The Policy Agenda
Guest blogger Lauren Withey is a research analyst working on the World Resources Report at the World Resources Institute. She is a contributing writer to the newly-released World Resources 2008 - Roots of Resilience: Growing the Wealth of the Poor.
By Lauren WitheySofia Begum never imagined that she would be running her own poultry business. In 2000, the former housewife from northern Bangladesh was struggling to make ends meet for her family. She and her husband, a fisherman, were too poor to send their children to school. Like most of the families around them, the couple relied heavily on the local wetland to provide the protein and income necessary to sustain their daily lives. But degradation to the wetland from agricultural pollution, sediment from deforestation upstream, and overfishing had taken its toll in recent years. Fish harvests had fallen dramatically and the communities reliant on the wetlands had few other economic opportunities to fall back on. Fortunately for Sofia, a new effort was just beginning in the area that aimed to help her community develop alternative income sources while restoring the wetlands under community management. The Managing of Aquatic Ecosystems through Community Husbandry (MACH) program was funded by the US Agency for International Development (USAID) and executed by four civil society organizations with the support of the Bangladeshi government.
Communities across northern Bangladesh created two types of groups to carry out this process: Resource Management Organizations (RMOs) designed and implemented wetland management plans to aid the wetlands' recovery, while Resource User Groups (RUGs) served as training and financing mechanisms to develop alternative income sources. Specialty vegetable farms, fruit orchards, livestock-rearing operations, energy and clothing businesses, small stores are just a few of the fruits of the RUG's efforts in MACH communities.
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Submitted by Rob Katz on July 22, 2008 - 11:33.
 This is the fifth and final installment of our series reviewing Michael Edwards' Just Another Emperor and the concept of 'philanthrocapitalism'. Follow the links to read part 1, part 2, part 3 and part 4.
By Rob Katz and Francisco Noguera
Philanthrocapitalism – harnessing business and the market to the goals of social change – is a controversial term. First introduced by The Economist's Matthew Bishop, then expounded upon by the Ford Foundation's Michael Edwards, philanthrocapitalism has been the subject of no fewer than four major online discussions and debates. Here at NextBillion.net, we have dedicated five blog posts to the topic, offering a range of opinions on Edwards' new book, Just Another Emperor: The Myths and Realities of Philanthrocapitalism. Derek, Moses, Manuel and Nitin – who authored the first four entries in this series – offer a range of viewpoints, mostly critical of Edwards' argument that market strategies are inappropriate tools for driving social change. Edwards, of course, makes many salient points, and is not to be criticized as a hack. (Over at the Global Philanthropy Forum blog, Benetech's Jim Fruchterman deconstructs Michael Edwards in no uncertain terms, and comes close to making this very criticism. Edwards responds.) As I read through the NextBillion.net posts and comments, the Global Philanthropy Forum debate, the OpenDemocracy forum and other discussions on philanthrocapitalism, I wonder if we aren't talking past each other at least a little bit. (This post continues past the break; click "Read More" to continue)
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July 16, 2008 - 09:00,
Vancouver Sun
Tracking Down the Trail of Foreign Aid
The current foreign aid fad is to channel most money through recipient governments rather than the NGOs that actually deliver most services in most poor countries. This wins the donors (Canada among them) high praise from the heads of those lucky governments who get the cheques. They like this policy a lot. But the people the money's supposed to help? No so much. In an ideal world, it would be hard to argue against providing aid money through governments. Fairness and democratic principles demand that nations be free to pursue their own priorities, not be bound by ours. But in the real world, a key cause of mass poverty is bad governance - incompetent, corrupt, sometimes even vicious. In other words, far fewer places would be poor if their governments could be trusted. So who wants to prop up their leaders with money for them to siphon off from its intended uses? Continue Reading.
July 11, 2008 - 09:00,
Economist
Promises, promises
DEVELOPMENT aid can be as fickle as fashion. Remember those white Make Poverty History wristbands, which briefly made compassion chic in the run-up to the Gleneagles summit in 2005? Memories of the pledge made by G8 leaders there to double annual aid to Africa by 2010 also seem to have faded with time. According to the OECD, on current spending trends annual aid will fall $14 billion short of the $50 billion African target-not a statistic to savour as today's G8 leaders tucked into their eight-course banquet on the Japanese island of Hokkaido on July 7th. Once again, they vowed to honour their aid commitments to Africa, but they are not legally binding nor are they easy to pin down. As usual in the aid business, making promises is a lot easier than sticking to them. Does that matter? After all, the effectiveness of such sweeping aid pledges has been questioned a lot lately. Last year, in his book "The Bottom Billion", Paul Collier, an Oxford economics professor, convincingly argued that aid, on its own, was unable to make a big difference to the world's poor. He saw it more as a way of stopping things from falling apart, rather than fostering growth. He and other scholars have argued that large disbursements are subject to the law of diminishing returns. Even at Gleneagles, aid sceptics warned world leaders of the dangers of "Dutch disease"-that a sudden windfall of hard currency could push up the exchange rate and damage a country's export competitiveness. Continue reading.
Submitted by Nitin Rao on July 10, 2008 - 14:05.
