Top

Entries in poverty (9)

Monday
Mar212016

Bureaucracy (and worse) vs entrepreneurship in fighting poverty

The trailer for the documentary Poverty Inc. challenges the traditional charity/aid approach to fighting poverty, and starkly suggests that--while intentions may be good--the donor-driven approach will never bring about real change. 

At what point do aid efforts become so entrenched that they effectively compete against real business development? And how can real, sustainable economic growth be cultivated?  These are important questions to ask. As one interviewee in the film states,

I know about countries that developed on trade and innovation and business. I don't know of any that got so much aid they suddenly became a first world country."

We are focused on developing mutual solutions based on real business models, and are interested in your point of take on the issues raised here.

 

POVERTY, INC. | Official Trailer from POVERTY, INC. | The Movie on Vimeo.

 

-- Clara Shen

Thursday
Jan142016

No compromises: profitable business model, while serving the poor?

As part of the Economics of Mutuality, we are very interested in business models that do well by doing good. In a recent article in Bloomberg Business, M-Kopa Solar's founders outline their "no trade-offs" approach to social business and profitability.

M-Kopa sells solar lighting and battery charging systems to rural African customers, most of whom rely on ancient, expensive, and "dirty" sources for their light and power. The company’s power system includes a solar panel, two LED bulbs, an LED flashlight, a rechargeable radio, and adaptors for charging a phone. In addition to the environmental benefits, M-Kopa estimates that it's customers can save about $750 over four years by switching to solar.

Company founders Nick Hughes and Jesse Moore envisioned building a company based on three conditions:

  • It had to involve mobile technology, an area in which they both had experience;
  • It had to solve a significant pain point for the very poor; and
  • It had to have the potential to become a billion-dollar business.

We think it’s possible to build a business with no trade-offs. We can benefit the environment. Our customers will be better off. And we’ll get richer. We all can win.” -- Jesse Moore

Because the company only requires a small down payment on their systems, collecting a $0.45 daily payment for one year to make up the difference, M-Kopa operates much like a finance business. Counterintuitively, the company has found that its poorest customers—those who rely on the system as their only source of electricity—make the best credit risks. “If you take the long-term view and if you treat low-income people as customers, not charity cases, you can change the world,” Moore says.

-- Yan Toh

Tuesday
Nov242015

Sustainability and poverty alleviation: focus on market-based solutions

I enjoyed a collection of recent articles in the New York Times focusing on the role of the private sector in sustainability and market based solutions to poverty, and recommend them to those interested in the topic. (Click on the headlines for the full articles).

Saving the World, Startup Style

The author notes that over the past 10 years, there has been a "quiet revolution" in the way many scholars and advocates think about aid. The revolutionary shift is the central philosophy that rich countries shouldn’t see themselves as responsible for coming up with theories about how poor countries can become richer. Rather, he says, "the rich countries allow the poor ones to determine what they think needs to happen — more girls in school, more vaccination, better access to global markets for farmers — and then pay money to whoever comes up with an actual solution. Governments, nonprofits and private-sector companies can compete on who can do this best."

Buffett's Grandson Seeks Own Investment Route: Social Change

Howard Warren Buffett, the grandson of the Berkshire Hathaway founder Warren E. Buffett has co-founded an operating company with big ambitions — essentially mimicking the structure of Berkshire Hathaway, but with a major difference in strategy. The plan is for the new company, called i(x) Investments, to invest in early-stage and undervalued companies that are working on issues such as clean energy, sustainable agriculture and water scarcity. “We’re looking at the long-term horizon and investments that are doing more than avoiding bad, but are actually trying to improve the world,” Mr. Buffett said. “It’s about taking the potential for capitalism to the next level.”

Unilver Finds that Shrinking Its Footprint Is A Giant Task

Unilever CEO Paul Polman has made sustainable production — of Hellmann’s, Lipton tea, Dove soap, Axe body spray and all the other products Unilever makes — the company’s top priority. Detergents are being reformulated, packaging is being reduced, and the company is taking steps to find more more eco-friendly food ingredients. But the transformation is not a simple one, and the article notes that before Unilever can "transform the world," it must focus on changes within the company.

Image source: New York Times

-- Clara Shen

Thursday
Aug062015

Public funds and private sector investment in economic development

A recent article in the Guardian reports that there is an increasing focus on private sector investment by the U.K. government's international aid agency, the Department for International Development (DfID). The agency's plan to provide £735m over the next three years to the CDC Group, the British development finance institution that specialises in private sector funding, is the immediate subject, but the article also highlights the sharp debate over the role of private sector investment in economic development, particularly when the source for that investment is public funding.

At the heart of this argument is the question of what is the most effective way to eliminate poverty. Some advocate more direct spending on housing and other necessities for the poor, while others argue that a strong private sector will provide jobs and a long-term reduction in poverty, and funding should be provided to businesses that will generate the greatest ROI--even if those businesses have little to no connection to poverty reduction.

The CDC Group's mission is "to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people's lives in some of the world's poorest places," according to its website. However, it has been criticized for investing in businesses, such as luxury hotels and high-end shopping centers, that are not focused on improving conditions for the poor.

The minister responsible for DfID points to the just-concluded Addis Ababa agreement, the U.N. sponsored initiative to coordinate global policies on sustainable development, as supporting an increased role for the investment of economic development funds in the private sector:

This is a historic international deal that takes us beyond aid. It is the first ever agreement that allows us to harness private sector investment and developing countries’ domestic resources, including tax revenues, to turbo-charge development.”

Alex Scrivener of Global Justice Now disagrees:

Pushing hundreds of millions of pounds towards the private sector like this at best seems like a waste of taxpayers’ money and at worst could end up actually causing more harm than good in the global south.”

This debate will not end here. The larger question of how the developed world can alleviate poverty and promote prosperity in Africa will require the private sector, non-governmental organizations and governments to try new approaches, measure the results, share information and find ways to work collaboratively. This is a debate of great interest to us as we focus on building new business models for Africa and elsewhere based on the Economics of Mutuality.

-- Yan Toh

 

Tuesday
Jun092015

Innovation being driven by homegrown 'maker movement' in Africa

So-called makerspaces or hackerspaces are becoming the grassroots hubs for innovation in Africa, according to this recent article in Harvard Business Review by Ndubuisi Ekekwe, the Founder of African Institution of Technology. These open-minded individuals are combining knowledge of local issues with their own expertise and the ubiquity of computer-based tools to carve out their own markets.

Adweek explains that the Maker Movement consists of innovation ecosystems that take a bottom-up approach to the economy, enabling consumers to be engaged in designing and producing the products they'll ultimately buy.

Some examples of the Maker Movement in Africa include HacKIDemia, which empowers makers, typically youths, to solve local challenges and exchange best practices by awarding fellowships to mentors who engage with other makers in their communities. M-PESA, a Kenyan-based online payment system, and BitFinance, an ATM machine enabled for cash, digital money and Bitcoin, are two other examples of made-in-Africa solutions. Beyond the tech space, there is even a Nigerian group that is refining crude oil on a small scale.

Ndubuisi Ekekwe says:

These makers offer a platform for a new economic system that taps into the brainpower of Africans to seed shared prosperity.

With many issues facing the continent - clean water, energy, health care and food processing - these Makers are aiming to create solutions that address these challenges. There is also an opportunity to form partnerships with these makerspaces in an effort to garner insights into new products and offer methods to better reach new customers.