Village savings and loan schemes help the poor save in remote communities like this one in Malawi. Photo: Erik Mandell for MercyCorps

The world's poorest have long struggled to borrow. Now, an alternative microfinance model is also making it easier for poor people to save.

Microfinance institutions have provided lending services to millions of the world’s poor people for several decades. But loans must be paid back, and even traditional microlenders are hesitant to lend money to the poorest of the poor—including those living in some of the most remote and unpopulated communities. That’s where the model of village savings and loans associations (VSLAs) comes in, according to a recent Economist article.

The idea is simple: savings, rather than just borrowed money, is key to helping poor people become more stable and less vulnerable. Differing from the better-known Grameen Bank model of microfinance, which provides individual or group loans and operates on credit, a village savings and loan scheme allows a group of community members to pool their savings, lend within the group, and save the interest earned from the loans to disperse to members individually or use for community projects.

This model enables both borrowing capabilities and longer-term savings accumulation for both the group and its members.

CARE International, a humanitarian aid organization focused on fighting poverty, engineered the VSLA model in Niger in 1991. Today, CARE oversees village savings and loan associations in Ghana, Malawi and Uganda. Numerous other non-governmental organizations have promoted village savings groups that serve more than 4.6 million members in 54 countries.

While nonprofits promote the model, the groups themselves are internally managed. Unlike solely credit-based models, group members do not owe repayment to an external bank, but rather to their own pool. Group constitutions are established by members, outlining rules, interest rates, and how savings and interest will be shared. Sometimes transactions, debts and credits are written in basic ledgers, but some groups with no literate members rely on memorization, familiar to those with a culture of oral history, according to Hugh Allen, founder of VSL Associates.

Amid criticism of the effectiveness of traditional microfinance models, as we reported a few months ago, VSLA schemes offer a different path to poverty alleviation.

And for some of the world’s poorest, savings—not a loan— is the golden ticket needed for a better life.

Erik Mandell is a graduate of Middlebury College in Vermont. He is currently pursuing a master's degree in public administration and global leadership at Portland State. Read his other contributions to Global Envision.

Much needed food aid being distributed in Sukkur, Pakistan. Photo: Rob Holden, UK Department for International Development (Flickr)

Malnutrition, which prevents children from reaching their physical and intellectual potential, is falling. The most significant cause? It's becoming a politically important issue in its own right.

Today, 925 million people do not have enough to eat. About 98 percent of those people live in developing countries and 60 percent are women. In sub-Saharan Africa, one third of all child deaths are caused by hunger.

But these rates are lower than they have been in the past. In Brazil and Peru, malnourishment in some regions has been nearly eradicated. A likely cause for these improvements is economic development: as economies grow, people should have more money for food.

But a recent study found no such correlation in many parts of the world. In Peru, a mining boom occurred that boosted the incomes of certain regions. But these regions were not those that saw the most dramatic drop in malnutrition rates. In Southeast Asia, where economies have been growing rapidly, hunger rates have not seen a corresponding drop. As the World Bank’s chief economist for South Asia describes it, "For a region that's clocked something like 6 percent growth on average over the past decade, the statistics on malnutrition are just truly astonishing and unacceptable.”

Growth hasn’t exactly led to glut for much of the developing world. But many regions have seen a sharp decline in hunger rates.

Children in Haiti waiting for food and school supplies to be distributed. Photo: UN Photo/Marco Dormino (flickr)

What caused the plummet? Proactive politicians. Increasingly, politicians are seeing tackling malnutrition as a means of getting elected. The humanitarian news and analysis service IRIN reports that malnutrition has been a neglected issue in the politics of many developing countries. One researcher from the Institute for Development Studies recalls being told by Indian journalists that hunger was a difficult issue to get past editors “because it’s not an election issue.” Looking at the figures for global poverty, it is easy to note that the world’s poorest tend to be the most politically neglected. This may be changing.

