The challenges of eradicating poverty

Every year, the United Nations Development Programme (UNDP) releases its Human Development Index (HDI) reports comparing countries' development using life expectancy, access to education and per capita income as indicators. These indicators are used by the UNDP to measure how countries have achieved their development goals as enshrined in the Millennium Development Goals.

Countries ranked highest on the HDI are regarded as developed economies. Citizens living in these countries achieve high per capital income, improved access to education and very high life expectancy. They enjoy a high level of security and have ability to make decisions affecting their life.

In contrast, countries placed in the bottom ranks are mostly those continuously plagued by poverty. Countries falling under this category are characterized by issues such as a high mortality rate, widespread malnutrition, high gender inequality, low level of school enrollment, prone to environmental degradation, and others.

Poverty in developing countries is so rampant and addressing it is a real challenge. Consider health for instance; according to the World Health Organization Report (2014), 6.3 million children under the age of five died in 2013. More than half of these early child deaths are due to conditions that could have been prevented.

According to the report, the leading causes of death in under-five children are pre-term birth complications, pneumonia, birth asphyxia, diarrhea, and malaria. In addition, about 45% of all child deaths are linked to malnutrition. Children in sub-Saharan Africa are more than 15 times more likely to die before the age of five than children in developed regions.

A recent report by the World Bank suggested that in 2011, 17 percent of people in the developing world lived at or under $1.25 a day. Of this number, over 80 percent of the extremely poor lived in South Asia (399 million) and Sub-Saharan Africa (415 million). In addition, 161 million lived in East Asia and Pacific, and 50 million of the extremely poor lived in Latin America and the Caribbean. Middle East and North Africa and Eastern Europe and Central Asia combined.

The above figures do pose questions as to why, despite billions of dollars spent on international development assistance to developing countries are not really yielding the expected impacts-they remain underdeveloped. A prominent author such as Dambisa Moyo in her book Dead Aid clearly points out that International aid tends to produce a long-term dependency on recipient nations and lead to prolonging the vicious cycle of impoverishment.

Likewise, Joseph Stiglitz, author of Globalization and its Discontent argues that international financial institutions such as the World Bank and IMF are to blame for failing developing countries. According to Stiglitz shortsighted, policies of these two institutions in promoting free market lead to exacerbating poverty in developing nations.

While arguments against the world financial institutions and international aid are justified, numerous studies strongly suggest that - bad governance, lack of technology and knowledge, the absence of modern infrastructure have been the primary factors.

First, bad governance is viewed as a condition where the institution is unable to perform its functions as it should have been. It refers to corruption, distortion of government budgets, inequitable growth, social exclusion, lack of trust in authorities.

In Afghanistan, for instance, the Transparency International estimated that around $1 billion of the $8 billion donated in the past eight years was lost to corruption. Bribe payments, ranging for enrolling in elementary school to getting a permit, have doubled between 2007 and 2009, and topped $1 billion a year.

According to the same study, in countries like Ghana, Madagascar, Morocco, Niger, Senegal, Sierra Leone and Uganda, around 44 percent of the parents surveyed had paid illegal fees for schooling.

Corruption increases the cost of doing businesses and maintaining businesses in the formal economy. It encourages business and entrepreneurs to run their businesses covertly to avoid briberies that they need to pay for obtaining services such as registration licensing or obtaining business permits. It also reduces trust in institutions of governance and this has a detrimental effect in attracting investment.

According to the Transparency International, in 2015 more than 350 businesses worldwide (around 35% of companies) were reluctant to invest in developing countries because of the host country's reputation for corruption. Corruption, thus, discourages investors to invest in productive sectors that might have otherwise led to creating jobs and economic growth.

Combating corruption is often a challenge because corruption itself is usually endemic in high levels of state institutions. Survey by Global Peace Index 2015 indicates that over 50% of people worldwide think that political parties, the police, parliament and the judiciary are more corrupt than other state institutions. Thus, this implies that it is impossible to eradicate poverty where the state institutions themselves are corrupt.

Secondly, the absence of technology and know-how is another main reason. In many developed countries, the backbone of the economies is powered through the application of the latest technologies such as computer and robots. These technologies enable them to reduce production costs and increase profit maximization.

In developing countries, however, acquiring technology and expertise is a real challenge. Most of the government annual expenditure spent on unproductive sectors such as social services, procuring expensive vehicles, lavish meals and overseas trips, exorbitant salaries, and excessive retirement scheme. In addition, soaring unemployment continually poses both internal security threat to the government; consequently most government expenditure is directed toward acquiring military hardware rather than investing in science, technology, and know-how.

Thirdly, with the onset of globalization in the 21st century, multinational companies are always moving and diversifying their capital around the world through investment. China, for example, since the introduction of its open up policy in the early 1980s, has gained unprecedented economic growth through Foreign Direct Investment (FDI).

Under the leadership of Deng Xiaoping, he ambitiously embarked on modernization of Chinese infrastructures in order to attract investment from outside. In the preceding years, the government built Major infrastructures such as roads, bridges, ports, and improved housing. In addition, the government also introduced land forms as well as reduced government bureaucratic red tape, hence encouraging foreign companies to invest in China.

The Chinese government fully realized that no investor would come to invest in China unless it has something attractive to offer. Today China is ranked the second largest economy in the world thanks to the government's ambitious plan to the modernization of China.

For Other developing countries, lack of infrastructures has been a major impediment to attracting foreign direct investment. War torn countries like Sierra Leone, Sudan, Congo, Afghanistan, Libya, Yemen, Somalia, Iraq, and others all have their major infrastructures compromised. The protracted wars do trigger not only a human tragedy, but also destroy social fabrics that hold society together.

In short, it can be argued that poverty will remain so over the next few years. Poverty is not merely a policy issue, but a multifarious discourse that requires a holistic approach to addressing. Indeed, the causes of poverty differ from country to country. Nonetheless, no country will ever overcome its poverty without addressing the fundamental questions of bad governance, lack of know-how and debilitating infrastructures.