Posts Tagged ‘poverty’

Time to acknowledge the social cost of mobile and apps driven disruption

Abandoned makeshift recharge cards stand (Source: Punch Newspaper, Nigeria)

From Lagos, Nigeria comes this moving human interest story that looks at the downside of modern technology and it’s impact on livelihoods. For those who must hustle to make a living, send the kids to school, or put food on the table, smartphone driven digitization of the services they used to provide are disrupting their incomes.

“On the negative side, it has seriously affected our business with about 40% drop in passenger traffic. There is nobody among us (cab drivers) that would say he’s not feeling the pain.”

Whether its Uber and Taxify grabbing customers from traditional taxis, or the ease of an online purchase of airtime eating into Mama’s recharge card sales, the long awaited and much hyped transformation of African economies by ICT is arriving at a much higher cost than noted anywhere in media, or in research reports on mobiles for “social good.”

Literate youth quick to pick up new skills have no choice but to adapt and adopt. Its the older traders, the taxi drivers, the less literate, the long established service providers in the urban informal economy who are shouldering the brunt of this disruption.

“Even the prices charged by ‘those phone things’ are not realistic. I just pity the people who are rushing to them. A time is coming that they would increase their fares. And by that time, people wouldn’t be able to do anything about it, because they would have killed the competition. They just want to destroy the taxi business, which many of us are using to take care of our families,” Baba Ayo added.

Whose responsibility is this anyway?

Disruption is what every techno bling startup seeks, blaring it in their press releases, as they launch an app for this and that. What falls by the wayside is consideration of the social cost of this disruption – much more expensive in developing countries like Nigeria where there is no social safety net, no welfare department, and certainly no old-age pension for those whose livelihoods are lost to look forward to.

“I have been selling recharge vouchers for about 10 years and I can tell you that the situation has never been this bad. It’s as if someone commanded people to stop buying airtime. I accused some of my customers of patronising other people, and some of them said they usually top-up their phones online whenever they run out of airtime,” she explained.

The entrepreneurial will adapt, or move on to other services that apps have not yet replaced. The article is illustrated with photographs of abandoned recharge seller’s makeshift stalls as the line of business fades away in the big city.

But who will think of all the rest who may not have the energy or youth to start over, and whose responsibility is it to ensure that technological progress is not exclusive?

This post is a reminder to us all of the tradeoff we make when we choose to innovate or disrupt in societies where the margin between hunger and full belly is as slim as this year’s latest smartphone model.

Key Insights on the Reality of Rural India: Socio-Economic & Caste Census data

Recently, India released a selection of data from the 2011 Census of India – their focus was rural India’s socio-economic reality, primarily aimed at policymakers and programme designers. This was the first time the Government of the Republic of India has collected information on caste. The last such census was back in 1931, by the British Raj.

I’ve gone through the standard talking points and a variety of articles online to synthesize and pinpoint the factoids that caught my attention.

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Rural Rajasthan is India’s least literate state. Photo Credit: Niti Bhan, Sawai Madhopur

Mobile  phone ownership – More than 2 out 3 households

While only one per cent of rural households own a landline phone without a mobile, a whopping 68.35 per cent have mobiles as their only phone(s). In Uttar Pradesh, as many as 86 per cent rural households own no phone but mobiles. Households with both landline and mobiles constitute an additional 2.72 per cent of the rural population, with Kerala the highest among the states at 28.33 per cent. In Chhattisgarh, this is particularly high at 71 per cent, mainly due to lack of connectivity and mobile towers, a reflection of the lack of development in the state. Source

India rural census

Literacy and Education – More than 1 in 3 illiterate

Educational levels remain dismal, with over a third of rural India illiterate. The proportion of those passing through the primary, secondary, senior secondary and higher secondary stages drops at each successive level, from nearly 18 per cent to 5 per cent, while only 3.45 per cent are graduates or above. The highest proportion for graduates is in the National Capital Territory and Delhi, at 9.6 per cent; among the states, Kerala tops at 8 per cent. Source

