NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Imagine that you’re a 13 year old, the oldest of seven kids, growing up in Pakistan in a poor family. As you try to fall asleep each night, you wonder whether you’ll have something to eat the next day and your back hurts because you spent the last week lifting and pushing wheelbarrows to help your mother and father with their work.

Rather than dream about one day becoming a professional athlete or a world famous musician, you look ahead and expect that you’ll be doing back breaking work like your mother and father for the rest of your life. Life isn’t terrible though; you have a very loving, happy family and wonderful friends. Despite that, you know that your parents are fighting a daily battle to make ends meet and you have a growing sense of responsibility to help provide for your younger siblings. If you’re struggling to picture the desperate scenario I’ve described, just think of young people in gangs across the U.S.; this situation is not so different from what a lot of poor people in America face.

In their 2009 publication, ’Emerging Markets, Emerging Models’, Monitor describes how many children find themselves in a condition of poverty across the developing world. The report goes on to portray an economic environment that would be very challenging for poor families to navigate: “…current low-end markets are informal, inefficient, exploitative, and often dominated by monopolists, quacks, or crooks.” As you would expect, parents in situations like this want nothing more than to offer their children a life better than their own. In fact, Monitor reports that parents are willing to spend a large portion of income on education for their children:

Even in one of India’s poorest states, Bihar, parents earning over Rs. 3,000 ($60) per month (or $2 per day) are willing to pay more than 10% of monthly income to send at least one or more children to private school.

Unfortunately, families in desperate situations are prime breeding grounds for the next generation of terrorists. Al-Qaeda, FARC, Hezbollah and others that have been labeled as terrorist organizations are generally among the most influential and powerful groups in their local geographies.

As noted recently in the Washington Post, terrorists are often recruited from poor families trying to break out of the cycle of poverty: “For poor people in countries where economic prospects are bleak, jihad can be one of the few jobs available…Of the 25,000 insurgents and terrorism suspects detained by U.S. forces in Iraq as of 2007, nearly all were previously underemployed.” For instance, many in the Arab world perceive Hezbollah to be an organization focused on social development. Similarly, in Pakistan, the Taliban often offers parents the best chance for their children to receive a decent education. In Colombia, the FARC recruit fighters from a very young age.

These groups have so much money (The Middle East Forum reported that, “the Saudi government has admitted to spending more than $87 billion over the last decade in an effort to spread Wahhabism”) in areas where many people are struggling to get by, that they can recruit members by offering them a better life. Families that face desperation and degradation are willing to make difficult choices in order to end their despondency.

The situation is further aggravated in countries and regions that have been torn apart by wars and natural disasters, which may add to the financial and emotional desperation that some families face when trying to get by. In his book, Capitalism at the Crossroads, Stuart Hart describes what drives individuals to join terrorist organizations:

It takes a lifetime of neglect, despair, dashed hopes, thwarted opportunities, or worse-intimidation, exploitation and humiliation-to drive most people to such extremes.

Individuals facing severe poverty often feel an intense sense of desperation and are therefore willing to do almost anything to escape their scenario. Though terrorist organizations are usually led by religious fanatics and fundamentalists, their member base generally comes from disenfranchised poor families who seek a better life. Hart, who is known to be a thought leader on this subject, goes on to say, “Terrorism, in short, is a symptom; the underlying problem is unsustainable development.”

The Solution

It is clear that in the long run, the solution to terrorism is to deconstruct the life circumstances that encourage members to join organizations like the Taliban. This is not an easy task, but social entrepreneurs are working diligently to help. In the same way that social businesses are just a part of the solution to global poverty, they cannot fix terrorism in isolation. Social enterprise, while critical, is only a piece of the puzzle; the severity of the problem requires solutions to a number of challenges, including social, government and economic reform. Still, the work of innovative change makers is crucial and important. As an industry, we are working to create solutions for those who don’t have all the tools they need to help themselves. We are providing access to proper education, health care, sanitation, energy, water, financial tools, and so on.

Though nearly everything social entrepreneurs do is meant to contribute to more sustainable development, two sectors of work stand out especially in terms of their ability to combat the seeds of desperation that lead to terrorism: education and financial tools. Education expands the potential of young people to improve their family’s life and financial tools help families to better manage their money, thus alleviating situations of financial desperation.

Education

Providing one’s children with an education is a desire shared across nearly all cultures and it is crucial for bettering the world and opening new doors of opportunity. As Monitor reports, “Parents generally prefer to send children to private schools [which are perceived as higher quality than public schools]: between 1993 and 2002, 80 percent of new enrollments in urban India were in the private sector.” Anyone who has read Greg Mortenson and David Oliver Relin’s ’Three Cups of Tea’ knows about the inspirational work being done by the Central Asia Institute. The institute is building schools in remote regions of Afghanistan and Pakistan to promote education, especially for girls. Doing so in the heart of the territory occupied by the Taliban and other extremists, the CAI is directly influencing the life opportunities available to those whom it reaches.

Another social venture, Vittana, is enabling person-to-person micro student loans over the internet, which makes it possible for the poor to receive quality education and pay off the loan with their earnings later on. Through two vastly different approaches, the Central Asia Institute and Vittana are providing education opportunities for those at the BoP.

Financial Tools

As is clearly demonstrated in the book Portfolios of the Poor, the world’s poorest are always coping with uncertainty, especially with regard to cash flows and the timing of when they receive income. Financial instability can make life very difficult and can certainly force families to make difficult decisions.

The work of Grameen Bank and the microfinance industry have provided some of the tools required for families to manage their finances, but more work is necessary. Currently, M-PESA and FrontlineSMS are building the capability for the poor to store money on their mobile phones and make payments via text message.

As Rob Katz described recently, M-PESA can be extremely useful for both rich and poor to manage their money and cash flows. Not only will this enable users to make digital payments and have another way of moving cash, it will allow them to keep more of their money safe rather than stashed at home or with money guards. For those living in tiny huts in the middle of urban slums, you can imagine how difficult it is to store money safely at home. Financial security provides stability, which helps enable the poor to avoid the degree of desperation that leads them to join forces with terrorist groups.

Though this post has only touched on social businesses in the education and financial services industries, unsustainable development can only be cured through the collective impact of solutions across all types of needs. Ultimately, social businesses and entrepreneurs will help local communities rise out of poverty. When this occurs, terrorist organizations as we know them may cease to exist.