I am delighted to be here today, and feel privileged to participate as a speaker in the prestigious Wertheim Lecture Series.
I would like to begin my presentation by expressing my gratitude to Joyce Elam, Executive Dean of the College of Business Administration, to Professor José de la Torre, and to the entire faculty and student body of this distinguished academic institution for your invitation.
This invitation gives me the opportunity to articulate some views on the issue of poverty and the struggle against it, with specific reference to Latin America, to the role of the private sector, and to the Cisneros Group’s commitment to a strategy of Corporate Social Responsibility in confronting this challenge.
Let me begin by trying to place the issue in adequate perspective.
Poverty is a global phenomenon. With the partial exception of highly industrialized countries, extreme poverty exists in practically every country on earth. It does not, however, affect every region of the world equally. Some regions, such as sub-Saharan Africa, are completely devastated by poverty, while others, such as Latin America, are not affected to the same degree.
Most developing countries determine their national poverty line as the value of a basket of basic food and essential non-food items. The World Bank calculates an international poverty line by reference to the average of the national poverty lines in 15 of the world’s poorest countries. This exercise was last completed using 2005 data, resulting in an international poverty line of US $ 1.25 a day.
Global poverty is then assessed by reference to data from 675 household surveys across 116 developing countries.
Based on this poverty line the World Bank says that 1.4 billion people now live in poverty. This is substantially more than its earlier estimate of 985 million people living in poverty in 2004, and indicates that poverty is more persistent than previously thought.
However, given the increase in world population, the poverty rate has still fallen from 50% to 25% over the past 25 years.
The new figures confirm that Africa has been the least successful region of the world in reducing poverty. But in absolute numbers, it is South Asia which has the most poor people, with 595 million, of which 455 million live in India. The poverty rate, however, has fallen there from 60% to 40%.
China, on the other hand, has been amazingly successful in reducing poverty, with the numbers falling by more than 600 million, from 835 million in 1981 to 207 million in 2005. The poverty rate there has plummeted from 85% to 15.9%, with the biggest part of that drop coming in the past 15 to 20 years, when China opened up to Western investment, expanded economic freedoms, and its coastal regions boomed. This is what India did too, but in a democratic context.
It is obvious that the challenge of poverty is immense, but the new figures produced by the World Bank still suggest that the world could reach its Millennium development goal concerning poverty.
As I am sure you know, in September 2000, 189 countries signed the Millennium Declaration, which led to the adoption of the Millennium Development Goals. These are a set of eight goals for which 18 numerical targets have been set and over 40 quantifiable indicators have been identified.
Among these goals I would highlight the following in this context: Eradicate extreme poverty and hunger; achieve universal primary education; reduce child mortality; and ensure environmental sustainability.
According to the World Bank’s chief economist, Mr. Justin Lin, recent data tends to show that the world could reach its millennium development goal of halving the 1990 level of poverty by 2015.
There are approximately 540 million people living in the Latin American/Caribbean area. Of these, 130 million are poor. However, the situation has improved in some countries, such as Brazil and Chile, which are experiencing or have recently experienced high economic growth.
Unfortunately, though there is some progress, Latin America is one of the most unequal regions.
In its studies on inequality in Latin America, the World Bank has discovered that inequality reduces the positive impact of growth on poverty reduction, and has identified several major areas of action, in particular: giving priority to access to quality education.
I believe this is a key finding. Poverty has many faces, and several strategies can contribute to reducing it. I do not adopt a dogmatic attitude on this matter. Authoritarian capitalism has worked in China, at a cost. Democratic capitalism works elsewhere. We must not lose sight of the fact that there is an ethical dimension involved when discussing economic growth. My personal preferences are for individual liberty, the priority of education, the development of human capital and the fight against poverty.
What is crucial is the understanding that to combat poverty efficiently we must create the institutional, psychological and economic conditions that generate wealth.
Above all, we must bear in mind that hard work and a sense of responsibility will never be replaced as dynamic factors driving individuals and communities forward. Highly advanced countries are not rich because they own natural resources, but because their peoples have the right attitudes and skills that make them productive.
And what is, we may now ask, the best framework for encouraging productivity?
I would mention, among others, the following elements: High quality educational systems, economic freedom for individuals and firms, property rights, and a sense of solidarity between different sectors in the community.
On the strength of these principles, the Cisneros Group, as we shall soon see, invests substantial resources in the struggle against poverty through education.