The study attributes this attitude shift to civil society networks that are getting better at lobbying governments, and to governments that are themselves becoming more responsive amid democratization of the developing world. According to the World Health Organization, “disparities in health outcomes between the poor and the rich are increasingly attracting attention from researchers and policy-makers, thereby fostering a substantial growth in the literature on health equity.” More attention has led to more action in many parts of the world.

Former Peruvian president Alan Garcia was elected on his “5x5x5” campaign, which pledged to reduce malnutrition for children under age 5 by 5 percent in 5 years. After his election proved it to be a popular issue, he raised the figure to 9 percent.

Some leaders learn the hard way that hunger is something to be taken seriously. In Niger, former president Mamadou Tandja all but banned the subject of hunger from the press. A growing hunger crisis led to his ouster in a military coup. Knowing that its power rested on a promise to provide food, the interim government acted quickly to coordinate relief efforts.

For most countries that have reduced malnutrition, success came after national governments began coordinating and implementing broad anti-poverty campaigns. In Malawi, the federal government began coordinating its own programs with those of non-profits operating in the country to increase efficiency and monitor what worked and what didn’t. Cash transfer programs that were established to incentivize behavior in the community best pulled people out of poverty. While international groups have been doing good work in Malawi for quite some time, it was the government’s engagement of the issue that proved crucial to increasing efficiency and providing real results. “The government’s remarkable engagement and leadership on fighting hunger and undernutrition cannot be overstated,” according to reports from Tripode Proyectos, the research group that conducted the study.

So malnutrition is being elevated in importance around the world. But it is still a huge problem. In Asia, Latin America, and Africa, despite recent improvements, malnutrition remains a leading cause of death for children. As many developing countries head for economic growth, this study should remind us that bigger GDP does not always mean healthier people. But prosperity should mean more money and resources to fight hunger, and politicians are learning that healthy voters are more likely to be happy voters.

According to one Peruvian governor, “In the past, politicians didn’t care about issues like nutrition, because children don’t vote. But now they have realized that their mothers do.”

Ben Osborn is a 2011 graduate of Lewis & Clark College in Portland, Oregon. Read his other contributions to Global Envision.

By the summer of 2008, the price of rice had increased five times from the average price in 2005. Photo: Thatcher Cook for Mercy Corps

The following post is from One Table, a Mercy Corps campaign to fight world hunger by investing in the world's women.

Today almost a billion people worldwide are unable to buy or grow enough food to avoid malnutrition. That's 120 million more than were hungry in 2006.

What happened? Basically, the world saw dramatic spikes in food prices. But there were many underlying causes of what's known as the global food crisis:

• Drought and other climate-related problems that resulted in smaller harvests
• Changing diets — rise of the middle class in India and China and an increased demand for food, especially meat, which requires large amounts of grain to raise
• Diversion of crops from food production to the production of biofuels
• High fuel prices during 2008 — if it costs more to transport food, prices go up
• Declining investments in agricultural productivity — total agriculture development aid to poor countries plunged from $8 billion in 1984 to $3.4 billion in 2004. At the same time, the developing world's cities have been ballooning with people who do not grow any of their food
• Export bans and restrictions last year in several major grain-producing countries like China as governments sought to lower food prices for their own citizens, with the result of reducing the global supply on hand.

While food prices have come down from their highs of 2008, they remain substantially above historic levels. Many economists feel this trend, which most severely affects those who can least afford it, is likely to continue for some time.

The economic, health and societal costs of the global food crisis have been severe. One of the first things Mercy Corps did to figure out how and where to direct our efforts was to survey the communities where we work. We discovered that within communities Mercy Corps serves, roughly 70 percent of income is spent on food, and 80 percent of the population had been affected by rising food prices over the past year. The survey also confirmed something we already suspected: that families were coping with higher prices by eating fewer meals, selling off household belongings, going into debt and removing children from school so that they can work.

