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Portfolios of the Poor

Portfolios of the Poor: How the World's Poor Live on $2 a Day

Daryl Collins
Jonathan Morduch
Stuart Rutherford
Orlanda Ruthven
Copyright Date: 2009
Pages: 312
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  • Book Info
    Portfolios of the Poor
    Book Description:

    Nearly forty percent of humanity lives on an average of two dollars a day or less. If you've never had to survive on an income so small, it is hard to imagine. How would you put food on the table, afford a home, and educate your children? How would you handle emergencies and old age? Every day, more than a billion people around the world must answer these questions.Portfolios of the Pooris the first book to systematically explain how the poor find solutions to their everyday financial problems.

    The authors conducted year-long interviews with impoverished villagers and slum dwellers in Bangladesh, India, and South Africa--records that track penny by penny how specific households manage their money. The stories of these families are often surprising and inspiring. Most poor households do not live hand to mouth, spending what they earn in a desperate bid to keep afloat. Instead, they employ financial tools, many linked to informal networks and family ties. They push money into savings for reserves, squeeze money out of creditors whenever possible, run sophisticated savings clubs, and use microfinancing wherever available. Their experiences reveal new methods to fight poverty and ways to envision the next generation of banks for the "bottom billion."

    Indispensable for those in development studies, economics, and microfinance,Portfolios of the Poorwill appeal to anyone interested in knowing more about poverty and what can be done about it.

    eISBN: 978-1-4008-2996-5
    Subjects: Business, Sociology, Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Tables
    (pp. vii-viii)
  4. List of Figures
    (pp. ix-xii)
    (pp. 1-27)

    Public awareness of global inequality has been heightened by outraged citizens’ groups, journalists, politicians, international organizations, and pop stars. Newspapers report regularly on trends in worldwide poverty rates and on global campaigns aimed at halving those rates. A daily income of less than two dollars per person has become a widely recognized benchmark for defining the world’s poor. The World Bank counted 2.6 billion people in this category in 2005—two-fifths of humanity. Among these 2.6 billion, the poorest 0.9 billion were scraping by on less than one dollar a day.

    For those of us who don’t have to do...

  6. Chapter Two THE DAILY GRIND
    (pp. 28-64)

    Subir was 37 when we met him, and his wife Mumtaz only 29, though their oldest son Iqbal was by then at least 14. They had come to Dhaka, Bangladesh, when Iqbal was a baby, soon after their scrap of land in central Bangladesh was washed away by the great Ganges River. They had three more children, all sons, and Mumtaz was pregnant again and delivered her fifth son midway through the research year (“No more!” she told us). Day by day, Subir and Mumtaz focused on managing life on a dollar a day per head—and sometimes less. Their...

  7. Chapter Three DEALING WITH RISK
    (pp. 65-94)

    In 1974, Jaleela and her baby fell seriously ill with dysentery. Jaleela, one of our Bangladeshi respondents, recalled the acute difficulty she then faced. The family had no savings to speak of, and her husband was unable to raise loans quickly enough to pay for treatment. He resorted to mortgaging her marriage jewelry to a pawnbroker. Happily, mother and child survived, though the jewelry was lost. Years later, her husband, a rickshaw driver, fell ill and couldn’t work, and the family went hungry for three days until a neighbor supplied them with food. Then in 1992, Jaleela again fell seriously...

    (pp. 95-131)

    Life presents plenty of financial challenges and opportunities for rich and poor alike: getting a job, marrying, setting up and furnishing a home, and educating children. These are human goals that are blind to levels of wealth. Each of us likes to feel that we have the means to pursue dreams and to grasp opportunities when they arise. And as the petty pace of life creeps along, we all worry about how to prepare for old age.

    Richer families take advantage of loans, insurance, and savings plans to produce the right sums at the right time: a mortgage, a car...

  9. Chapter Five THE PRICE OF MONEY
    (pp. 132-153)

    In the spring of 2007, the Mexican microfinance bank Banco Compartamos completed a highly successful public offering of its stock. Inspired by Grameen Bank, Compartamos had grown rapidly while keeping its focus on a customer base of low-income women. By 2008, Compartamos served over one million customers, using its profits to fuel expansion. In some corners, this was cause for celebration, a vindication of the commercial possibilities of banking in poor communities. But for others the success story was marred by the high interest rates that Compartamos charged its customers. A widely read study reported that, on average, Compartamos’s interest...

    (pp. 154-173)

    The Grameen Bank of Bangladesh is the best-known and most widely imitated microfinance pioneer. But Grameen found itself in trouble in the late 1990s. Loans were no longer being repaid at the on-time rate of 98 percent that the bank had long advertised: in some areas it had fallen below 75 percent. In 1998 a devastating flood, one of the worst in the country’s history, damaged many millions of households and exacerbated Grameen’s problems by a further dramatic erosion of loan repayment. The bank had a crisis on its hands.

    It responded with a major rethink; old premises were discarded,...

  11. Chapter Seven BETTER PORTFOLIOS
    (pp. 174-184)

    Not having enough money is only one part of what it is to be poor. Households like those who feature in our diaries face many challenges of poverty that go beyond the lack of money. They may face discrimination because of their ethnicity or class, find that their legal rights are poorly enforced, or have to struggle with low-quality public services and low skill levels. Measures of well-being such as the UN’s Human Development Index track health and literacy as well as income, broadening the domain of poverty reduction.

    Yet the financial diaries made us think afresh about poverty in...

    (pp. 185-210)
    (pp. 211-242)
  14. Acknowledgments
    (pp. 243-246)
  15. Notes
    (pp. 247-264)
  16. Bibliography
    (pp. 265-272)
  17. Index
    (pp. 273-283)