Rajasthan leads the pack of illiterate states with 47.58% of its population falling in that category, followed by Madhya Pradesh with 44.19% of its people in rural areas being illiterate. Bihar is at the third place with 43.85% and followed by newly carved state Telangana with 40.42% population belonging to this category. Source

Informal Sector and Irregular Incomes – 9 out of 10 people

Rural India remains largely dependent on self-employment or the unorganised sector. Less than 10 per cent households are dependent on salaried jobs, of which the majority are in government jobs. Also, 0.09 per cent of rural households are houseless, compared to 0.15 per cent in the urban areas. Source Fewer than 5 per cent pay income tax. Source

villagesNearly one in every three rural households still have an uncertain source of income and continue to live in one-room kutcha houses. They compose 31.26 per cent of the 17.91 crore rural households covered by the census — and will now be considered as ‘poor’,  eligible for benefits applicable to Below Poverty Line (BPL) families. Of the rural households covered, 21.53 per cent belonged to scheduled castes and tribes Source

Over half of rural India owns no land at all. Among households who do own land, 40 per cent is not irrigated. Just 4 per cent own any sort of mechanised agricultural equipment, and just 10 per cent own any irrigation equipment. Fewer than 4 per cent have an agricultural credit card that entitles them to at least Rs 50,000 per month. Source

The Big Picture

india-socio-economic-large

Why the Search for the Middle Class is a Waste of Time and Money

CJamzx5WsAANOgfOnce we stop focusing only on the search for the mythical middle class, we see the very real changes that have taken place, globally, over the past 25 years. The Pew Report in the previous post focused primarily on the middle income/middle class, overlooking in their haste that even this segment of the world’s population had almost doubled from 7% to 13%. Their rationale is based on conventional thinking which frames the importance of this middle income demographic so:

Developing a vast middle class is key to sustaining growth in emerging economies, whose comparative advantage in offering advanced markets products at a fraction of the cost is waning with new technologies.

Just a couple of days before this Pew report, the United Nations released an important global development report. Here, we can see the real changes that have taken place in historically poverty stricken populations like India’s and China’s:

More than a billion people have been lifted out of extreme poverty since 1990 with China and India playing a central role in global poverty reduction, a major UN report has said

The latest estimates show that the proportion of people living on less than $1.25 a day globally fell from 36 per cent in 1990 to 15 per cent in 2011. Projections indicate that the global extreme poverty rate has fallen further, to 12 per cent, as of 2015.

The poverty rate in the developing regions has plummeted, from 47 per cent in 1990 to 14 per cent in 2015, a drop of more than two thirds.

“The world’s most populous countries, China and India, played a central role in the global reduction of poverty. As a result of progress in China, the extreme poverty rate in Eastern Asia has dropped from 61 per cent in 1990 to only 4 per cent in 2015,” the report said.

“Southern Asia’s progress is almost as impressive — a decline from 52 per cent to 17 per cent for the same period — and its rate of reduction has accelerated since 2008,” it said.

Who cares about the middle class and their mythical relationship to economic growth and progress when the data shows that poverty has been halved, and a billion people can dream of hope. If this middle class were genuinely related to economic growth then we wouldn’t be seeing these conflicting headlines. From the same article that touts the need for a middle middle as critical to growth, already linked above, and referencing the Pew Research report.

India’s middle class barely expanded during the decade, increasing from 1 per cent of the population in 2001 to 3 per cent in 2011, an increase the study called ”small by any measure.”

While the Indian economy is currently said to be so:

India is seeing “stable growth momentum” even as economic activities are expected to slow down in China, the US and many other major economies, says Paris-based think tank OECD.

Last month, OECD — a grouping of 34 countries — had pegged India’s growth to remain “strong and stable” at 7.3 per cent in 2015 on the back of revival in investments.

India has surpassed China to become the world’s fastest growing economy by clocking 7.5 per cent growth for the three months ended March. In 2014-15, the economy had expanded 7.3 per cent.

Earlier this month, Finance Minister Arun Jaitley said the country is no longer satisfied being in the 6 to 8 per cent growth.

“It wants to transcend to another level and aim for 8 to 10 per cent growth… We wish to grow faster because we have a huge challenge of eradicating poverty ahead of us,” he had said.

