Innovating Ways to Address Poverty in Uganda

0:00Today on State of the World, innovating ways to address poverty in Uganda.

0:08You're listening to State of the World from NPR. We bring you the day's most vital international stories, up close, where they're happening. I'm Greg Dixon. You need money to make money, is an old adage, and there's some truth to it. It is among the factors that trap people in extreme poverty. Globally, that's nearly one billion people. There are programs trying to tackle this problem by giving people cash so they can start a business. and coaching to help them know what to do with the money. NPR's Fatma Tanis takes us to Uganda to examine one such program and their attempts to improve the impact of their money, which lead to some unintended consequences.

0:52Rolling hills are topped with lush greenery in this remote part of southwest Uganda. Most homes here are one-room huts with sheet metal roofs. 23-year-old Jacareen Cabanyana and his family used to live in a hut like that. They fled here in 2018 from the war in the Democratic Republic of the Congo. But now, Cabanyana, the oldest son, is building a much larger and sturdier house.

1:26It's a big step up for this family of 11. They used to survive on just$5 a week. Sometimes they didn't eat, and they couldn't afford school fees for the children. Then, in 2022, Cabanana got a grant for$74. He started raising and selling goats. This break came from a$28 million donation from the IKEA Foundation. 14 ,000 households in this region got the same grant. They can use it to start a steady business, like selling secondhand clothes or growing food. They also get coaching. It's called the graduation approach. Now Cabanana earns$13 a week from raising goats. It's how he's built this new house.

2:15The people who got the grant meet up twice a month in groups of 20, along with a coach. This group meets at the school. In the middle of the circle, on the floor, is a metal box with some petty cash and a ledger.

2:33Today, there's other visitors, too. My name is Dean Carlin. I'm a professor. Economist Dean Carlin, who designed the program, along with a team of researchers and the NGO that's running it, Avsi Foundation. And so we want to learn as much as we can from what you've experienced so far. Now, there are programs in many low-income countries that apply the graduation approach, but this one is trying something new. Carlin is an expert in poverty solutions at Northwestern University, and he's been wondering, could you get more out of the same pot of money? So instead of giving each household a one-time grant of, say,$200, a group of 20 households gets around$4 ,000 to manage jointly.

3:20They use the pot of money to loan themselves cash for their businesses. If those do well, they pay back the money and keep the profit. They also pay interest to the group on the loans, which then gets distributed to all 20 members. It's called the block grant, and Carlin says it essentially creates a mini bank for the group. The big picture is about providing a faster on-ramp for households to be able to start up large and having a better and more stable source of income. And funding for global development programs like this is being cut. If we can find a better way of squeezing more juice out of whatever we're doing, then you can expand and help more people.

4:00And instead of going to 1 ,000 communities, we can go to 2 ,000 communities. But in discussion after discussion, Carlin notices something perplexing. People have not been borrowing from the block grant as much as they could be. In fact, half of the money has been sitting safely in the bank. Karlyn asks Kabanyana about his goat business. Why did he only take out 500 ,000 Ugandan shillings, about$140, from the block grant, to buy two goats? Why not have a budget for four goats and say my budget is a million so that I can buy four goats?

4:39He says, first, I wanted to see how the market is, and if I'm able to manage it, then I'll borrow more. Carlin then asks him how much he's planning to borrow next time, but it turns out it's even less, 300 ,000 shillings, about$80. So I was surprised because now he knows this is a successful business. He knows how to do it. So why is he borrowing less rather than more?

5:11Cabaniana says, recently I noticed that when I'm at the market, people have less money to spend. He's referring to the fact that many of the refugees here were getting cash aid to buy food. But the Trump administration cut that earlier this spring. Because of the cutbacks in aid, there was less economic activity going on. The markets were not as thriving and they could actually see that difference. Other group members tell Carlin they're not taking out loans because they felt the bank was too far from where they lived. And one woman says she's afraid to take out too much. Her name is Antoinetta Justine.

5:46She points to the metal box on the floor. This money here, she says, it's where our hearts are. It feeds our families. That's why we're more responsible about it. AVSI's director of programs, Rita Laroque, chimes in, saying she appreciates that. However, this money is supposed to help you make more money. Because when you borrow little, you earn little interest and you share little. For Karlyn, it's a stark reminder of how challenging it can be to address poverty. What we're seeing today, clearly, from these conversations, is that it's deeper than you need money to make money. you also need to be able to take on risk to make money.

6:32And that's a double whammy for someone who's bored. It can be really hard for people in poverty to take advantage of opportunities. There's fear that failure might leave you worse off than before. After all the meetings, Carlin and OVSEE staff put their heads together. They decide to make some tweaks. Instead of a bank, they'll use mobile money online to help people access the block grant easily. And the coaches will have to keep encouraging the groups. Over time, the block grant will get used more and more because of the group coming together and knowing each other better. So that's one thing that we're going to look out for in the next phase of this project.

7:13Back in the village, Carlin meets with a different group that chairs a block grant. They gather under a gazebo surrounded by banana trees. This group's leader, Tumariwe Justine, has a request for Karlin. Avsi's Ruth Ninsima is translating. She says Justine has been calling Karlin a jubu-jubu, which in Runyan Kore means the top leader. She's referring to you as jubu-jubu. Like a high-authority leader. And what Justine wants Karlin to do is to get them a tractor to do more farming. High authority, if you can get them a tractor, oh, you'll be glad. The leftover money in the block. But Carlin says they don't need him to be the high authority to get that tractor.

8:05They can just buy it with the money they still haven't used that's sitting in the bank.

8:16Pat Matanis and PR News in southwest Uganda.

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