A cashew nut farmer on the island of Flores, located in the Nusa Tenggara Timur province of Indonesia. Photo: jasperwiet (flickr)

Indonesia is setting its own poverty line at less than $1 a day. When a country comes up with its own definition of "poverty", can global policy makers trust it.

Indonesia’s equation to measure its own poverty line is based on a series of calculations for what poor people spend money on — including housing, food, education and health care, also accounting for cost differences between urban and rural areas, according to a recent blog post from The Economist. And conveniently, this homegrown equation says only 30 million out of Indonesia's 245 million population live below the poverty line.

What the equation doesn’t account for is more important. From 2004 to 2009, during which Indonesian GDP per capita shot up 38 percent, the World Bank's estimate of Indonesia's poverty rate fell only slightly, from 16.7 percent to 14.2 percent. The Indonesian poverty equation doesn't capture the deep socioeconomic differences between urban and rural areas that has preserved this inequality.

Despite Indonesia's efforts to eliminate statistical poverty, the facts are clear — 100 million Indonesians still live under $2 a day. Considering the World Bank sets the poverty line at $1.25 a day, the Indonesian government's insistence that only 30 million are living in poverty becomes clouded.

Although countries creating their own measurements for the poverty line may be useful, in the Indonesian case it seems wrought with discrepancies. Setting the poverty line below $1 a day may look good on paper, but doesn’t help those who are struggling and certainly can’t be utilized on an international basis.

While corn is not native to Malawi, it has become the country's staple crop. Photo: Nathan Laurell (flickr)

Teach a man to fish and you feed him for life; if you give a family seeds, do you feed them forever?

For decades, the people of Malawi have lived with chronic food shortages, prompting massive food aid interventions. But these unending handouts of foreign-grown food are unsustainable, so how can one of the poorest countries in the world enable its population to produce the food they require? One answer is to give the Malawian people the tools to grow it themselves.

A scorching drought ruined the 2005 Malawi growing season. Compounded with an economy that didn’t allow many to plant in the first place, this left the people hungry, reported the New York Times. Five million Malawians, almost 40 percent of the population, required emergency food aid -- the proverbial fish handout. At the time, World Bank policy was to promote cash crops and exports. This incentivized farmers to grow crops for use outside of the country, that would in turn allow they to buy food. But after more than a decade of implementation the strategy had yet to pay off, the Times notes.

After the food crisis in 2005, something changed. Newly elected President Bingu wa Mutharika defied the decades-old advice from the World Bank. Instead of encouraging cash crops, the government started subsidizing fertilizer and maize seeds for the poorest of the poor. At the time, the national poverty rate was at 53 percent, so this was a huge undertaking. This move defied the conventional wisdom of the West and the World Bank and carried a sizable risk of alienation and failure, reports the Times.

Despite these challenges, the government of Malawi distributed millions of coupons for two 50-kilogram bags of fertilizer -- enough to treat an acre -- and seeds to fill half that space. These coupons allowed the holders to purchase fertilizer and seed at a fraction of the retail cost. With such small allowances the program was targeting subsistence or small-scale farmer, who likely only owned a few acres, this giving the common people of Malawi the tools to support themselves.

The crops and fertilizer, when combined with the abundant rainfall of 2006, completely transformed the barren landscape. Maize production more than doubled that year, from 1.2 million metric tons to 2.7. By 2007, production was up to 3.4 million and instead of importing food aid, Malawi became the largest exporter of corn in Southern Africa to the World Food Program.

However this success has come at a cost. Between 2008 and 2009, the government of Malawi dedicated a full 16 percent of the national budget for seed and fertilizer subsidies. This strain prevented other projects, such as irrigation systems, from getting off the ground. And some question the sustainability of the subsidies. Elizabeth Sibale, a consultant at the UN Food and Agriculture Organization in Malawi, commented that “[Malawi is] forgetting all the other problems that affect farmers and putting a Band-Aid on them."

It has been a full six years since the initiation of the subsidy program and it's harvest time again in Malawi. But even as the corn is harvested and processed, the Malawian government is debating the future of the subsidies. The program officially ends in June and while the program has been successful at raising corn production and lowering poverty levels, the true cost of the subsidies has been steep.

So the question remains: Are fertilizer subsidies teaching families to fish, or are they just handouts wrapped in a new package? The answer seems to be somewhere in between. Ensuring access to seeds and fertilizer is an important step in reducing poverty, but it is only one step. In 2004, about 60 percent of Malawi's population was impoverished. Today the poverty rate has fallen to 40 percent. These numbers seem to suggest that the idea is working, but the remaining poverty level demonstrates that it’s not enough.