Given the imperative to push hundreds of millions above the poverty line – far more important to a developing country like India, a historically poverty stricken country – worrying about the mythical middle class is the least of the government’s problems. India’s NREGA is the world’s largest public works programme, benefiting 182 million human beings, only 15% of the country’s population.

This begs the question: “Is growing a vast middle class really key to sustainable growth?

India didn’t grow one (sounds rather like a beard, doesn’t it?) as large as or as fast as China, yet India’s economic indicators seem to be healthier and its population emerging out of abject poverty.

One wonders whether the continued emphasis and focus on chasing the middle class dream not only blinds us to the very real social and economic developments taking place but also whether its a corporate imperative rather than a societal one?

In the long run, will more noodles and biscuits matter, or the fact that more girls are going to school, studying computers and English?

This same single minded search for a middle class is creating its own set of repercussions on the African continent. One gets the feeling there’s a bunch of folks wandering around dazed and confused, groping and grasping blindly for something called “middle class”. Again, overlooked in this game of blind man’s buff are data points like Kenya’s recent emergence as a lower middle income country – the World Bank upgraded it from low income last month:

“Our latest data show that in terms of this indicator, the world’s economic geography has changed a lot. In 1994, 56.1% of the world’s population – 3.1 billion people – lived in the 64 low-income countries. In 2014, this was down to 8.5%, or 613 million people, living in 31 countries. It is heartening to see that over the last one year itself four nations crossed over that critical line from the low-income to the lower-middle income category.”

But, no, lets go chasing the mythical middle instead. On paper, and in the numerous reports churned out by management consultancies, they might be easiest demographic to sell consumer goods to, but as I’d asked 8 years ago, is the holy grail of economic development only the creation of a consumer society? And, is it something that can be realistically aimed for, given the rapidly dwindling natural resources of our planet?

Global tipping point in development

Two years ago, I’d written the following words:

Finally, enough people in enough places have managed to lift themselves free of the gravity well sucking them down into completely insecure and uncertain relationship with the poverty line (aka the next meal or three for the entire family) that they can plan ahead for the next purchase or investment in their future economic status and social standing. One is not independent of the other, especially not in the closely knit, hyper local social networks in rural regions of the developing world.

What we’re in fact seeing are the metrics that demonstrate that tipping point I’d sensed a couple of years ago, while wandering around rural Kenya.

People, not consumers, are bootstrapping themselves out of poverty and feeling steady enough to make a leap for the brass ring of prosperity. The shift is so huge – 700 million people or 10% of the planet’s population – that we’ll be seeing the impact and influence of this emerge over the near term emerging future.

They’ll be neither the Bottom of any Pyramid nor the Middle Class – both measures use metrics too obsolete to account for the leapfrogging taking place in the eternally developing world. What they won’t be is stagnant, or satisfied with their achievements. Pew might say they haven’t come far enough, but who is to say that’s their own metric of success?

Book Review: An Uncertain Glory: India and its Contradictions by Jean Dreze & Amartya Sen

Photo Credit: India Habitat Centre, New Delhi

Just over a month ago, in Kinokuniya bookstore located in Singapore’s Orchard Road, I picked up the hardcover release of Amartya Sen’s latest book – An Uncertain Glory: India and its Contradictions – coauthored with Jean Dreze.

Today, I’ve reached the point in my daily few pages of reading where I can write something approaching a review, or at the very least, my thoughts.

The book is a vast tome yet written in an extremely accessible chatty tone  – something very rare in Indian academia which tends to be addicted to the turn of the previous century’s writing and style guides – in fact, and I’ll just get it out the way and say it upfront, Mr Sen really should get his own blog in the way Paul Krugman has or simply join a syndicate like Joseph Stiglitz. But I recognize the transitional era of the hardcover book and the need for such things in the rest of the world. Print is booming, iirc, in India, ever the reader’s market. English books taught you vocabulary and idiomatic language, along with the pre-internet peek at lifestyles and mores from a different culture or geography.

