The Best Recipe for Ending Poverty is Homemade

Alleviating poverty remains a core issue on the global agenda--rightfully so--but serious consideration should be invested in new approaches. The long-tested methods familiar to government and donors simply have not proven themselves up to the challenge.

While some trumpet the great strides that the world has made toward achieving the UN's Millennium Development Goals (MDGs), which range from halting the spread of HIV/AIDS to providing universal primary education by 2015, others cast serious doubt on our progress. The MDGs certainly are a useful blueprint for healthier societies. However, we need to shift focus from marginal improvements to world altering results. If we hope to explode the paradigm, we need new strategies that are not anchored in tired old ideas.

Jonathan Greenblatt in Ethiopia

First, we should demolish the mythology around top-down, aid-driven programs as the elixir for global poverty. Quite simply, the classic premise of "aid" to poor nations has failed. While the original intentions were admirable, the Bretton Woods system has proven woefully inadequate in uplifting the poor. The World Bank continues to perform some important work, but it also has squandered tens of billions of dollars and often cemented ineffective policies and corrupt regimes in Africa and Asia. The International Monetary Fund has imposed its draconian, belt tightening policies on developing countries in a manner not so different from electro-shock therapy. Despite the utility of aid, it is insufficient to rescue the billions of human beings caught in the flytrap of dire poverty.

These institutions have a wide set of critics who often point admiringly to the market and big business-driven trade as a better answer. However, "trade" per se is not the solution. Global trading deals and regional economic groupings like ASEAN and Mercosur have driven down tariffs and facilitated cross-border commerce. Widespread market liberalization and privatization efforts have ushered capitalism into once closed economies. While these trends have improved trade and investment flows, the largest beneficiaries typically have been multinational corporations. These large entities discover new consumers and rich profits but there is insufficient trickle-down relief to the bottom billions. Because of the resulting inequities, a global backlash has erupted. It is a movement that speaks to massive grassroots economic frustration. Even a wide range of the establishment elite acknowledge that trade is important but alone cannot unlock the gates of prosperity for those most in need.

It is time to move beyond these flawed constructs and find inspiration in a new generation of solutions. We need to shift beyond "aid" or "trade" and focus on "home-made" - locally developed, enterprise-driven approaches to economic opportunity. Rather than always emphasizing the top-down centralized programs, we should shift direction to embrace bottoms-up, decentralized models of development. In fact, a shift already is underway, one that is empowering the four billion people living on less than $4 per day. And it's happening with minimal assistance from bureaucrats in Brussels or Washington, already initiating a reevaluation about long-standing symbols of aid and trade.

Nobel Laureate Mohammed Yunus is a much deserved success story. Decades ago, the economist postulated that, given the chance, the "unbankable" poor in rural Bangladesh would repay small loans and that microcredit could serve as a viable business model. Today, organizations like Accion and Unitus stand at his side, enabling the growth of the 500-million person microfinance economy that is creating new opportunities for some of the poorest communities on the planet.

Yunus is not alone in his approach. Bangladesh-based BRAC has brought livelihoods to 100 million people since its founding in 1972. Ashoka has supported change-making entrepreneurs across the world. More recently, HealthStore has introduced affordable and much needed medication via clinics in Kenya. Kickstart has helped to develop appropriate technologies that provide clean water and increased irrigation capabilities to the rural poor in Tanzania and Mali. These organizations might not fit snugly into the classic categories of "for-profit" or "non-profit," yet they are transitioning millions of families from subservience to sustainability through job creation and income generation. These are the trends that we should encourage and accelerate, yet only a small number of organizations truly celebrate these achievements. That must change.

In a time when candidates vie for our attention with carefully contrived sound bites and corporate leaders pledge their commitments to social responsibility, a thoughtful discussion about how to uplift the poor is long overdue. Elected leadership and captains of industry in the West should learn from mavericks in the South to avoid past mistakes and blaze a better future. In short, we need more Grameen Banks and less World Banks or Citibanks. We need to suppress our tendency for micro-management and adopt approaches that engage the extraordinary entrepreneurial talent already thriving in the developing world.

Imagine if Western institutions encouraged developing countries not to focus solely on monetary policies, but rather on commercial frameworks that facilitated local entrepreneurship, such as easing the bureaucratic impediments to business incorporation. What if we promoted models of risk taking, such as promoting property rights so that home owners could convert their homes into risk capital to finance new ventures? What if we worked to catalyze the evolution of free but fair markets by celebrating businesses that support labor with compensation beyond wages, such as training and health care?

