Poverty’s Not a Narrow Subject

For me, the Sen discussion is an extension of the main discord amongst members of La Ceiba. From writing an effective mission statement to simply analyzing each other’s blogs, we have all failed in finding a definition of poverty that satisfies us all. We have struggled to understand the complexities of the relationship between income and poverty, and have argued over the importance of increasing income as a means of eradicating poverty. Sen offers a simple but powerful argument, that “there is a danger in seeing poverty in the narrow terms of income deprivation”, and that to eradicate poverty we must also pay attention to “capability deprivation” and “freedom deprivation.” This suggestion should be considered by the members of La Ceiba and kept in mind as we move forward.

To me, it’s easy to understand that income is not the only relevant factor to eliminating poverty. It’s absolutely relevant, but it cannot explain everything. Think of it this way: if you needed to buy a blue book for an exam, what could possibly deter you from not doing so? Well, maybe you didn’t have a quarter… maybe you felt too sick to leave your dorm… maybe the bookstore was closed? All legitimate reasons. You either didn’t have the income to buy the book, you didn’t have the capability to walk to the bookstore and get it, or the freedom to break open the doors of the bookstore and get it yourself. I know it’s basic, but sometimes thinking about it this way makes it clear. No matter whether you had a quarter or not in the last two instances, you weren’t getting a bluebook. I know it’s basic, but it’s helpful in understanding Sen’s basic argument.

In providing loans, La Ceiba is able to provide our clients with an opportunity to invest in themselves. Perhaps unknowingly, our organization already addresses many of these issues. We lend only to women, and by doing so, we are increasing their capabilities to participate in providing for their families, a role traditionally filled by men. We have no stipulations of how clients use the loan money, allowing our clients to freely choose for themselves what the loan money should be used for. While these may not always be La Ceiba’s rules, they seem complimentary to the action of issuing loans.

In the end, La Ceiba needs to continue to recognize the complexities of poverty reduction. We must be receptive to the idea that increasing income alone will not eradicate poverty for our clients. We must look to increase not only the physical capital of our clients, but the human capital as well. Both are essential elements to reaching our ultimate goal as an organization.

6 Responses to “Poverty’s Not a Narrow Subject

  • russellscott
    13 years ago

    “In providing loans, La Ceiba is able to provide our clients with an opportunity to invest in themselves.”

    La Ceiba does not require any guarantee, or even ask what our clients use the loans for, so we really don’t know if they are investing in themselves. We can only go on what they tell us after the fact, to say nothing of the scores of defaulted loans that we’ve given.

    “We lend only to women, and by doing so, we are increasing their capabilities to participate in providing for their families, a role traditionally filled by men”

    How do you know that happens? In theory, perhaps, but there is no evidence (that I am aware of, at least) that La Ceiba is successfully modifying the roles of women in the Honduran Family unit. If you have Data otherwise, though, i would like to see it.

    “We have no stipulations of how clients use the loan money, allowing our clients to freely choose for themselves what the loan money should be used for.”

    No other MFI does this. We are the only ones, and (without giving away anything major from the Performance team presentation tomorrow), i can tell you that it is not cost effective or sustainable. We have no data on how they use the loans, nor do we have any data on what they do with the money. Not having any stipulations on the money use means that our policy is “Have some money, and pay us back when you feel like it.”

    “While these may not always be La Ceiba’s rules, they seem complimentary to the action of issuing loans.”

    I Can tell you right now that its not working from the accounting perspective, and its only hurting La Ceiba, and that can only hurt the clients that we hope to help.

  • I’m not sure that I discussed how failing to recognize these other aspects could be “dangerous” for La Ceiba. In failing to recognize all aspects of poverty, it would be impossible for the organization to achieve any sort of success. If our client’s do not feel that the loans are increasing their well-being, they will no longer participate. In that case, La Ceiba will have failed as an organization and failed to improve the lives of our clients.

  • russellscott
    13 years ago

    Forgot to add: Given all that, how do you think La Ceiba can alleviate poverty at all? what should La Ceiba change to make it more effective at alleviating any kind of poverty, be it Income or Otherwise?

  • “La Ceiba does not require any guarantee, or even ask what our clients use the loans for, so we really don’t know if they are investing in themselves. We can only go on what they tell us after the fact, to say nothing of the scores of defaulted loans that we’ve given.”

    While many of the women are in default, they are still in communication with Ana and participants of the program. We only have 1 instance of a woman taking La Ceiba’s money, and leaving. While the women are struggling to pay their loans, they are paying. These women have many troubling issues, yet, they continue to pay when they can. If the women were not using the loan money correctly, why wouldn’t they just completely stop cooperating? Nothing is stopping them from doing so.

    How do you know that happens? In theory, perhaps, but there is no evidence (that I am aware of, at least) that La Ceiba is successfully modifying the roles of women in the Honduran Family unit. If you have Data otherwise, though, i would like to see it.

    It’s not always about data. I’d love to be able to offer it to you, but we only go to La Ceiba for a week. Have you ever had a conversation with any of these women? Do you talk to Ana? From the conversations I’ve had with her, it is evident that La Ceiba has helped these women participate in matters that they were silenced on before. Giving the women loans DOES empower them within their families. Using statistical data alone to measure something like empowerment is naive.

    “No other MFI does this. We are the only ones, and (without giving away anything major from the Performance team presentation tomorrow), i can tell you that it is not cost effective or sustainable. We have no data on how they use the loans, nor do we have any data on what they do with the money. Not having any stipulations on the money use means that our policy is “Have some money, and pay us back when you feel like it.”

    Here, I’ll agree with you in some ways. While we are NOT the only MFI that does this (many MFI’s limit monitoring of loans because of confidentiality), we are among a VERY small minority. It is possible that we ARE the only MFI that does not require collateral & does not monitor loans. This is a HUGE risk that La Ceiba has taken on, and a dangerous combination. Unfortunately, there is a fundamental trade-off between sustainability and lending to the ultra-poor. I’d also like to see us monitor loans, but that would be putting a VERY UNFAIR BURDEN on our Honduran loan officer. Perhaps we can think about getting more staff members on our team on the ground in La Ceiba… what’s your suggestion?

    La Ceiba needs to be a sustainable organization in order to increase the income levels of our clients, the capability of our clients, and the freedom of our clients to make their own decisions. We have a lot of work to do as an organization, but if I questioned the potential of this organization to do good, I wouldn’t be in the class.

    I don’t go to class on Thursdays but I’m very interested in seeing your presentation? Perhaps you could send me a personal e-mail of your powerpoint and some explanations? It’s econrad@mail.umw.edu

    Good luck tomorrow.

  • One additional point about the data on how the loans are used (you both are addressing crucial issues): our client pool is not large enough for statistical proof of anything. So though many economists and impact practitioners would say that simply talking to Ana and getting stories or examples of how we help doesn’t mean anything, in our case it does. With the limited number of clients that we work with, we can use individual stories as a stronger approximation of our overall impact than we otherwise would. Also, as you point out, numerical data is relatively meaningless when dealing with something like empowerment. Just because it cannot be quantified does not mean that it is unimportant.

    • russellscott
      13 years ago

      I’m sorry but you are incorrect. We are not looking for statistical “proof” but statistical Data. Then we can say “x% of our clients do THIS”. and it is relevant. it helps in many ways, so saying that we dont have enough clients to get useful data is completely incorrect. any data is useful. right now we have none.

Leave a Reply to russellscott Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

css.php