1 Week to Davos: Ending Poverty With Digital Transformation
17 weeks to Davos. 17 global goals to achieve a sustainable future. 17 blog posts exploring the UN’s vision for humankind. Here is number 1.
Global Goal #1: End poverty in all its forms everywhere
The cost of an iPhone lifts one person out of extreme poverty for almost two years. Over 800 million people in the world barely subsist on less than $1.25 US each day. Few of us can fathom what that life would be like. Four college friends – Chris Temple, Zach Ingrasci, Sean Leonard, and Ryan Christofferson – chose to live in rural Guatemala one summer break. Their award-winning documentary, “Living on One Dollar,” gives us a small taste of poverty’s harsh reality.
According to the World Bank, 85% of the extremely poor live in the countryside of South Asia and sub-Saharan Africa. This is a shift from 30 years ago, when 80% of the extremely poor lived in East Asia. Economic transformation in China and surrounding countries lifted hundreds of millions of people out of the “extreme” designation. As a result, the percentage of extremely poor in the region decreased to 7% and the number of people living in extreme poverty by over 40% globally.
Microfinancing: our way to prosperity
The economic transformation of the Industrial Revolution led to a higher standard of living for most. Rural folk living in abject poverty moved to cities in droves to find work in factories that were started by entrepreneurs and fueled by innovation. Over time the quality of everyone’s lives improved.
Can we replicate the success of Europe and North America in the 19th century, and more recently of China in the 20th century, with an entrepreneurial awakening for hundreds of millions stuck in extreme poverty?
“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” Microfinance a man who fishes and you lift him out of poverty.
According to the World Bank, over 2 billion people lack access to simple financial tools, such as bank accounts and loans. Experts recognize that financial services are crucial to ending poverty. Many poor have the desire and knowledge to “fish” for themselves, but without even basic financial tools they lack the tiny amount of capital needed to turn their dream into reality.
Accessing financial services is a major barrier for many of the poorest because banks rarely build branches in slums and remote rural villages. Up until now, it has been cost-prohibitive, but this is changing. With the widespread availability and use of mobile phones among the poor, and financial services offered through a mobile device by institutions such as UBank and Standard Bank, everyone has the opportunity to improve their lives.
Digital transformation: friend or foe?
Poverty exists everywhere, and that’s where the UN Global Goal wants to end it – all over the world. Almost 15% of the US population lives on $50.82 per day, which is below the poverty line. Even people who are gainfully employed live impoverished lives. In fact, with a minimum hourly wage of $7.25 in most US states, a family of three with one adult working 40 hours per week at minimum wake is officially poor. The situation in Europe is no better.
Many hold a gloomy outlook on the future. It appears the middle class will slide back into poverty if current trends continue. Earnings for the average worker have been declining for decades, eroding the middle class around the world. Some worry artificial intelligence, and more broadly digital transformation, is the next major revolution to displace workers – following on globalization, information technology, and mechanization before that. It’s not only lower-wage factory work at risk, but doctors and researchers as well. It’s not only friends and family, but you and me.
Digital transformation has the incredible potential to cure intractable diseases; ensure sustainable consumption and production; and equip people with the knowledge and skills to improve their lot in life. But digital technologies will require social, political, and economic transformation as well if we are to elevate people’s lives. By managing the shape of digital transformation, we can make everyone better off; the future of work – and the end of poverty – depends on it.
SAP is doing its part
As part of our vision and purpose, SAP is proud to help companies like UBank, National Bank of South Africa, and Juhudi Kilimo, an agricultural microfinancing initiative, give people the means to improve their lives. We believe when the digital revolution is shaped the right way, it can build a digital economy, ensure the future of work, and improve life for all – like the Industrial Revolution did 200 years ago.