Fundacion Paraguaya

SUMMARY: Fundacion Paraguaya aims to eliminate poverty in Paraguay using a bottom up strategy that combines granular analysis and data collection, grassroots financing, precise targeting of services, and coordination on a national anti-poverty effort.

PROBLEM SPACE: Most of the world’s poor are micro-entrepreneurs or their dependents depending for survival on income from precarious, informal businesses. Too often their attempts to increase income and get out of poverty are derailed by many other poverty-related problems: lack of decent housing, clean water, health care, skills, networks, etc. This is not only a personal tragedy for the 1.4 billion living in extreme poverty and billions more who are “merely” poor; poverty puts the whole global system at risk. Without a sustainable, replicable solution to poverty, the world faces increasing over-population, deforestation, pollution of watersheds and other strains on natural resources, which all life on earth requires to sustain itself. By allowing global poverty to continue, the world deprives itself of the talents and resources of billions of people who could contribute their energy and intelligence to solve global problems. Our solution– The Traffic Light Poverty Elimination Strategy– is based on market mechanisms so as to be sustainable and replicable, but considers poverty holistically in 50 dimensions, which include only insufficient income but also poverty’s effects on individuals, including low self-esteem, resignation to poverty, lack of participation in the political system, etc.

SOLUTION: Despite decades of top-down programs to alleviate poverty, 1.4 billion live in extreme poverty. The “Traffic Light” strategy eliminates poverty from the bottom up, enabling the poor to be the architects of and chief protagonists in their own plans for overcoming poverty as it affects their families in 50 dimensions. “”The “traffic light” strategy begins with a survey of each village banking client consisting of 50 questions on 50 different aspects of poverty in 6 categories: income&employment; health&environment; housing&infrastructure; education&culture; social organization&civic participation; and self-awareness&personal motivation. Each question has 3 possible answers represented by 3 pictures showing how a typical family would fare on conditions of extreme poverty, poverty and non-poverty. For each question, the client identifies the picture which best depicts her family’s situation. A village bank advisor records this data on her PDA and downloads it into FP’s data base. This becomes the baseline for measuring client’s progress in overcoming poverty.
The client receives a page showing in “traffic light” format the ways in which her family is “extremely poor” (red), “poor” (yellow) & “not poor” (green). She uses this “traffic light” to prioritize poverty-related problems her family needs to resolve and, with help from her advisor, develops her family poverty elimination plan. The village bank gets a group “traffic light” highlighting problems that lend to group solutions and members who could be role models. Then, with FP lending and training, government services targeted to specific family needs, collaboration from specialized NGOs and the private sector, and a pro-active stance by village bank members, families tackle poverty-related problems one-by-one, until their “traffic lights” are completely “green,” showing they are no longer poor in any of the 50 dimensions.
Inspiration for this strategy came from FP’s 25 years in microfinance. We learned that financial inclusion, while crucial, is not enough to overcome poverty, and that clients are our greatest resource. Since 2008, we have tested our idea in pilots of increasing size and complexity; now we are using the strategy with 37,300 village banking clients and looking to export our idea. Our vision is a world free of poverty, where all families have the tools and support to overcome poverty in all its dimensions.