In addition to being a record year for food prices, it's also been a record year for our food security team, allowing Mercy Corps to aggressively respond to this crisis. We now have 17 programs in 13 countries designed specifically to respond to this on-going problem. Through support from donors including USAID, the Bill & Melinda Gates Foundation, the Gap Foundation, the Hunger Site, and private individuals, our Food Crisis Response employs a strategy designed to ensure that the groundwork for increased prosperity in the future is laid — even while addressing the immediate problem of accessing sufficient food.

Food distributions, much of which are specifically targeted to improve child nutrition, are taking place in Tajikistan, Kyrgyzstan and Zimbabwe. Meanwhile, in the Central African Republic, India, Indonesia, Liberia, Nepal, Niger, Somalia, Sri Lanka, Uganda and again Zimbabwe, Mercy Corps is helping hungry households to access food by providing employment opportunities, agricultural training and inputs (such as seeds and tools), and helping people establish and grow small businesses.

Combined, these programs are reaching almost 1.5 million individuals who have been directly impacted by higher food prices. Overall, Mercy Corps’ Crisis Response will lead to a sustainable increase in income for these people, leading in turn to greater food security over the long-term.

In some parts of Africa, cell phones are becoming essential tools for economic growth, bringing both information and prosperity. In the Democratic Republic of the Congo (DRC), however, cell phone technology is helping fuel a deadly, decade-long civil conflict that has sharply escalated in the past week.

There are plenty of examples of how cell phone technology benefits national economies. A 2007 study suggested that a country's economy grows 1.2 percent for every 10 percent increase in the number of cell phone users. An analysis from Niger reports that cell phones triggered a fall in grain prices and a 20 percent reduction in geographical differences in grain prices after they were introduced in 2001. The researcher concludes that cell phones allow grain traders to collect information about market prices without the time and expense of travel, allowing them to respond to market shifts cheaply and efficiently.

The war in the Congo, however, illuminates the dark side of this technological success. Part of the battle is over resources, including a rare mineral called coltan used to manufacture small electronics. Eighty percent of the world’s coltan is in the DRC, and the world's rabid demand for things like laptops and cell phones has made coltan extremely valuable.

According to OneWorld.net:

Armed militias from Rwanda, Uganda, and Burundi, along with local militias from the DRC, are exploiting most of the reserves and selling the product to multinational corporations that produce cell phones and other electronic devices.”

This battle over resources has led to rape, torture and death in the Congo. In introducing the history of this conflict, a reporter for The Independent admonishes, "No, this is not only a story about them. This — the tale of a short journey into the long Congolese war we in the West have fostered, fuelled and funded — is a story about you.”

The Green Wall for the Sahara Initiative will plant a wall of trees to stop the spread of the Sahara. Photo: Dale Gillard (flickr)

Ever heard of the Great Green Wall?

Concerns about the rapid southern spread of the Sahara desert have prompted African nations to build a wall – out of trees.

The Sahara has been moving south at a rate of almost a square kilometer a year, consuming villages and wiping out agricultural lands.

Slowing the desertification has become a huge priority — and a huge community effort.

International aid groups are helping build community gardens, institute new irrigation techniques, and teach sustainable farming. Projects are especially successful in the areas of the Sahara, like northern Burkina Faso, where new farming techniques are taking advantage of increased rainfall due to climate change.

The biggest project to date is the Green Wall for the Sahara Initiative. The $3-million, two-year initial phase will plant a belt of trees 7,000-kilometers long and 15 kilometers wide, and was formally approved at the Community of the Sahel-Saharan States in Benin last month.

The African Union says future phases will plant trees from Mauritania to Djibouti in two parallel belts, creating a strip of protected topsoil for high-yield farming. Nigeria has launched its own complimentary Desert-to-Food Program.

The AU hopes the Green Wall Initiative will arrest soil degradation, reduce poverty, conserve biodiversity, and increase land productivity in more than 25 countries. Others hope the project will create millions of jobs, promote ecotourism, alleviate the food crisis, and even introduce new fishing and livestock-breeding industries.

Who would have thought a wall of trees could have such a big impact?