To End Extreme Poverty, Give Cash — Not Advice | Rory Stewart | TED

Summary

The speaker addresses the critical issue of extreme poverty, highlighting the inadequacy of traditional aid methods and the potential of unconditional cash transfers. They recount personal experiences in international development, emphasizing the inefficiencies and failures of past projects. The talk pivots to a transformative cash-based approach, supported by evidence from randomized controlled trials, which has shown significant improvements in health, education, and economic growth. The speaker advocates for a shift in mindset, embracing technology to facilitate direct cash assistance, thereby empowering the poor and respecting their autonomy.

Takeaways

• 🌐 The speaker addresses the global issue of extreme poverty, highlighting the struggle of hundreds of millions who lack basic necessities.
• 💡 A message of hope is presented, suggesting that with current ideas and technology, it's possible to end extreme poverty in our lifetime.
• 🔍 The speaker reflects on past failures in addressing poverty, questioning the reliance on technology, the assumption that poverty will diminish on its own, and the delegation of solutions to experts.
• 📈 Despite some reduction in poverty rates, the absolute number of people in poverty in Africa has increased, indicating the need for more effective solutions.
• 🚧 The speaker shares a personal experience where a poorly executed project led to significant waste of resources, emphasizing the need for better project management.
• 💡 The traditional aid approach of 'teach a man to fish' is critiqued for being patronizing and not achieving the intended outcomes.
• 🇷🇼 A project in Rwanda that provided unconditional cash transfers had remarkable success in transforming communities, challenging conventional aid methods.
• 📊 Academic studies support the effectiveness of cash transfers in reducing child mortality, depression, and increasing education, health, and economic growth.
• 💼 The speaker identifies four reasons why cash is effective: it provides capital, respects individual differences, is more efficient, and trusts people to make their own choices.
• 🌟 Technology, including mobile phones and AI, is enabling more efficient and targeted cash transfers, making it easier to reach those in extreme poverty.
• 🌱 Cash transfers are proposed as a key tool in addressing poverty, allowing the extreme poor to participate in development and use resources like roads and clinics effectively.

Q & A

What is the main issue discussed in the transcript?

The main issue discussed is the extreme poverty around the world and the failure of traditional aid methods to effectively address it.

What is the speaker's background in international development?

The speaker has worked in international development for 30 years, including in Asia, countries emerging from conflicts, setting up a nonprofit in Afghanistan, and working for the British Agency for International Development with a budget of 20 billion dollars.

What is the speaker's view on the effectiveness of past poverty reduction projects?

The speaker views past projects as largely ineffective and depressing, often resulting in much less impact than intended due to bureaucratic processes and mismanagement.

What example does the speaker give to illustrate the inefficiency of aid projects?

The speaker gives the example of a project in East Africa aimed at helping young women stay in school during their menstrual cycle, which resulted in only two holes in the ground with brick walls and plastic buckets despite a 40,000-dollar budget.

What is the speaker's critique of the 'teach a man to fish' approach to aid?

The speaker argues that the 'teach a man to fish' approach is patronizing and often counterproductive, as it assumes that people in poverty lack knowledge rather than capital.

What alternative approach does the speaker suggest for addressing poverty?

The speaker suggests unconditional cash transfers as an alternative approach, which respects people's choices and allows them to invest in their own development.

What were the results of the cash transfer project the speaker observed in Rwanda?

The cash transfer project in Rwanda led to a significant transformation in the community, with increased electricity, more people having roofs, better health insurance coverage, and a rise in school attendance.

How does the speaker describe the impact of cash on communities?

The speaker describes cash as leading to a multiplier effect, where every dollar delivered into a community results in 2.50 dollars of benefit for the surrounding villages.

What role does technology play in facilitating cash transfers to the poor, according to the speaker?

Technology, particularly feature phones and AI, plays a crucial role in making cash transfers more accessible and efficient by enabling direct payments to individuals and improving targeting of aid.

What is the speaker's view on the role of cash in overall development?

The speaker views cash as a tool that allows the extreme poor to participate in development, complementing other government initiatives like infrastructure and education.

What is the moral argument the speaker makes for cash transfers?

