Debunking Myths: Funds and Material Donations are Not Needed to Improve Standards of Living

Apr 30, 2018

Article by Poverty Stoplight

In 2017, 782 households in the Lugarawa District, Njombe region of Tanzania were surveyed using the Poverty Stoplight. The Lugarawa Project began at the instance of the ACRA Foundation Project (“Hydroelectric Energy for 20 Isolated Rural Villages in Lugarawa District, Tanzania”) in partnership with Fundacion Paraguaya. Part of the objectives of the project was to improve the socioeconomic and environmental conditions of the rural poor in the 20 villages by helping to create or improve SMEs and social services in the area through a business competition (gamification) that will provide small processing machines to successful participants. On the other hand, the Poverty Stoplight survey was used to engage with households and also to provide them a clear understanding of the socioeconomic conditions of each of the families in the different villages. The Lugarawa Project effectively kicked off on the 22nd of May 2017 and concluded on the 3rd of November. Fundacion Paraguay began to implement the Poverty Stoplight and financial literacy training Lugarawa Project 2017. This started with an awareness workshop, which was done in two parts; leaders’ awareness workshop, covering leaders and delegates from various institutions, and the second part, for the entire villagers (included the leaders). The training workshops helped to provide orientation to the communities about the Poverty Stoplight methodology and indicators. Afterwards, financial literacy trainings were conducted.

With the participation of local leaders in a prior awareness workshop, the communities showed a willingness to be a part of the program. Many who had initially attended solely for the eligibility to participate in the SME competition showed significant interest in learning about improving their quality of life. Others invited their spouses and friends after being exposed to the benefits of the Poverty Stoplight trainings. Of the total number of 933 registered participants, 900 individuals attended the workshops and 782 took the Poverty Stoplight survey across the 20 villages.

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The surveys conducted during the Poverty Stoplight workshops revealed that some villagers earn decently and operated multiple streams of income. Thus, emphasizing to the participants that financial planning and management habits were a problem. Participants also learned about the importance of saving, credit, business plans and proposals writing, including basic entrepreneurial education. The workshops helped to guide the participants to enter the SME competition (funded by ACRA), testing their ability to present standard business plans following the Fundacion Paraguaya and ACRA guidelines.

The poverty elimination strategies further helped participants to understand the multidimensional nature of poverty. The participants were able to recognize and differentiate what it means to be poor in all 50 different Poverty Stoplight indicators. This further motivated many to commit to adjust and improve in the indicators that they were in “yellow and/or red”.

Interviews were conducted to select the winning business plans after the best two from each village were picked. This process was considered highly successful as it helped to debunk the common myth prevalent in many remote villages, that funds and material donations are the only things needed to improve their standard of living.

The positive feedback received after the training workshops—despite the low literacy rate—showed improvement in their reds and yellows on the financial indicators. This has translated to participants initiating other means and sources of income, opening bank accounts to start saving and applying their newly acquired entrepreneurial knowledge to improve their businesses and in turn, their standard of living.

The initial phase of the Poverty Stoplight project targets to move 30 percent of the participating families to increase their income levels above the local poverty line. Furthermore, 50 percent of the participating families will move from red to green on at least 5 indicators. Following the first phase of the interviews from the SME competition, the best candidate selected will be awarded while follow-ups and mentorships will be provided for others with impressive business plans to further encourage good financial habits and sustain the progress that families have made since the commencement of the Lugarawa project.

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