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How Cell Phones are Helping to End Extreme Poverty

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cellphone-africaFor the first time in world history, less than 10 percent of the global population will be living in extreme poverty.

According to World Bank projections, at the end of 2015 only about 702 million people, or 9.6 per cent of the global population, will still be living in extreme poverty. Over the past three years, an additional 200 million people have climbed above the international poverty line.

What makes this feat even more remarkable is that it’s based on a new definition of extreme poverty. The World Bank, which sets the benchmark for the global extreme poverty line, is shifting the line from $1.25 a day to $1.90 a day. Valerie Kozel, a professor at the University of Wisconsin-Madison, explains the reason for the shift:

“It’s an effort to keep a global poverty line contemporary,” Kozel says. “To make sure it reflects conditions today.”

She says when the bank first set the standard 30 years ago, living above the poverty line simply meant having enough food to eat.

Today, durable goods like cell phones and motorbikes are almost as important as food in many developing nations.

In 1990, when the UN’s Millennium Development Goals included a target of halving poverty by 2015, the first truly portable cell phones were just coming onto the market (the Micro Tac Personal Telephone cost $2,995 in 1989—the equivalent in 2015 of $5,756). At the time almost no one would have dreamed that such a luxury item would be considered “almost as important as food” for those in extreme poverty.

In 1990, if you gave a poor person in China or Africa a Micro Tac, they could sell it and live off the profits for 8 years (at the rate of $1 a day). Today, though, cell phone are cheaper and yet much more valuable to those in developing countries. They are part of the of the reason the number of people who live in abject poverty has been reduced from one out of three in 1990 to less than one out of ten in 2015.

Consider, for instance, the role of mobile banking. Almost 2 billion people have access to a cell phone but not a bank. Mobile banking allows the global poor to have access to financial services and transactions that most of us take for granted. For example, employers can transfer money to employees, allowing them to safely store and save their income. It also allows people to apply for microloans or send money seamlessly to friends and family in need.

As USAID says, mobile phones “fundamentally transform the way people in the developing world interact with one another and their governments, and access basic health, education, business and financial services.”

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Joe Carter Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).