This is part 4 of our series reviewing Michael Edwards' Just Another Emperor and the concept of 'philanthrocapitalism', which will conclude next week with remarks from other members of the NextBillion.net team. Follow the links to read part 1, part 2 and part 3.The close-knit community of development-through-enterprise professionals in Hyderabad woke up a couple of weeks ago to a series of e-mail forwards of an interesting article in the Financial Times. Michael Edwards, author of " Just Another Emperor", had raised a series of points that the development sector was driven by misguided calls for business thinking, leaving this community with hard questions: Were they working passionately, but in the wrong direction? The crux of Edwards' argument is that the development sector should follow a different logic from business thinking and be driven by its unique values of compassion and collaboration. He writes: The reason is that business and non-profits operate on different logics - competition and co-operation, individualism and collective action, market share and sacrifice or service. You wouldn't use a typewriter to plough a field or a tractor to write a book, so why use business thinking in areas where different instruments are needed. It is certainly true that the development sector is unique in many ways, but this does not mean that its values are opposed to sustainable business or, as Edwards suggests, that it should be protected from measures of profit.
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This is part 3 of our series reviewing Michael Edwards' Just Another Emperor and the concept of 'philanthrocapitalism'. Follow the links to read part 1 and part 2.
Recently, there has been some debate surrounding business involvement in philanthropy and its usefulness after the publishing of “Just Another Emperor?” last March by Michael Edwards. Michael Edwards, Director of Governance and Civil Society at the Ford Foundation takes a critical look for the first time at a relatively new phenomenon: using sustainable business tools and models to solve poverty problems. NextBillion.net’s core content (and passion!) deals exactly with these issues.
Constructive criticism is always welcome, especially if it is from someone who has worked at Oxfam, Save the Children and the World Bank. In the fight against poverty, Edwards makes a distinction between government, civil society and what he calls, philanthrocapitalists. According to him this last group is made of market agents that claim to be able to solve social problems through business approaches alone. Edwards states that, although these approaches are important, they are very difficult to operate successfully at scale and that they usually experience some trade-offs between their social and financial goals. Furthermore, he argues that civil society might be being damaged by these trends.
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Submitted by Moses Lee on July 8, 2008 - 11:19.
This is part 2 of our series reviewing Michael Edwards' Just Another Emperor and the concept of 'philanthrocapitalism'. Read part 1 here.
Michael Edwards' recent book on "philanthrocapitalism" reminds me of a recent conversation I had with my sister, a social worker. Over dinner one day, she started going off on business types: Why is it that business people think they are the answer to all the world's problems? You guys come off so arrogant! Somehow, we, who have been working in the civil sector for centuries, struggling to solve social issues, are completely inept, and you guys, who have all the money, are going to solve all the problems.
I think many people have a similar perspective. And perhaps rightly so. Maybe we business folks didn't enter into the public/non-profit sector scene in the smoothest way. We in the BoP world know that when entering into a developing country, we can't just tell locals what to do and what they need. But perhaps we didn't follow our own advice when we entered into the world of foundations and NGOs. Instead of partnering with and listening to those who have gone before us, we just set up shop and announced to the world, "times are changing -- a new and better way has arrived!" Therefore, I can understand the push back and why Edwards wrote his book, Just Another Emperor?
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"The profit motive could be the best tool for solving the world's problems, more effective than any government or private philanthropy,"
-Oracle CEO, Larry Ellison Larry Ellison's bravado makes Michael Edwards mad. Similar quotes highlight the introductory section of Edwards' new book, Just Another Emperor. Throughout his book, and in related articles published by the Financial Times and OpenDemocracy.net, Edwards makes it clear that he is tired of pro-market hype - and he doesn't want you to buy into it. Edwards takes aim at the market-based principles of development underlying the base of the pyramid (BoP) perspective and even mentions BoP movement leaders by name.
Here at NextBillion.net, we've followed Edwards' work closely. Having read his book and articles, our cadre of Staff Writers has decided to offer a sampling of our thoughts in response to Edwards' ideas. In this and five subsequent posts, NextBillion staff will offer our own personal perspectives on Edwards' diatribe against what he calls "philanthrocapitalism." Today, I'll kick off this dialogue with my own review of Just Another Emperor.
In Just Another Emperor (2008, published by Demos and the Young Foundation), Edwards, a Director at the Ford Foundation, targets what he calls "Philanthrocapitalism" for critique. This is a philosophy that he defines as being based on the belief that business approaches to social problems are superior to approaches traditionally advanced by the government and civil society and that these approaches have the unique ability to create transformational social change.
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Submitted by Rob Katz on July 3, 2008 - 11:10.
July 03, 2008 - 11:00,
Economic Times
Inclusive business model could serve the poor
Doing business with the poor need not be about philanthropy. Nor does it necessarily mean wafer thin margins. When the bottom of the pyramid is represented by 4 billion people with combined income of about $5 trillion, can companies choose to completely ignore them? Individually, they may be living on less than $8 a day, but as a group their income is equivalent to the gross national income of Japan, the world’s second largest economy.
Submitted by Rob Katz on June 27, 2008 - 09:00.
