Entrepreneurship: One Answer to Poverty

In his State of the Union address President Barack Obama placed a spotlight on global poverty and the 1.2 billion people on the planet who stay alive on around $1 per day.

"Progress in the most impoverished parts of our world enriches us all," the president said.

So the United States will join with our allies to eradicate such extreme poverty in the next two decades: by connecting more people to the global economy and empowering women; by giving our young and brightest minds new opportunities to serve and helping communities to feed, power, and educate themselves; by saving the world's children from preventable deaths; and by realizing the promise of an AIDS-free generation.

One solution that works and went unmentioned merits a moment in the spotlight: Entrepreneurship. All around the world, and in the countries and provinces and neighborhoods held captive by some of the most entrenched and toughest to battle poverty, women and men turn to business to feed their families. These range from banana and potato chip companies in Liberia to logistics companies in Afghanistan and food markets in Pakistan. In the process many are doing much more than surviving. They are transforming subsistence into consistent income and nourishing their families and educating their children, cousins, nieces and nephews on their earnings.

Often entrepreneurship remains forgotten on the list of leading answers to poverty by those who run programs aimed at helping the poor. This is not because they do not want to help, but because all too often small business owners either remain invisible or uncounted. And that is even more the case when it comes to women. As I argued in a TED talk on women entrepreneurs, we don't count what we don't see and we don't invest in what is invisible.

This is changing, with programs from corporate sponsors such as Coca Cola, Dell, Exxon Mobil and Goldman Sachs helping to encourage and train women entrepreneurs, and the work of non-governmental organizations such as Oxfam, which has launched an investment fund aimed at bolstering banks' small business lending. Other NGOs, such as the Business Council for Peace andThe Institute for the Economic Empowerment of Women, along with the Cherie Blair Foundation, focus on one-on-one mentoring in some of the toughest economies, with the Cherie Blair Foundation focused on the unique role of technology in boosting women-owned business.

US Agency for International Development head Raj Shah noted in a recent blog post that "85% of global poverty is now concentrated in the following countries: India and China (combined 618 million people or 48% of the total), Nigeria, Bangladesh, DRC, Indonesia, Pakistan, Tanzania, Philippines, and Kenya."

In Nigeria, along with its West African neighbor Ghana, women are now starting businesses in greater numbers than men. In fact, in much of Sub-Sahara Africa, entrepreneurship levels among men and women were "almost equal," noted the recently published 2012 Global Entrepreneurship Monitor.

The benefits to communities in which women start and run businesses are plentiful. When women have income coming in research shows that the entire family benefits in the form of better nutrition and health. More money also means that parents must no longer face a choice between paying a son's or a daughter's school fees -- a contest which the daughter usually loses - since there is enough money for both boys and girls to be in the classroom. And as plentiful research and a powerful new film, "Girl Rising," point out, girls' education is among the most potent poverty fighters in the world.

Challenges facing women entrepreneurs abound: the three largest are access to finance, access to markets and access to skills-building and networks. Together, the private and public sector are working to fill some of these gaps. The biggest unsolved piece of the puzzle remains access to finance -- fertile territory for innovation.

So file "entrepreneurship" in the category of what works when it comes to the poor lifting themselves out of poverty. The innovation gap that remains, particularly on the question of access to funding, is one that requires creativity, an embrace of risk and, most importantly, determination.

The payoffs, in the form of less poverty, more jobs and greater growth, will benefit us all.

 

Follow Gayle Tzemach Lemmon on Twitter: www.twitter.com/gaylelemmon

Comments

[Itsbeenalongday]

08:59 PM on 02/23/2013

So few people are entrepreneurs. Most are content to just have a job. The whole micro-finance concept (banks getting at poor people) is to generate entrepreneurship through the establishment of cottage industries instead of sustainable job creation. The economic fundamentals in third world countries are just completely wrong. Why grow cotton in Afghanistan to sell it as raw material to China or Pakistan and import finished medical dressing and cloth at ten times the price?

[PedroAnimala]

10:53 AM on 02/20/2013

The savvies entrepreneur cannot succeed if he is not able to compete, to sell his product or afford the raw material. When resources limit such action, then cooperatives would play a mayor role.

[osteosynthese]

12:17 AM on 02/20/2013

Thank you for sharing Ms. Lemon. Are you not forgetting, though, the most important barrier to entry facing women entrepreneurs: freedom? On a practical level, think about being around negative people or people with low expectations of you. It is very difficult to innovate and to be entrepreneurial in that kind of atmosphere. In contrast, being around your most creative friends spurs further creativity and allows ideas to blossom through the development of concrete plans. If a woman feels trapped in her home, state or country, access to finance, however limited, will remain a distant dream.

[Marcus047]

07:15 PM on 02/19/2013

Let us be honest. Despite the american cultural virtue of entrepreneurship, entrepreneurship is rarely an answer to poverty. The vast majority of entrepreneurs, particularly those from minority and immigrant communities pursue entrepreneurship as a means of sustainability, because so often they cannot find work in their fields because of prejudice and bias. In starting their business, they are often unprepared and under-financed. and then the majority of them discover that they can't make a go of it, their business folds in less than a year, and they lost what little savings they had and what little they were able to borrow from family and friends. more lose their businesses in the second and third year, and those that do manage to survive rarely make their entrepreneurs and their families enough to crawl out of poverty. so they work long hours, often 60+ hours a week and barely manage to survive doing so.

The true answer to poverty is to aid people in getting recognition for their foreign acquired credentials, get work in their fields of expertise and finally be honest with those "qualified and highly trained" immigrants we allow into the countries, that we don't really want engineers and surgeons and doctors, etc, but cab drives, pizza delivery boys, and cleaners, and allow them to make an honest assessment of whether they would be better of in their own country or immigrating abroad.