It is essential that our leaders look more closely at the realities and opportunities in the Global South. While we should not simply forego aid and trade, homemade solutions must become part of the equation. National governments and global bodies should adopt policies that foster the extraordinary entrepreneurial talent present in the developing world. With a soft-touch approach that builds markets and empowers communities, we may not achieve every MDG by 2015, but we might just lay the foundation for a more prosperous future.

Jonathan Greenblatt is the co-founder of Ethos Water and a senior advisor to the X PRIZE Foundation, helping to design a global competition focused on entrepreneurial solutions to poverty.

Comments

[BRUMALIA]

YES! Homemade entreprenurial solutions and bottoms up approaches are the new techniques and paradigms that must be employed and promoted in the Global South.

[RaderBarbarian]

"Elected leadership and captains of industry in the West should learn from mavericks in the South to avoid past mistakes and blaze a better future."

Ah, but there is an assumption in your statement and "elected leadership and captains of industry" give a hoot about the billions of people living in poverty. They don't. They must say they do - societal pressure requires it, but nothing requires them to do anything more than that.

The solution must be driven from the bottom, not the top. The top simply is not interested.
We need to stop even bothering with the "elected leadership and captains of industry" and get on with what works, like the Grameen model, etc.

[dadw5boys]

In most of those culutres the majority of the hard labor falls to the women. Get the men tools or machines like the peanut sheller that they have to operate that give the women a break and you'll be helping more than just they hunger but the society as well.

[ponderman]

The most abundant, available, renewable, non-polluting source of energy in the world is human physical energy.

We have the technology to re-direct 10 or 15 minutes of moderate human physical exercise into a significant amount of electricity, which can be stored in batteries for use when needed. The idea is being ignored.

Meanwhile, millions of people around the world are exercising every day, using machines that do absolutely nothing but provide resistence to muscles. Some of these machines, such as treadmills, actually require electricity to operate!

The bottom line is this: Every able-bodied person in the world could have the ablility to produce a commodity that will always be in demand.

[Merrysunshine]

Bravo for a brilliant post. You make so many excellent points.

Worldwide foreign and domestic economic models based on government handouts, mega corporations and trickle down economics have, for the most part, been a dismal failure and consistently caused more harm than good in combating poverty.

Just as a shade tree grows tall and spreads out from a small seed planted in the ground, so does sound economic growth and financial freedom. I absolutely agree that we must allow the small entrepreneur to thrive and flourish. Our own country was built on small business entrepreneurship.

When people are given the chance to own their own land, have access to water and other natural resources necessary for survival, education, healthcare and small business loans, they create their own economic independence. When people are able to enjoy a decent standard of living they are less likely to commit crime and wage wars.

I suspect current and past economic policies throughout the ages have and are maintained to keep the slave/plantation owner status alive and well. If we allow economic freedom and education for the masses to prevail the plantation owners just might lose some of their power and economic benefit " it seems far too many of them just can't allow that to happen.

I"m hopeful our children will see the folly in this and work together to practice fair trade and monetary policies that benefit all mankind. It"s time for the Robber Barons to fade away.

[cin]

this article reminded me of hurricane katrina and the scene at the superdome....
for days poor people, sick people, many skin and bones lined up begging for help..
and many of the talking heads on cnn and msnbc were shocked so much they all started "it's time for a national conversation about the poor in this country"
well the national conversation never happened.
Yesterday morning I stopped by the market for coffee, after I dropped my son at school.
A women in front of me at the check out was getting her son a lunchable for school. He looked exhausted and she looked exhausted and so poor and without. They both needed real food with nutrition and hope and money. She pulled out a wad...just three dollars to pay for it. That is all she had.
I thought several times about them yesterday, wishing I could help. Wishing there was a place for families to get help get healthy food.
Something has got to give.

[Henry]

a home owned micro-bank is the nucleus of the community. It creates money as it books loans to finance economic activity. First and foremost that is production but it is also consumption.
Hard to believe but this is the solution. Look at homesteaders on the plains of america...it was the local home owned bank that put them on the circuit to become capital intensive highly productive. It would not have happened without the banks.
Whenever a bank makes a loan, it creates money...yes it really is that simple. This of course does not work for nomads or refugee dwellers...