The speaker argues that cash transfers respect people's choices and dignity, offering them the agency to decide their own path out of poverty, which is a moral imperative in an age concerned with patronizing and colonial aid.

Outlines

00:00

😔 The Horror of Extreme Poverty and the Failure of Traditional Aid

The speaker begins by discussing the severe issue of extreme poverty, affecting hundreds of millions worldwide who struggle with basic needs like clothing, shelter, and food. Despite technological advancements and ideas that could potentially end poverty, the speaker expresses disappointment in the traditional approaches to poverty alleviation. They recount their experience as an expert in international development, having worked in various countries and eventually overseeing a significant budget aimed at poverty reduction. However, they found the effectiveness of these projects to be dismal, with many failing to deliver on their promises. The speaker uses a specific example of a failed project in East Africa, where a significant amount of money was spent with little to show for it, highlighting the inefficiency and mismanagement that plagues many poverty alleviation efforts.

05:01

🤔 Rethinking Aid: The Surprising Effectiveness of Cash Transfers

The speaker questions the common mindsets and mental models that underpin traditional aid, particularly the popular adage 'Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.' They argue that this approach can be patronizing and counterproductive. Instead, they share their experience with a project in Rwanda that provided unconditional cash transfers directly to people living in poverty. Contrary to expectations, this approach led to remarkable improvements in the community, including increased access to electricity, better housing, health insurance, and education. The speaker explains that recent studies using randomized controlled trials have shown that cash transfers consistently lead to significant improvements in various aspects of life, such as health, education, and economic growth. They identify four key reasons why cash transfers are so effective: they provide the necessary capital, respect individual differences, are more efficient, and foster trust and autonomy by allowing people to make their own choices.

10:03

📱 Technology's Role in Revolutionizing Aid Through Cash Transfers

The speaker emphasizes how technology has made cash transfers more feasible and efficient, particularly for the extreme poor in Africa. With the advent of affordable feature phones, money can be directly transferred to individuals, bypassing intermediaries that often delay or diminish the impact of aid. They highlight the use of artificial intelligence in targeting communities and predicting climate-related disasters, allowing for proactive measures to protect vulnerable populations. The speaker acknowledges that cash is not a panacea but is a powerful tool that complements other development efforts. It empowers the poor to participate in and benefit from broader development initiatives. They call for individuals, regardless of their income level, to contribute to direct cash aid programs, arguing that even small contributions can make a significant difference. The speaker concludes by stressing the moral dimension of cash transfers, which respect people's choices and dignity, contrasting with traditional, often patronizing aid approaches.

Keywords

💡Extreme Poverty

Extreme poverty refers to a condition where people lack the basic necessities of life, such as food, clothing, and shelter. In the video, the speaker emphasizes the vast number of people globally who are struggling with extreme poverty, highlighting the urgency of addressing this issue. The video's theme revolves around finding solutions to end this state of deprivation.

💡International Development

International development encompasses efforts to improve economic, political, and social conditions in developing countries. The speaker's background in this field is crucial as it provides credibility to his critique of traditional poverty alleviation methods and his advocacy for alternative approaches like cash transfers.

💡Sanitation Facilities

Sanitation facilities are essential for maintaining hygiene and preventing diseases. The video mentions a project aimed at improving these facilities for young women in schools, illustrating the intersection of poverty, gender, and education. The project's failure to deliver on its promises underscores the need for more effective solutions.

💡Capacity Building

Capacity building is the process of enhancing the skills and capabilities of individuals or communities to improve their well-being. The video criticizes this approach, suggesting that it can be patronizing and ineffective. Instead, the speaker advocates for giving people the capital they need to utilize their existing skills and knowledge.

💡Unconditional Cash Transfers

Unconditional cash transfers involve providing money directly to individuals or households without any strings attached. The video presents this as a powerful tool for poverty alleviation, arguing that it empowers recipients to make their own decisions and invest in their own priorities, leading to significant improvements in various aspects of their lives.

💡Randomized Controlled Trials (RCTs)

Randomized controlled trials are a type of scientific experiment used to determine the effectiveness of an intervention. The speaker references RCTs to support the claim that cash transfers have been proven to reduce child mortality, increase education and health outcomes, and stimulate local economies.

