“Poverty trap” is an interesting topic for me considering the current efforts made by various institutions to eliminate poverty in developing and under-developing countries. Economic Times defines poverty trap as a spiraling mechanism which forces people to remain poor. It is so binding in itself that it doesn’t allow the poor people to escape it. Poverty trap generally happens in developing and under-developing countries and is caused by a lack of capital and credit to people. It’s therefore, a situation that forces an individual to remain poor even when they are taking measures towards removing themselves from the trap.

A situation that forces an individual to remain poor even when they are taking measures towards… Click To Tweet

For example, Kibali is a carpenter in Dar Es Salaam, he earns a total of USD 200 per month. He has a wife and two children that he takes to school. Normally he spends 75% of his earnings on his children’s education, house rent, food, transport and medical bills before the month ends. In the case of any emergency, his friends lend him money to sustain his and his family’s needs. At the end of the month, he has no savings and in debt. When he gets money in the coming month he will pay the debt and continue to live in the same way all year round or for the rest of his life. He can not obtain capital from his job to develop himself, Kibali is in a “Poverty Trap”.

Why do poverty traps form? Click To Tweet

Broken into an individual level a poverty trap can explain how a poor society is formed and how hard it is to break through. Questions to ponder; Why do poverty traps form? Do governments make it hard for poor people to break through poverty traps? If yes, how? Do aids or loans really help to prevent or eliminate poverty traps? How can a person like Kibali help himself out of poverty?

Do governments make it hard for poor people to break through poverty traps? If yes, how? Click To Tweet

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POVERTY TRAP.
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