World Hunger – Key Facts and Figures - and the Role for Microfinance?

Is there a food shortage in the world?

There is enough food in the world today for everyone to have the nourishment necessary for a healthy and productive life.

Of the total number of over 963 million chronically hungry people, over half are in Asia and the Pacific and about a quarter are in Sub-Saharan Africa.

GLOBAL HUNGER
Today our world is home to 6.7 billion people; 25,000 people (adults and children) die every day from hunger and related causes; 963 million people do not have enough to eat - more than the populations of USA, Canada and the European Union;

The number of undernourished people in the world increased by 75 million in 2007, largely due to higher food prices; 907 million people in developing countries alone are hungry; Asia and the Pacific region is home to over half the world’s population and nearly two thirds of the world’s hungry people; More than 60 percent of chronically hungry people are women; The number of hungry people in the developing world slid towards 17% in 2007, compared to 16% in 2003-05.

CHILD HUNGER
Every six seconds a child dies because she or he is hungry; Every day, almost 16,000 children die from hunger-related causes - one child every five seconds.

More than 70 percent of the world's 146 million underweight children under age five years live in just 10 countries, with more than 50 per cent located in South Asia alone; 10.9 million children under five die in developing countries each year. Malnutrition and hunger-related diseases cause 60 percent of the deaths; The cost of undernutrition to national economic development is estimated at US$20-30 billion per annum;One out of four children - roughly 146 million - in developing countries are underweight.

FOOD AID AND HIV/AIDS
Every minute, a child under 15 dies of an AIDS-related illness. Every minute, another child becomes HIV-positive.

HIV/AIDS directly impacts a person's ability to provide enough food to feed themselves or their families, directly compromising their household's food security.
Less than one in five people at risk of becoming infected with HIV world wide have access to basic prevention services.

WFP and UNAIDS estimate that it costs an average of US$0.66 per day to provided nutritional support to an AIDS patient and his/her family.

Children with HIV/AIDS may face as a result: poverty, malnutrition, inadequate access to social services, discrimination, stigmatization, gender inequality and sexual exploitation.

Nutritious food combined with antiretroviral drugs are essential to maintaining the immune system and helping prolong the life of someone with HIV. By 2020, the AIDS epidemic will have claimed one-fifth or more of the agricultural labour force in most southern African countries. Most households will never fully recover from the death of a parent which means that the effects of HIV/AIDS are likely to be felt for generations to come.

FOOD AND AGRICULTURAL PRODUCTION
The concentration of hunger in rural areas suggests that no sustained reduction in hunger is possible without special emphasis on agricultural and rural development.
Productivity-driven growth in agriculture can have a strong positive impact on the rural non-farm economy by boosting demand for locally-produced non-agricultural goods and by keeping prices low.

ROLE OF MICROFINANCE
Microfinance, which is the provision of financial services to the low-income categories of the population (largely the poor), holds a great promise in the fight against hunger. Microfinance can avail to the poor the much needed financial services in form of loans as capital for micro-enterprise promotion; savings services to enable the poor to set aside or securely keep their surplus earnings from their enterprises or agriculture activities especially during crop harvest seasons and having access to such savings in lean times such as during the beginning of the agriculture season when they need money to buy farm inputs; micro-insurance to help the poor insure their agricultural produce against the vagaries of weather, pests and disease or indeed provide health insurance for themselves and their families, and enterpreneurial and vocational skills training to equip the poor with skills with which to start and run enterprises.

By addressing the basic factors for entrepreneurial development, microfinance can help empower the poor economically thereby making them food secure.

Dr. Kennedy Bisani Lweya
Johannesburg
01 June 2009

Institutional linkages between commercial banks and MFIs for enhanced microfinance delivery

In 2005, the United Nations Capital Development Fund (UNCDF) asked for expert opinion on the following observation and question:

According to the Report of the Commission for Africa, "microfinance institutions (MFIs) alone are not the answer. Banks and other financial institutions, domestic and international, have far greater resources to take up the challenge of enterprise financing and come up with innovative financing schemes."

Q. Do you agree? If not, why? If so, what concrete steps can be taken to generate greater involvement by banks and other financial institutions in responding to the financial needs of poor people in sub-Saharan Africa?

I offered the following advisory opinion:

In global comparison, poverty levels are highest in sub-Saharan Africa with recent figures showing that over half of the population is living on less than US$1 per day and three-quarters on less than US$2per day (Chen and Ravallion, 2000). As such, the challenges to entrepreneurial growth are even greater, and include the growing socio-economic effects of the HIV/AIDS pandemic, high illiteracy levels, inadequate vocational skills training programmes, poor telecommunication and other infrastructure. Due to the enormity of these challenges, it is a fact that microfinance institutions (MFIs) alone are not the answer. As such, there is need for concerted effort among all stakeholders in order to meet the financial needs of the poor in Sub-Sahara Africa. Commercial banks have the potential to bridge the gap that leads to exclusion of the poor from the formal financial system. Commercial banks have the expertise and know-how; they have the capacity in terms of financial capital, human resources and infrastructure; they also have the technology. However, they lack the empathy and understanding of the needs of the poor due to their profit-driven culture.

It is for the afore-mentioned reasons that establishing proper institutional linkages between commercial banks and MFIs (and other non-formal and informal financial service providers) is the answer in that such linkages can create synergy by maximising the commercial and social attributes of commercial banks and MFIs, respectively. Furthermore, the linkages can also enhance capacity for wider outreach in the delivery of financial services to the poor not only in sub-Saharan Africa but across the world.

Dr. Kennedy Bisani Lweya
UNCDF Voices of Microfinance - http://www.uncdf.org