UNITED NATIONS CAPITAL DEVELOPMENT FUND    Microfinance

Issue 11 / April 2005

Issue Table of Contents

Marketplace

Made by Microentrepreneurs

Update

on the International Year of Microcredit 2005

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Past Issues

By Mindy Booth, Robert F. Wagner Graduate School of Public Service, New York University

Jeffrey Sachs

The Millennium Development Goals were set forth with a goal to cut extreme poverty in half by the year 2015. The International Public Service Associations Spring Conference of New York University's Robert F. Wagner Graduate School of Public Service was held on March 25, 2005, discussing the topic, "The Millennium Development Goals, Lessons, Opportunities and Challenges." Jeffrey D. Sachs, Columbia University Professor, Special Advisor to UN Secretary General Kofi Annan on the Millennium Development Goals and Director of the UN Millennium Project, addressed this topic to over 200 students, faculty and development professionals. Paul Smoke, Associate Professor at NYU Wagner, moderated the panel. Also participating in the panel discussion were Elizabeth Littlefield, CEO of consultative Group to Assist the Poor, and William Easterly, Professor of Economics and Co-Director of Development Research Institute at New York University.

Sachs' discussion opened with a compelling presentation on the life and death issues of the Millennium Development Goals: one sixth of the earth's population lives in extreme poverty, two billion people live every day without access to safe drinking water and millions more are chronically hungry. While daunting, Sachs believes these numbers can be slashed dramatically. He explained that his vision extends even beyond slashing extreme poverty in half to completely eradicating poverty by the year 2025, an achievable goal in his estimation. "We've ended extreme poverty in the world's richest countries," he declared. "We can end it in the rest."

Sachs explained, "What's needed is an investment in people, physical environment and infrastructure." He reiterated his plea to the world's richest countries to solve the problem of extreme poverty by providing just 0.7% of their national GDP as a resource to build this capacity. "The desire for change exists," he affirmed. "We should take action now to make the resources available."

According to Sachs, donors should invest in specific inputs, allowing for "practical solutions to practical problems" related to the issues of poor health, rural isolation, lack of energy resources and crop production vulnerability in rural villages. He described specific measures, including mosquito control, water management, soil nutrient management and school attendance, that if implemented will make great strides toward the eradication of poverty in less developed countries.

Microfinance can be such a tool. Sachs declared, "Microfinance is one of the institutions that can play a really nice role, along side health and agriculture [initiatives], once we get the basic infrastructure [in place]." He continued, "Microcredit can provide the opportunities necessary" to build capacity in less developed countries.

Elizabeth Littlefield began her presentation by stating that in order to achieve the UN Millennium Development Goals, a grassroots-level effort must have effect in order for the development to be successful. She also called for an improvement in quantity and quality of technical resource inputs. Littlefield explained that donors need to untie access to aid to give the system more flexibility from the inefficient bureaucracies. She suggested handing over control of the aid to local infrastructures for a more efficient allocation of resources. "It's not their fault that aid doesn't work," she stated. "We need to spend what we're spending better."

William Easterly agreed with Sachs in calling for an increase of foreign aid for billions who live in extreme poverty, or on less than $1 a day. Easterly raised several points related to resource allocation and program implementation. He cautioned, "Having too many goals weakens the incentive to do any one." Easterly argued that instead of a broad approach to poverty reduction, a more focused attempt with few basic strategies be implemented for greater impact. Easterly reasoned that a decentralized, bottom-up strategy is the best way to implement change for sustained results. Additionally, he explained that a focus to output of aid is a more constructive way than aid inputs in measuring impact. His argument stemmed around the questions, "How do we spend the money and how does it get on the ground to the people?"

Sachs responded in agreement that countries need to design their own plans for implementation of poverty reduction techniques. He explained that the people who live in these rural villages want to be organized and follow through; they simply lack the resources. While efficiency of resource allocation is important, "these [changes] requires more resources, not just efficiency," he stated. Sachs implored those in attendance to get involved in the poverty eradication movement.