The problem of poverty has many dimensions, including a psychological one: fighting poverty and overcoming it require that the person living in poverty be convinced that he or she can get the necessary skills to improve his or her lot in life, and that the aim can be achieved.
Education is a fundamental tool to accomplish these objectives. On the one hand, education reinforces the individual’s self-confidence; on the other, it provides the means to increase each person’s productivity and efficiency.
In today’s changing world, knowledge has become the key driver of value creation, and talented labor is the most valuable asset a country can have. Investment in education is therefore a fundamental source of wealth creation and a primary device for defeating poverty.
Reports issued by the Program for the Promotion of Educational Reform in Latin America and the Inter-American Dialogue, indicate that to a large extent, unequal income distribution patterns in Latin America reflect the fact that the region has not done enough to invest in good quality education for its children and its young people. These studies estimate that education is responsible for around 40% of the growth differential existing between East Asia and Latin America.
But significant efforts are being made to improve the situation. As stated by the Partnership for Educational Revitalization in the Americas (P.R.E.A.L.), in a recent and I believe reliable report, Latin America is working hard to improve its schools, and is making progress in some areas. Most governments are taking steps to increase investment, establish and consolidate national testing systems, work toward standards, and delegate authority and responsibility to municipal governments and local communities.
The chief accomplishment of our region over the past three decades, in the field of education, has been the quantitative increase of the enrollment in elementary and primary schooling, but the quality is still low.
Good quality schools are crucial to spur growth and reduce poverty.
Because we are convinced of this fact, the Fundacion Cisneros focuses most of its work on improving the quality of teaching and learning in the thousands of schools served by our programs. And I say this not to present these programs as a privileged solution to such gigantic and complex problems, but to show them for what they truly are: an illustrative and successful example of a strategy of Corporate Social Responsibility and of the private sector’s contribution to economic development.
This strategy defines our character as a corporate group, and what I want to do now is to briefly describe what we are, how we act and what programs of the Cisneros Foundation we are advancing in Latin America.
The first point that I should highlight about the Cisneros Group of Companies is that it is a private business organization, originating in the last century, and its most important trademark has been continuity, perseverance through the ages. In fact, for us the year 2010 deserves special consideration, because we are marking our 80th year of sustained business activity, 80 years of activity in the field of managerial and corporate innovation on a global scale.
The Cisneros Group of Companies was created by my father, Diego Cisneros, at the beginning of last century. Those which were his first undertakings came to fruition at the end of the 1920s as a small transportation company, which with the passing years has become a corporation that has participated in the most diverse fields of the production world and has gathered experience in markets in different corners of the globe.
I mentioned continuity through the ages. Since the moment that he began, Diego Cisneros stamped a personality on our organization, characterized by a modern business vision, a constant interest in using the most advanced production, trading and marketing tools; with the careful selection and training of human resources and an uncompromising commitment to social responsibility by our companies.
As the Group continued to advance, we have acted to promote education, social progress and democratic principles in our hemisphere. What is today called Corporate Social Responsibility has been for decades an essential element of our operations.
By Corporate Social Responsibility we understand a systematic ethical and legal commitment, both national and international, to improving the social, environmental and human rights impact of our business activities, making sure that economic growth and human welfare go hand in hand.
That is how my wife Patty and I understood it. Based on this philosophy of corporate activity, we began our first educational project on a wide scale, named ACUDE, which benefitted 300,000 people who were educated in the 1970s in Venezuela, a country, which at the time, had a population of about 15 million habitants. This program was executed with the cooperation of several of our companies, as well as our television and radio media outlets that encouraged people to join an educational project that was participatory, flexible and efficient.
Our social commitment led us to create Fundación Cisneros, with the mission, as I pointed out earlier, of improving education in Latin America, promoting global awareness of the region’s contribution to global culture, and structuring and directing the corporate social responsibility programs of the Cisneros Group. Its innovative programs strengthen the social network, further freedom of expression and democratic thought, promote economic progress and increase understanding among Latin American nations
During these years we have continued focusing our social commitment through educational programs that operate in several countries in the hemisphere.
One of our emblematic programs is AME -Actualización de Maestros en Educación –, an online program aimed at primary education teachers that is present in 14 Latin American countries and has trained over 12,000 teachers, with an impact that has benefited approximately 800 thousand students in the continent. AME leverages the media resources and infrastructure of the Cisneros Group of Companies, to create comprehensive training courses for teachers across the region, improving their skills in fundamental topics such as School Ethics, Education for Peace and Conflict Resolution, Information Technology, Language, Arts, and HIV / AIDS prevention, among others.
