Global poverty is a phenomenon that is experienced both in the developing and developed nations. Poverty rates, according to the World Bank, have in the past two years been on the decline and this is attributed to factors such as improving world economy and the reduction of unemployment rates in some of the countries. Impacts of extreme poverty include an increase in crime rates, high rates of disease infection and the drop in the GDP of countries. In the quest for solving global poverty, market-based solutions are the most ideal to be implemented. In this essay, the focus is directed on the application of market-based solutions in dealing with global poverty.
Global poverty is an issue that has a direct impact on the livelihood of people. In Kenya, living below $1 a day categorizes one into the realms of poverty. There are various factors contributing to an increase in poverty rates in Kenya and these include inadequate access to clean drinking water and nutritious foods, massive corruption, and embezzlement of funds by people in the government and leadership positions, never-ending conflicts and the aspect of inequality. Other factors that contribute to poverty include poor education, the limited capacity of the government that is in place and poor infrastructure (Hulme 33). Global poverty contributes to sluggishness or stagnation in the economic growth of countries, thus the need for the implementation of market-based solutions that will effectively deal with the issue. Market-based solutions are termed to as initiatives that are used in the expansion of the quality of economic opportunities for the marginalized population and ensuring that the persons engaged in the markets by addressing factors such as skills and assets.
Market-based solutions to tackle global poverty
According to the World Bank, despite the stagnations in the poverty rates around the world, failures to implement suitable measures to deal with the issue will have a negative impact on countries. Scholars argue that market-based solutions are the most appropriate for tackling the challenge of global poverty (Popper 67). Poverty is a complex problem and any solution that is implemented has to effectively and genuinely address all the causative factors. There are various measures related to market-based solutions that can be implanted in dealing with the problem of global poverty.
Firstly, advocating for self-employment and entrepreneurship among the marginalized groups in Kenya is among the steps that can be used in the eradication of global poverty. The governments in collaboration with the non-governmental agencies need to channel funds in those regions that are worst hit by poverty. The monies will be used in hiring experts that will raise awareness among the affected groups about various entrepreneurial activities that they need to put into consideration (Ortiz-Ospina and Roser). Moreover, the funds will serve as starting capital for businesses for the selected persons in the marginalized areas. The market-based approach will also provide the government with an opportunity to educate the people about the strategies that they need to embrace in meeting the needs of the consumers while at the same time cutting on costs (International Monetary Fund). Self-employment will be critical for the group in that it will boost their lifestyles. Application of the self-employment and entrepreneurship technique is a market-based solution that will play a major role in the eradication of global poverty.
Another market-based solution that needs to be implemented in dealing with global poverty entails involving financial institutions in the campaigns against the societal issue. Across the years, the target audience for banks has always been the rich and the middle class. The poor persons in the community are left marginalized and languishing in their poverty (Ojiaku, Nkamnebe and Nwaizugbo 59). Financial institutions need to create programs that will target the poor people in the communities in Kenya. A digital platform will have to be implemented by the financial organizations that will allow for the individuals in the poverty-stricken areas to be registered as members. The members will be allocated funds in the form of loans payable within a long-term framework to be used in setting up their businesses (Ojiaku, Nkamnebe and Nwaizugbo 56). Additionally, the financial institutions will be on the frontline in raising awareness on the groups about the approaches to be used in ensuring that the various entrepreneurial activities that are embraced by the individuals are a success. The banks and micro-financial institutions will urge the people in the marginalized areas to open saving accounts with them, thus incorporating a saving culture among the people (Kritzinger 17). In the long-run, the decision by the financial service institutions to invest in those areas that are poverty stricken will not only be beneficial to the banks and micro-financial institutions but also improve the livelihoods of people by lowering unemployment and poverty rates.
The fiscal and monetary policies that are implemented within a country can also fall under market-based solutions that are aimed at eradicating global poverty. The Central Bank or Federal Reserve for any country is tasked with the role of implementing monetary policies that drives a country’s economy (Grochulski and Zhang 358). A nation that is faced with high poverty rates requires that the Central Bank becomes pivotal in dealing with the challenge. The decision by the Central Bank of a country such as Kenya to lower interest rates, for instance, may be instrumental in addressing poverty rates in a country because it encourages individuals to borrow more from banks (BULUT and ABDOW 178). Subsequently, this not only improves the level of investments by people in a country but also improves the nation’s GDP. Open market operations such as the buying and selling of government securities is essential in that the government collects adequate funds that it uses to support the marginalized and create employment opportunities for its civilians (BULUT and ABDOW 178). The fiscal policies that are adopted by a government may also be critical in the eradication of global poverty. When a government decides to lower tariffs on importation encourages Foreign Direct Investment. A rise in the Foreign Direct Investment within a country contributes to an increase in the job opportunities for the citizens. Subsequently, unemployment rates in such a country fall and so does the poverty rates (Grochulski and Zhang 350). Moreover, the government may set aside a percentage of the revenues that it collects in addressing the challenge of poverty starting with those regions that are worst affected.
The introduction of self-help groups and push-pull models can be effective in graduating various families out of poverty. A self-help group is termed to as a village financial intermediary committee composed of 10-20 members where members share a common problem and seek solutions that will effectively address the issues at hand. In Kenya, the self-help group initiative is already up and running (International Monetary Fund). Individuals that are in poverty have various abilities and needs and by relying on the push-pull model, they can be supported. Individuals in a poverty-stricken area will be urged to form self-help groups. The groups will then be required to join a program run by the NGOs that focuses not only to integrate skills and marketing capacities to the communities but also link the poor to various market opportunities (Damelang and Kloß 133). The push and pull model will be structured in such a way that the NGOs will educate the members of the various self-help groups about agri-businesses while at the same time promoting market extensions systems to them. Community gender dialogues will also be facilitated by the models and in the process, the people will be aware of their collective involvement in the eradication of poverty (Brainard, Jones and Purvis 89). The push strategies for the model will include increasing financial literacy and facilitating gender dialogues within the group, increasing access to technology and inputs, strengthening vertical and horizontal value chain linkage and ensuring that individuals successfully graduates out of the program poverty-free. The pull strategies, on the other hand, include sensitization of the market actors, promotion of extension and market information systems, strengthening of agriculture input supply and support service providers and promoting market linkages between the buyers and the sellers (Grochulski and Zhang 356). Adoption of the push-pull model and self-help groups will thus be critical in addressing the issue of global poverty.
Global poverty is a complex problem that needs to be addressed in a manner that will be beneficial to both the civilians and actors involved in fighting the issue. Scholars argue that market-based solutions are appropriate for the eradication of global poverty. Some of the market-based solutions that need to be adopted include the integration of the push-pull strategy in communities that are facing extreme poverty, the formation of self-groups supported by the Non-Governmental Organizations, implementation of superb fiscal and monetary policies that favor job creations and the support for the marginalized persons in the community and the push for self-employment and entrepreneurship among the marginalized groups. Implementation of the above market-based solutions can effectively address the problem of global poverty.
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