The Price Problem in Poverty Alleviation

By Milena Overhoff

Photo by Christine Roy on
Photo by Christine Roy on

There are many examples of technologies that help fight poverty. But even the most helpful technologies are useless if they never reach the right people because they can't afford them. Finding a sustainable and long-term solution to affordability is not easy. 

Technologies can have an impact on poverty for people in low- and middle-income countries (LMICs) in many different areas of life. For example, they can make farming more efficient, combat disease, or improve education for the population. The impact of a single technology here can already be large. 


Prof. Edward Asiedu from the University of Ghana, for example, reported in his talk at ETH on the positive influence of improved cooking equipment. In the course of a study in Senegal, the improved cooking stoves were distributed to 253 households in twelve villages and their influence was observed over several years. The results were excellent. The cooking stoves were used in all households and they had a positive impact on health and high consumption of firewood. So the technology itself seems successful, but there is a problem: 


If the price is too high for the population, even the best technology will not be bought

In designing for LMICs, developers must consider many factors. The different environmental conditions, the less available resources and the need for easy maintenance and repair of technologies is of great importance here. However, the example in Senegal shows that the focus on affordability of the technology plays a key role. Because the technologically improved device is more expensive than the traditional utensils, many of the households go back to it as soon as the device is broken, despite the many benefits. Price should therefore be considered early during the development process and given a high weighting in design decisions. But what alternatives are there if manufacturing costs cannot be further reduced? 


The dependency trap

One of the first thoughts that comes to mind when considering the price problem of LMIC technologies is probably funding through donations. Donations give people living in poverty access to technology that may be of particular importance to them. This seems to solve the problem for the time being, but unfortunately only for a short time until the device is broken or needs maintenance. Even if the funding continues and another device can be purchased, the beneficiaries thus fall into an unsustainable dependency. 


Users are now dependent on how long the financing lasts. As soon as it suddenly stops, they are back to their starting position. For some projects, this dependency can be consciously accepted. For example, the promotion of education can have such a long-term impact on a person's financial situation that here a short-term dependence can bring long-term independence. However, this should then be planned from the outset and, if possible, longer-term financing should be clarified at the beginning. 


Start considering finances early

Ultimately, it is clear that price plays a key role in ensuring that a technology reaches the right people and is used successfully. In this sense, the price should be considered from the beginning of the development process and kept as low as possible. In the best case, the technology can be sold cheaply enough so that the target group can buy the technology themselves and are not dependent on others. If this is not possible, other models such as donations can be considered. However, the dependency created by this should, in the best case, only be short-term and bridging. 


Ultimately, the most important thing is to consider affordability right from the start.