improved opportunities for everyone.
Poverty exists everywhere, and that’s where the UN Global Goal wants to end it – all over the world. In 2018, about 11.8% of the U.S. population lived below the poverty line. Even people who are gainfully employed live impoverished lives. In fact, with a minimum hourly wage of US$7.25 in most U.S. states, a family of three with one adult working 40 hours per week at minimum wage is officially poor. The situation in Europe is not any better.
Earnings for the average worker have been declining for decades, eroding the middle class around the world. Some worry that artificial intelligence and, more broadly, digital transformation may be the next major revolution to displace workers worldwide. Following on globalization, information technology, and mechanization before that. It’s not only lower-wage factory workers at risk but doctors and researchers as well. It’s not only friends and family but you and me.
Digital transformation has the incredible potential to cure intractable diseases, ensure sustainable consumption and production, and equip people with the knowledge and skills to improve their lot in life. But digital technologies will require social, political, and economic transformation as well, if we are to elevate people’s lives.
By managing the shape of digital transformation, we can make everyone better off; the future of work – and the end of poverty – depends on it.