Social Poverty

In my last post I discussed how there are different types of poverty that keep Bangladesh’s ultra-poor impoverished. Being both financially and knowledge poor the ultra-poor of Bangladesh are stuck in an ever-revolving cycle of poverty with neither the means nor the knowledge to escape it. Today I’ll discuss a third element that contributes to this cycle, “social poverty.”

Over the past decade we have seen the emergence of microfinance in nearly every corner of the globe. Many have  seen this rise as a testament to the entrepreneurial spirit of those in the BOP. However, what some don’t realize is that many of these “entrepreneurs,” are entrepreneurial not out of choice, but necessity. In many developing countries families are dependent on  individual enterprises for survival. Nearly half of Bangladesh’s 153 million citizens make meager incomes from small agricultural ventures that, in many cases, are no more than a plot of land, a dairy cow, and a flock of chickens. While it would be easy to assume that running a business with such few assets would be a strait forward affair – in reality this couldn’t be further from the truth. Beyond having the basic capital and training required, these individual enterprises are deeply dependent on their owner’s personal relationship with his or her community. Coming from a “developed” economy dominated by online shopping and “big box” stores this can be a difficult concept to grasp. Whether it be a bag of chips, a pair of jeans, or a car we typically only interact with the last person in a supply chain that may depend on inputs from hundreds if not thousands of other individuals around the world. However, in rural Bangladesh business is a much more social affair. Buying or selling anything – from eggs, to milk, to gold bangles –  requires one to interact with others in their community. Thus, in such an environment in order to sell products, make money, and get the support one needs to survive, he or she must first belong to a community that is willing and able to provide such support. Hence, we come to the ultra-poor.

At first glance Bangladesh’s ultra-poor are clearly disadvantaged. As we have explored in past posts the ultra-poor lack the financial and intellectual capital necessary to escape poverty traps. However after spending a few weeks interviewing the ultra-poor it seems they face an additional obstacle. Through my interviews I have found that many ultra-poor live lives that are removed from the communities around them. Ultra-poor report that they are rarely involved with community meetings, local politics, and frequently fail to develop healthy relationships with other members of their village. If any relationships do exist they are largely based on dependency, in which the ultra-poor look to a village’s elite for support to survive. The implications of such a division go far beyond the psychological trauma of isolation to have a tangible economic effect.

It has long been understood that we derive economic value from our relationships and networks. As the collective knowledge, wealth, and influence of  our network increases it is likely that our individual knowledge, wealth, and influence will increase as well. The reasoning behind this correlation is pretty clear: As more people are included in our network the more opportunities we will have to learn from them while bridging needs and opportunities across individuals (Metclaf’s law states that a network’s value is equal to the square of its participants – thus larger social networks produce significantly more value). Economists like to call this value “social capital.” For those of us living in “developed countries” social capital can be very influential in determining where we go to school, where we work, and what opportunities we ultimately have access to. For Bangladesh’s ultra-poor a lack of social capital has different, but just as significant effects:

  1. Access to Information – Anyone who has studied economics knows that information asymmetries in markets never have a good outcome for the party with less information. For the ultra-poor, many of whom are illiterate, learning  important details from the fair market price for eggs to the best way to treat malaria is dependent on what they can glean from others. When access to other members of a community is restricted, particularly the most knowledgeable “elite”, the ultra-poor are disadvantaged as a result.
  2. Access to Markets –  Due to their social isolation, the ultra-poor don’t have equitable access to local markets. As described above, a lack of social capital may prevent the ultra-poor from understanding where they can fetch the best price for their goods or even what a fair market price is to begin with. In addition, given their low social standing, some individuals may refuse to buy or sell to/from the ultra-poor reducing their potential “market” and increasing the bargaining power of those who are willing to buy from them.
  3. Access to Services – Despite there being a significant demand for assistance among the ultra-poor there didn’t seem to be a shortage of private, public, and non-profit groups on the ground willing to lend a hand. However, there remained a clear disconnect between the ultra-poor’s demand for and supply of these services. The primary reason for this gap is that the ultra-poor rarely, if ever, leave their village or interact with “outsiders.” Conversely many village “elite” are aware of or are in someway connected with these programs, but were either unaware, unwilling, or unable to see the link between the ultra-poor’s need for and the availability of these services.  In one particular village, multiple ultra-poor households had just lost their prized asset (either a cow or sheep) to a waterborne disease that is prevalent during  monsoon season. Little did they know there was a free government live stock vaccination scheme only a 20 min truck ride away. Needless to say, this was a tragic and totally unnecessary loss that could have been prevented had these families been better connected to the collective knowledge of those around them.

Thus, in an area of the world where so much of one’s livelihood is dependent on communal involvement, it is clear that the ultra-poor’s lack of social capital can be disastrous for their enterprise and their family. While “social poverty” is clearly significant, why does it exist? What are it’s underlying factors? After conducting over 670 interviews with Bangladesh’s ultra-poor I can point to two very distinct drivers, one cultural the other inter-personal, that seem to explain the perpetuation of “social poverty.”

While Bangladesh culturally is a very rich place, it does have some patriarchal practices that don’t serve the interests of it’s ultra-poor. Women who are married to (or are under the protection of) an active male community member automatically enjoy greater social standing and influence. Conversely, women who are either single, divorced, widowed, or whose husbands are disabled lack  a community “advocate” depriving them of the social status required to meaningly participate in a village. Therefore it should be no surprise that nearly all members of BRAC’s ultra-poor program (under which I am studying) are women. This correlation between gender and poverty has not only been observed in Bangladesh, but worldwide. The so called “feminization of poverty” has become a global trend in which 70% of individuals living under $1 a day are women.

However, a patriarchal society alone is not enough to explain the “social poverty” that confronts the ultra-poor (after all Bangladesh has had a female prime minister for close to 20 years). The second most noticeable (and self reported) social challenge for the ultra-poor involves their inter-personal skills. Many of the women I talked to felt they didn’t know how to conduct themselves properly while interacting with others in the community. In addition, many felt they were not trained in proper sanitary practices, leading to disputes over their household’s waste. This lack of interpersonal understanding combined with little to no community advocacy results in few relationships upon which the ultra-poor can rely for support.

Upon identifying similar problems six years ago BRAC  started village mentorship committees (called GDBC’s). These committees, comprised of local leaders, are charged with supporting ultra-poor women enrolled in BRAC’s Targeting the Ultra-poor program. Originally established to ensure the security and well being of BRAC’s gifted assets to the ultra-poor (typically cows, goats, and chickens), all GDBC’s have now gone beyond this initial mandate to provide additional services to the ultra-poor. Among these is an unofficial mentoring dynamic between village leadership and it’s ultra-poor members. Village leaders now not only mentor ultra-poor members through the social and economic challenges in their lives, but advocate for the ultra-poor on a local level  and regional level. In doing so the elite have redefined their relationship with the ultra-poor from one of dependency to assistance which, as the data shows, is making everyone better off.

Taylor CorbettSocial Poverty

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