World Development Indicators 2010 Launch and Open Data Initiative announced April 10, 2010. Photo: Simone D. McCourtie/World Bank (Flickr).

Problems cannot be solved without understanding the facts. Because of this, the World Bank launched a collaborative open data website to promote transparency and informed policy-making in April. The website allows users to download, manipulate, and use data freely. And it is available in several languages.

Pooling all this data in one place is helpful because it allows users to compare things like foreign aid dollars and fluctuations in the poverty rate within a country over a set time period. Or correlations between key health indicators and stats on education, and so on. With these tools development practitioners should be able to learn what is most statistically important to reverse poverty.

World Bank President Robert B. Zoellick discussed the importance of public data access shortly after the unveiling:

Statistics tell the story of people in developing and emerging countries and can play an important part in helping to overcome poverty. They are now easily accessible on the Web for all users, and can be used to create new apps for development.

Later this year, the organization will announce its "Apps for Development Competition," challenging users like you to make new mash-ups and tools for development. Keep an eye out for the announcement!

A young girl walking on the outskirts of Kibera, the largest slum in Africa. Photo: subcomandanta (flickr)

More than $50 billion of foreign aid is given to African countries every year to address poverty on the continent. Although this may seem generous, and to some a solid strategy to treat Africa’s ailments, Dambisa Moyo — a Zambian economist with a background that includes Harvard, Oxford and Goldman Sachs — says just the opposite.

In her new book, Dead Aid: Why Aid is Not Working and How There is Another Way for Africa, Moyo claims that foreign aid has been "an unmitigated political, economic and humanitarian disaster.”

In a recent op-ed piece in the Wall Street Journal, Moyo writes that although she isn’t completely against humanitarian aid, she doesn’t believe "charity-based aid" can provide long-term sustainable development for Africa. Her biggest issue is with “government-to-government aid,” and funds from large monetary institutions like the World Bank. Moyo says the $60 trillion of this aid that's been given in the past 60 years is not working, evident from the fact that the number of Africans who live on less than $1 day has doubled in the last 20 years. And most foreign government aid, she argues, has been pocketed by corrupt politicians.

Trade, foreign investments and microfinance opportunities can provide a better future for Africans, Moyo said in an interview with the New York Times.

As expected, Dambisa Moyo’s claims have come under fire. In an interview with Newsweek, ONE Campaign co-founder Jamie Drummond says “Dead Aid” is “a poor polemic, with nothing new of substance, filled with anecdotal micro examples which ignore mountains of evidence." Madeleine Bunting from the Guardian calls Moyo’s claims “poorly argued” with “frequent pre-emptory glib conclusions.”

I wanted to get another perspective on Dambisa Moyo's assertions regarding the effects of foreign aid on Africa. So I asked Laura Miller — Program Officer for Central Africa at Mercy Corps — to respond to some of Moyo's claims based on her experience in the international-aid business, including stints in the Central African Republic and the Democratic Republic of the Congo.

Photo: hdptcar (flickr)

It’s not easy to find something good to say about the global economic downturn, but a former World Bank economist claims that there is a possible bright spot.

According to Dambisa Moyo, donations and outside aid money for Africa have done little to extricate the continent from poverty. Instead, she suggests, the slowdown in aid as a result of the global financial crisis will give African countries an opportunity to create new and innovative ways to boost economic development. Moyo would instead like to see African countries increase trade with Asia, have more foreign investments, establish more microfinance projects, and raise money through capital markets.

Moyo’s ideas are quite a departure from the prevailing sentiment regarding aid to African countries. U.N. Secretary General Ban Ki-moon and World Bank President Robert Zoellick, among others, have made impassioned pleas in the past few months, urging wealthy nations not to renege on their aid promises. According to an interview with Reuters, Moyo is not moved by these arguments:

[The aid] actually tends to pool at the top so it's not like the average African is going to suffer. They don't see the aid anyway. Essentially it's going to really affect the bureaucratic processes at the top and would really impact on corruption."

The current global recession will undo a 20-year trend of fewer and fewer people living in abject poverty, according to the World Bank's Year in Review 2008 report. The reversal is due to high food costs and sluggish growth, which has caused the poverty rate to increase by about 1.5 percent this year in urban parts of East Asia, South Asia, the Middle East and sub-Saharan Africa.

Forecasts indicate that strong growth may return to some developing countries by 2010, but not quickly enough for the millions currently hungry and unemployed.