Amazing Progress in Eradicating Extreme Poverty

According to a new World Bank report, 114 million people worldwide moved out of extreme poverty in 2013, accelerating an overall positive trend that researchers have observed over the past two decades. There is much to celebrate: as stated in the report, “the world had almost 1.1 billion fewer poor in 2013 than in 1990, a period in which the world population grew by almost 1.9 billion people.” 

India in recent years has made remarkable strides, and is a significant contributor to this trend. Just five years ago, around the time Upaya was getting off the ground, we lamented the fact that experts a few years earlier reported over 400 million people living in abject poverty in India. This put the country on par with — or even exceeding — the same numbers reported for all of the countries in sub-Saharan Africa combined.

Today, India as a country still houses the largest number of people living in extreme poverty, but this figure is now estimated to be 224 million. Economic growth, increased employment, and rising incomes have all contributed to this progress. We at Upaya are proud to play our role in encouraging inclusive growth, and nurturing the development of investable businesses that create lasting, dignified employment for the most marginalized communities.

The World Bank deems a household living under $1.90/day as living in extreme poverty. Upaya ensures that the jobs it helps create pay incomes in excess of this amount. But just as important as the increase in income is ensuring the regularity and stability of that income stream. Households that remain mired in abject poverty are often reliant on cobbling together “odd jobs” in the informal economy – manual labor, trash collection, and even begging when nothing productive materializes – to make ends meet. On a good day, there is work to be had and a wage earned. On a bad day, there is no work, and hence no income. An entire family goes to bed hungry, anxiously hoping that its luck will improve tomorrow. This erratic and uneven and unpredictable existence does not allow a household to build a firm economic foundation and move out of poverty.

In keeping with our mission to create dignified jobs for the poorest of the poor, Upaya from day one has been committed to not only track how many jobs have been created, but also monitor how incomes have improved, and how these incomes have helped previously destitute families make improvements to their quality of life. We refer to this practice of collecting, assessing, and reporting data as social performance management (SPM), and this activity over the years has yielded invaluable insights for our entrepreneurs and other stakeholders. Are households making progress out of poverty in the ways we expect? If not, are there refinements we can make to our interventions to effect better outcomes?

This week, we are releasing a report for Maitri Livelihood Services, one of our partner businesses working in the Northeast states of West Bengal and Assam. Maitri provides skill development, training, and job placement opportunities in the domestic work sector for women from economically disadvantaged backgrounds. Traditionally, women working as housekeepers, cooks, nannies, and at-home nurses have dealt with highly informal work arrangements. It was not uncommon for employers to delay compensation to workers, negotiate below-market wages, and deny workers basic rights in terms of number of hours or working conditions. Maitri is bringing much needed structure and formality to this sector: women who are trained and placed in affluent households are guaranteed a steady and reliable income, an assurance of their rights and safety, and proper recourse in case of any conflict.

Our report demonstrates that Maitri jobholders do indeed benefit from increased, reliable income. It also points to improvements these households are able to make to their quality of life as a result -- such as being able to afford formal electricity and gas connections. The household is less likely to live in extreme poverty the longer a jobholder maintains her relationship with Maitri. We fully expect to see positive improvements in other indicators as time passes, such as housing quality, asset purchases and savings patterns.

In the coming weeks, we plan to release reports for two other partner businesses, Saahas and ElRhino, as well as a year-end portfolio wide assessment. Preliminary findings reveal significant improvements to household income, job satisfaction, and overall well-being. We view these developments as critically important components in our continued fight against extreme poverty. Knowledge is indeed power … studying the exciting progress our jobholders make over time, and listening closely to their feedback and ideas, allows us to fully engage these hard-working, ambitious women and men and empower them to build pathways to a better life on their own terms. 

Upaya extends debt to partners in India for the first time

Upaya Social Ventures has made 10 equity investments into Indian-based businesses employing the very poorest but until now, has not been able to extend debt due to regulatory restrictions. For the first time, in August of 2016, we have been able to structure small loan agreements with our partners to provide working capital assistance as they grow their businesses.

Parvata Foods

The first partner to receive debt from Upaya is Parvata Foods. Parvata aims to eliminate middle-men in the agricultural value chain so that poor farmers can keep more of their profit. Founded by Siddhi Karnani and Anurag Agarwal, their particular focus is to process and market the organic products from the state of Sikkim in northeastern India, which was recently declared the first fully organic state in the country. They source their products—currently spices and squash— from about 100 farmers with one to two acres of land who previously earned about $0.75 to $1.50 per day per person. Upaya has extended a two-year loan to Parvata and may make an equity investment in the future.

The second partner to receive an Upaya debt investment is Karmantik, a Delhi-based enterprise that aims to revive artisanal hand-crafted shoes. Founded in 2015  by Sruthi Niveditha Kande and Apoorva Kamath, who are alumni of the Young India Fellowship Program of Ashoka University. "Upaya came in at a time when we needed support to push ourselves forward, and for that we are very grateful," according to Kande.

Karmantik artisan