💡Multiplier Effect

The multiplier effect refers to the phenomenon where an initial investment or input leads to a larger total economic output. In the context of the video, the speaker explains that for every dollar of cash transferred to a community, there is a $2.50 benefit for the surrounding areas, demonstrating the broader economic impact of cash transfers.

💡Artificial Intelligence (AI)

Artificial intelligence is the simulation of human intelligence in machines to perform tasks. The video highlights how AI can be used to better target and understand communities, predict extreme weather events, and deliver aid more efficiently, thereby enhancing the effectiveness of poverty alleviation efforts.

💡Feature Phone

A feature phone is a mobile phone that offers more advanced features than a basic mobile phone but is less sophisticated than a smartphone. The video mentions that even the extreme poor in Africa can now afford feature phones, which allows for direct cash transfers, bypassing traditional intermediaries and making aid delivery more efficient.

💡Patronizing Aid

Patronizing aid refers to assistance that treats recipients as inferior or incapable of making their own decisions. The speaker argues that traditional aid programs often fall into this category, whereas cash transfers respect the dignity and autonomy of recipients by allowing them to decide how to use the aid.

💡Sustainability

Sustainability in the context of development refers to the ability of a project or intervention to continue over the long term without external support. The video suggests that cash transfers are more sustainable because they empower individuals to make investments that they can maintain and take pride in, unlike projects that are imposed from the outside.

Highlights

The horror of extreme poverty affects hundreds of millions worldwide who struggle to meet basic needs.

There is a message of hope that extreme poverty can be ended in our lifetime with the right ideas and technology.

Past efforts to address extreme poverty have often been unsuccessful due to flawed mindsets and ineffective projects.

The speaker's experience in international development revealed that many projects were worse than imagined on the ground.

Despite some reduction in percentage terms, the absolute number of people in extreme poverty in Africa has increased.

An example of a poorly executed project in East Africa resulted in a significant waste of funds.

The traditional approach of teaching people to fish is criticized as patronizing and often ineffective.

A project in Rwanda that gave unconditional cash to people resulted in significant community transformation.

Randomized controlled trials have shown that cash transfers lead to real reductions in child mortality and depression, and increases in education, health, and income.

Cash transfers have a multiplier effect, generating more than double the benefit for surrounding communities.

People in extreme poverty often lack capital, not knowledge, making cash transfers more effective than teaching skills.

Cash allows individuals to make their own choices, leading to more efficient use of resources and greater pride in their investments.

Technology is making cash transfers easier and more efficient, allowing direct payments to the extreme poor.

Artificial intelligence can help predict climate change events, enabling cash to be delivered before disasters strike.

Cash is not a silver bullet, but it allows the extreme poor to participate in development and use government services effectively.

Individuals can make a significant impact by sending small amounts of money directly to those in extreme poverty.

The current spending on international development is almost enough to lift everyone out of extreme poverty if directed correctly.

Unconditional cash transfers respect people's choices and dignity, offering a moral dimension to aid.

Transcripts

I'm here today to talk to you about the most extreme horror

and scandal in our age,

which is the horror of extreme poverty.

The fact that there are hundreds of millions of people

around the world today who cannot clothe themselves,

who cannot shelter themselves,

who are struggling to eat once every two days.

But I'm also here with a message of hope,

to say that this is a moment where we have the ideas,

where we have the technology,

that we could end extreme poverty in our lifetime.

Let me begin by going back to the question

of why we have failed to address extreme poverty.

And all of us, I think, have been through this.

We feel often that all we can do is hope

that some new magical technological solution will emerge.

Or that extreme poverty around the world

is somehow disappearing by itself.

Or that somehow if we just give money to the experts,

to the agencies, to the governments,

they're going to be able to solve extreme poverty.

I was, in a sense, one of those experts.

I've been working in international development for 30 years.

I started working in a poor developing country in Asia.

I went on to work in countries emerging from conflicts.

I set up a nonprofit in Afghanistan,

I lived in Kabul for a number of years.

I went on to join the British Agency for International Development.

