Tanzania, October 2011.
Kai-Uwe Waerner / Courtesy Reuters

The roughly 2.5 billion people in the world who live on less than $2 a day are not destined to remain in a state of chronic poverty. Every few years, somewhere between ten and 30 percent of the world’s poorest households manage to escape poverty, typically by finding steady employment or through entrepreneurial activities such as growing a business or improving agricultural harvests. During that same period, however, roughly an equal number of households slip below the poverty line. Health-related emergencies are the most common cause, but there are many more: crop failures, livestock deaths, farming-equipment breakdowns, even wedding expenses.

In many such situations, the most important buffers against crippling setbacks are financial tools such as personal savings, insurance, credit, or cash transfers from family and friends. Yet these are rarely available because most of the world’s poor lack access to even the most basic banking services. Globally, 77 percent of them

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  • JAKE KENDALL is Senior Program Officer for the Financial Services for the Poor program at the Bill & Melinda Gates Foundation. RODGER VOORHIES is Director of the Financial Services for the Poor program at the Bill & Melinda Gates Foundation.
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