I do not regret having purchased this book although I am not happy to be reading what Dreze and Sen are saying. They have really done their homework and swept out some really cobwebby corners of India’s social and economic responsibilities to her people. Oh voiceless masses, cries one more global Bengali intellectual, who will hear thy cry upon thy mother’s breast to be fed the milk at your first indrawn breath?

India is an embarrassing mess for a country of its size and unnatural resources, its jugaad and babudom, resisting the clearly written look in the mirror that shows the continued atyachaar upon it’s girl children and the harijans in general. Unsaid in so many words but underlined with charts, graphs and lucidly explained data driven disparities, Dreze and Sen show us the social and economic apartheid that the country’s caste system perpetuates and the quarter of the population who are so destitute that the very lack of public goods and services, much less a civic consciousness of social responsiblity, should draw international wrath upon our heads for allowing this daily humanitarian crisis to continue.

It is only the recent opening of the markets in the past 20 years of liberalization of the economy with their attendant promotional cacophony that drown out the ever beating drums of the poor of India and their downtrodden voiceless plight. Somewhere around 2006, I recall reading an article in The Guardian going on about the “third india” here “A Tale of Two Indias“published April 2006, says:

Gandhi’s India, or at least his influence on economics, has all but disappeared in the past decade. From 1947 until 1991, the economy grew at 3.5% a year, the so-called Hindu rate of growth which championed equality and social stability over wealth. After 1991, that all changed. Notions of speed and efficiency were stamped on to a civilisation that traditionally took a slower, more relaxed view of life. Economic growth rose to 6% a year. In the past three years, it has zoomed to 8% a year – meaning that the economy will double in size in a decade. The message now is similar to that of China during the 90s, in the phrase attributed to Deng Xiaoping: “To get rich is glorious.”

Not that the wealth has reached all of the country. India is one land, but the rich and poor exist on apparently different planets. Virtually unreported are some awful daily realities: the rate of malnutrition in children under five is a shamefully high 45%. Less than a third of India’s homes have a toilet and most women have to wait until the dark of evening to venture out to answer the call of nature. The talk of making poverty history sounds hollow in India, a land which is home to a third of the world’s poor and where some 300 million people live on less than $1 a day.

Yet another world is growing up, fuelled by the immense wealth that is being amassed by India’s new monied classes, who shop for brand-name luxury goods, ski in the Alps and send their kids to Harvard. Very soon the country will have 3.8m households with an annual income of 10m rupees (£130,000).

Below them in any rich list is the middle class, estimated to number about 150 million. Their hunger for goods has seen a new money culture – how to make it and how to spend it. India’s masses were, under the more equal state-run economy, denied shopping choices. The country is today undergoing a consumer boom. For some, this is proof enough that, in opening up, India has gained from globalisation – allowing Dior, Bulgari and Rolls-Royce into the country. Consumption in this India is nothing if not conspicuous.

And so on and so forth about the increasing divide between the rich and the poor. I would hazard a guess that what is really the issue is a) how visible the disparity has gotten i.e. the rich are no more shy about flaunting their wealth, a la Gandhi’s coterie of Calcutta industrialists like GD Birla himself et al, and b) how much more visible the global ICT connectivity via PC, broadband and mobile smartphone is making this disparity internationally.

Sen’s global experience in the UK and USA shows in his clearly argued case against private public partnerships or other enterprise led BoP solutions. At one point in the reading one got the distinct feeling that he was debating with the late CK Prahalad on the way the BoP concept was been narrowly interpreted to mean micro user fees. He mentions the very words and points out how it immediately becomes a huge barrier to access for India’s poorer segments of society, a micro fee for preventive healthcare might end up excluding anywhere upto 90% of those it is most meant to serve.

Who will serve them, ask Dreze and Sen, if they are not profitable even in the most basic sense? The state and the public goods that are currently mismanaged, corrupt and inefficient yet can demonstrate their efficacy in spots such as Tamil Nadu or Kerala (all in Southern India). They point out that even Bangladesh next door has better social indicators and gender parity metrics than India.

One has not heard a peep about this book on Twitter, does it mean I’m following the wrong crowd or that the book has not been noticed? This is a message that every able Indian really should take to heart. Why are we such a fucking backward nation in the August of the year 2013?