I ended up as the boss

in charge of 20-billion- dollar-a-year budget

directed to addressing extreme poverty.

What I saw was deeply depressing,

that when you go out on the ground,

these projects are far worse than you could possibly imagine.

The statistics and the evidence

are shocking.

Over decades of attempts to address this.

It's true that in percentage terms,

the number of people living in extreme poverty around the world has reduced.

A lot of that, of course, is to do with countries like China,

which have had incredible economic growth rates.

And even in sub-Saharan Africa,

there has been some reduction in the percentage of people

living in extreme poverty since 1980.

The absolute numbers of people living in extreme poverty in Africa

have gone from 170 million people in 1980

to 430 million people today.

That's almost half a billion people not able to meet their most basic needs.

And that is often because of just how bad our projects are.

Let me try to give you an example.

When I was a British government minister,

I went out to see one of these projects in East Africa,

which was directed towards trying to address poverty

through addressing the needs of young women.

The idea was that young women, during their menstrual cycle,

if there are not sanitation facilities available in schools,

will often leave school in order to return home,

and that will contribute to them not being in the workplace and to poverty.

I set off to visit the project and as you can imagine,

I received an amazing 100-page document

full of descriptions of all the smart stuff

that we thought we were doing:

needs assessments,

community consultations, engineering diagrams,

logical frameworks,

theories of change.

And I arrive at the project

and what I find is a line of white Land Cruiser jeeps

and smiling engineers.

And I get out, and all of them are explaining to me

all the wonderful stuff they've done in terms of sanitation, engineering,

design and consultation.

I asked to see what the result of it is,

and the result was literally two holes in the ground

with brick walls around them and five red plastic buckets.

2,000 dollars, maximum, impact

in terms of what we'd done for a 40,000-dollar project.

And I said to people,

"Why did you not just give 2,000 dollars to the head teacher

and let the head teacher buy those buckets?"

And the answer was,

"We were worried that if we didn't do all our paper works and studies

and needs assessments and consultations,

the project would go wrong and he would steal the money."

And my response was,

"We stole the money."

(Applause)

We literally stole 38,000

out of 40,000 dollars.

We could have done 20 times the number of schools.

We stole the money.

Now why is it that we get ourselves stuck in these problems?

Well often it is because of mindsets.

It's because of institutions, it's because of careers,

but it's also because of mental models.

And in particular, it's this lovely phrase,

“Give someone a fish, they eat for a day.

Teach them to fish, they eat for a lifetime.”

It's a miraculous phrase.

You can see why it's incredibly appealing, right?

Instead of imagining yourself flopping trout into someone's boat,

you imagine that you've taught them something

where magically, they're going to be able to feed themselves

for the rest of their lives

and you just step aside.

The problem is, unfortunately, that this phrase,

although incredibly appealing,

is actually leading to very patronizing programming

and programming that often achieves exactly the opposite

of what it claims to do.

And I realized that because I went out to see a completely different project.

I went to Rwanda,

to the Rwanda-Burundi border three years later,

and I saw a project where an NGO had turned up on the ground

and instead of doing capacity building, instead of teaching people how to fish,

they were quite literally just giving unconditional cash to people.

They were handing out cash.

They were turning up in village houses and saying,

"Here is 900 dollars in cash,"

not a monthly payment, a lump sum payment,

it's not a microcredit or a loan.

"This is your money, you can do with it what you like."

And I was completely astonished.

This seemed to be the most anti-development fish-giving project

I'd ever seen in my life, right?

(Laughter)

But the results were absolutely staggering.

This community had completely transformed

the amount of electricity in the community,

almost everybody was ending up with roofs,

almost everybody had health insurance.

It was a fantastic increase in the number of children in school.

The whole place just felt better, happier.

Honestly, in my entire life in international development,

I'd never seen anything like this village.

And it turned out that it wasn't a fluke.

Because academics over the last 10 or 15 years

have begun to use randomized controlled trials.

These are studies like a medical trial,

in which you compare a treatment group to a control group

and study them over time.