The Cisneros Foundation also sponsors Cl@se, the first educational TV channel in Latin America, simultaneously aimed at children, teenagers, parents and teachers. The Fundación Cisneros distributes its content through agreements signed with educational authorities and telecommunication companies. About 40 thousand public schools in the hemisphere have access to our programming, and we estimate that Clase reaches 500.000 households in the region.
Piensa en Arte, on the other hand, is an inquiry-based visual arts training program, whose workshops are designed to encourage children and youth in observational, expressive language and critical thinking skills. It operates in five countries in the region, has trained over 1,000 educators and benefited more than 100,000 students.
In addition to the mentioned programs, some of which cover large parts of the region, we also carry forward specific Corporate Social Responsibility projects adapted to prevailing conditions in specific countries, such as for example the Dominican Republic. We are investing to guarantee that the social progress of the communities where we act will become the axis of successful and positive development for each particular country and its people.
To begin with, I would like to note our support for the participation of Canadian multinational Barrick Gold in the Dominican Republic, a company of which I am a director and that will invest US$4.6 billion in the country. We are currently working at full capacity and our corporate project is on track with an extensive social responsibility strategy for which Fundación Cisneros helped develop educational content. Barrick is laboring to increase academic standards, as we are also doing through the Fundación Cisneros, in primary and secondary schools.
In fact, we already possess a cooperation agreement between the Fundación Cisneros, Intel and Barrick, that operates in Argentina, Chile and Peru, intended to create positive change in the dynamic of learning and teaching, through the use of technology for teachers and students in rural area schools. We have extended our agreement to the Dominican Republic.
A large part of the social investment at Pueblo Viejo are aimed at increasing farmers' productivity, improve health, nutrition, education and adult literacy. Such social investments aim to increase personal income levels and improve the quality of life in communities near the mine, in addition to supporting national development.
In general, the Pueblo Viejo Dominican Corporation investments will also help develop a project that will train over 150 women, residents of rural areas, on subjects of Business, Leadership and Accounting.
At the same time, the Cisneros Group has undertaken a project on sustainable tourism at the highest level, Tropicalia, which proposes responsible development in the Eastern region of the Dominican Republic. The site's planned investment of US$2 billion includes a comprehensive Corporate Social Responsibility strategy already underway under the management of my daughter, Adriana Cisneros.
We have brought the educational programs of the Cisneros Foundation to this area, creating a School Renovation Program which rescues the school infrastructure and makes it more conducive to teaching and learning.
We are proud to have renovated three schools in less than one year, favorably impacting the performance of nearly 1,500 students and 30 teachers. We have also introduced the Digital Literacy course for teachers, which has been very successful in training teachers on information technology tools. This course is also essential for everyone to access the wide range of courses offered by the AME program.
The sustainability of the environment is of course, together with education, one of our concerns; hence the Cisneros Foundation and a especially created Tropicalia Foundation advance in the design and promotion of training workshops on organic agriculture to improve land use, sustainable agriculture and agricultural biodiversity.
In addition to our educational programs, we are also implementing projects concerning the sustainability of the environment, and also microfinance programs promoting independent industries in the services, and trade and consumption sectors.
All of these programs derive from our conviction about the fundamental tie that should link business activity with social responsibility.
We feel of course proud of these accomplishments, but we are also aware of the scale of the tasks ahead of us and of the magnitude of the challenge. It is, however, a fundamental step in the right direction to identify where the root of the problem lies, and to accurately set our priorities in the fight against poverty.
In this sense, I believe education comes in first place.
Before briefly summarizing what I have said, I would like to express my deep concern about the tragic events which recently hit Haiti, a country that deserves all of our support, and which is the object of the sympathy and generous help of most of the hemispheric and international community. These efforts should be further strengthened, and we at the Fundacion Cisneros have pledged all of our support, with the decision to extend our educational programs to Haiti as soon as possible.
Let me finally emphasize the following:
The private sector in Latin America must commit itself fully to a well thought-out, Corporate Social Responsibility strategy. It should be adequately designed and as far as possible implemented on the basis of a dialogue and partnership with the public sector. It must be inspired by the vision of societies of free and responsible individuals.
To overcome the challenge of poverty needs economic growth and job creation, and these result to a significant extent from improvements in educational systems.