And what they discovered in hundreds of studies

in many countries in the world

is that consistently,

cash was leading to a real reduction

in things like child mortality and depression

and fantastic increases consistently in education, in health,

in businesses, in savings, in incomes, in investment.

More than that, it was actually leading to a multiplier effect.

For every dollar delivered into a community,

there was 2.50 dollars of benefit for the surrounding villages.

It was a fiscal stimulus.

And no, it was not, as you might imagine,

leading to people just lying around in bed, drinking alcohol.

In fact, people were investing the money productively.

Now why was this?

Well I realized that there are probably four reasons why cash is so effective.

The first is that people in extreme poverty

frequently don't require knowledge.

What they require is capital.

Take Jeanne, a traditional program that I used to run

when I worked for the government,

would have gone in and taught her how to run her business.

But Jeanne already knows how to run her grocery business.

She just doesn't have the money for the biscuits, right?

In other words, she already knows how to fish.

What she doesn't have is the money for the fishing hook.

The second reason why cash works is that everybody's different.

If you work your way around that village,

Jeanne needs to open a grocery shop,

Seraphine wants to get her children into school,

Esperance wants to access health care,

Telesphore wants to get a cow

so that he can have milk and yogurt to sell.

Marie may want to set up a tailoring business.

Damascene may want to get a motorbike taxi.

In other words,

people don't want to learn how to fish.

They might want to open a bakery.

(Applause and laughter)

The third reason that cash works

is that it's of course, much more efficient.

Instead of going in

with an international construction company or an NGO

building someone's house for them,

if you give them the cash,

they will work with their neighbors and with local materials

to repair and fix their house at a fraction of the cost,

and then have money left over for other things.

And the final reason why cash works

is it trusts people.

People are making their own choices on what they want to do with the money.

And when people make their own choices,

they are then able to sustain and take pride in the investments

in a way that isn't possible if somebody else does it for them.

So we are now at a moment

where I believe unconditional cash transfers

could unlock the secret of addressing extreme poverty worldwide.

And the reason to be excited by it

is that technology is suddenly making this much easier

over the last ten years.

So the extreme poor in Africa can now,

for seven or nine dollars, get hold of a feature phone,

and money can be directed directly to their phone,

cutting out all the middle people,

all the governments and NGOs that used to take the money along the way.

Artificial intelligence is now allowing us to target

and understand communities in a way we couldn't before.

In Togo, for example,

the Togo government was able to deliver cash

through people's phones

to 100,000 people in a matter of hours.

Technology is also helping us with climate change.

In the past, cash assistance arrived after the flood had hit.

Now AI is allowing us to predict far better than before,

when the extreme weather event would occur

and allow us to get the cash to people, to move their livestock,

move their families before the flood arrives.

Now, of course, cash is not the answer to everything, right?

There are many other things that governments need to do.

They need to make sure, for example,

that there is good government.

We need to build roads, need to build bridges,

need to build dams, need to improve the quality of education in schools.

These are all things that need to happen.

But what cash does

is it allows the extreme poor to participate in that development story.

It allows Jeanne to use that road to get her products to market.

It allows Esperance to use the clinic.

It allows Telesphore to find the markets for his milk or his yogurt.

And this is where everybody here can contribute, right?

As an individual on a lower income,

you can send 30 dollars a month directly to someone in extreme poverty.

It will make 100 times more difference to them than it does to you.

If you're a wealthier person listening to this,

put in tens of millions of dollars,

put in hundreds of millions of dollars.

Demonstrate that what we've seen at a small scale

can lift an entire country like Rwanda or Malawi out of poverty.

And do so to get to people like me,

to convince the government ministers

and the big agencies

that they should be putting the money behind cash.

Because the money is there.

We spend almost twice as much annually on international development

as it would take to lift everybody in the world

out of extreme poverty.

And we can do it.

And the most important thing to understand here

is that the cash is not just proven in evidence to be more effective,

more efficient,

more tailored.

There is a moral dimension here

because it respects people's choice

at an age that's worried about patronizing and colonial aid.

It doesn't just consult them or listen to them,

it puts them in charge.

It literally lets them make the choice.

It respects their equality

and it respects their dignity.

Thank you very much indeed.

(Applause)