"So, what do you think about the IEG report?" I was g-chatting with my friend Smita the other night when she brought up the World Bank. "What IEG report? What's the IEG?" I replied, showing my ignorance of the latest Bank goings on (and of the acronym – it stands for Independent Evaluation Group). Smita sighed. "I'm surprised you haven't heard. I'll forward you an e-mail from this listserve I'm on. Take a look." That's how I found out about Doing Business: An Independent Evaluation. Released on June 12, the report criticizes Doing Business' (DB) reliability and robustness, suggesting that top-ranked countries may achieve high scores due to the absence of regulation, not necessarily the presence of smart, socially-beneficial regulation. Furthermore, the report found "no statistically significant relationship" between the DB indicators and any kind of economic outcome such as investment, gross domestic product growth or employment. For those interested in business' role in fostering sustainable development, the IEG report ought to prompt some serious reflection. I know it's been on my mind since I read it. After all, I've been promoting the Doing Business reports for years here on NextBillion.net and to scores of colleagues, companies, development agencies and NGOs interested in base of the pyramid strategy. Perhaps it was naïve of me to assume that – as a World Bank / International Finance Corporation report – the DB indicators are robust and well-vetted. The IEG says they’re not – which calls into question a lot of my advice. (This post continues past the break; click "Read More" to continue)
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This past weekend, I had the pleasure of attending the Growing Inclusive Markets Forum in Halifax, Nova Scotia. The conference was hosted by the Faculty of Management of Dalhousie University and the Coady Institute of St. Francis Xavier University. The Growing Inclusive Markets initiative is a UNDP program that aims to "raise awareness by demonstrating how doing business with the poor can be good for poor people and good for business." The forum hosted a mix of development specialists, academics, and practitioners, who were all debating the growing role of the private sector in development. There was a great energy throughout the weekend, and the people in the room seemed to have no problem connecting across the issues and committing to action. I thought that one of the best aspects of this conference was that numerous citizens from the developing world were in the room. Representatives from over 45 countries were present, and this shaped the conversation considerably. In a conversation about the role of ICT in Development, one of the panelists was a Tanzanian Ashoka fellow, Joseph Sekiku, whose organization, Family Alliance for Development and Cooperation (FADECO), is utilizing a combination of mobile phone networks and radio to get accurate market prices to rural farmers. His most salient comment was probably that, "Africa has been dependent on donors for too long." In a discussion regarding the role of carbon markets for the poor, an organic farmer from the Caribbean shared her struggles with reaching the scale and capital required to access the established carbon markets. It was wonderful to hear these voices and witness their influence on the conversation. The following outline was presented during the last session, and does a good job of summarizing the constraints and opportunities that were highlighted over the short conference. It is also a concise summary of many of the same overall challenges and hopes we all face when considering the role of the private sector in addressing poverty and inequality in the developing world. (This post continues past the break; click "Read More" to continue)
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A key issue that the BoP development world currently faces is generating a tangible connection between markets, enterprise and the poor. After all, if we are going to alleviate poverty through enterprise, we require effective strategies that enable the BoP to participate in profitable business endeavors as well as markets that serve the BoP's needs sufficiently.
In light of this difficult obstacle, WBI has taken steps to provide insight into how BoP development can be engaged successfully through its release of the special report "Business and Poverty: Opening Markets to the Poor." The report's 18 chapters-each about eight pages long-analyzes various effective strategies, obstacles and prospects for NGOs, non-profit organizations, corporations, banks, MFIs, and local enterprises working to serve those who are most marginalized and impoverished-the BoP.
Though the World Bank report does not provide comprehensive statistical analysis explaining clear steps that can be taken in order to address barriers to serving the BoP, it does offer numerous case studies regarding successful business models. It also offers supplementary analysis, which details how and why each example project was effective, and outlines what will need to be overcome in future years.
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May 28, 2008 - 10:00,
Brookings
Trust the Development Experts – All 7 Billion
Why should we care about the debacle of a World Bank report? Because this report represents the final collapse of the "development expert" paradigm that has governed the west's approach to poor countries since the second world war. All this time, we have hoped a small group of elite thinkers can figure out how to raise the growth rate of a whole economy. If there was something for "development experts" to say about attaining high growth, this talented group would have said it.
What went wrong? Experts help as long as there are useful general principles, such as could be established by comparing low-growth and high-growth countries. The Growth Commission correctly pointed out that such an attempt to find secrets to growth has failed. The Growth Commission concluded that "answers" had to be country specific and even period specific. But if each moment in each country is unique, then experts cannot learn from any other experience - so on what basis do they become an "expert"?
The logical next step at this point would have been to give up on experts. But the commission insists that experts, who will communicate their advice to technocratic leaders, are still the answer. Partly this reflects how wedded the World Bank is to the "leaders and experts" vision of how growth happens, since such a world-view does create a big role for World Bank experts.
The commission made the common mistake of anointing high growth rates as the measure of success, whereas high growth mysteriously comes and goes. Indeed, only two of the 13 high-growth episodes the commission studied were still going at the time of the study. Yesterday's growth failures (for example India) are today's successes and yesterday's growth successes (for example Brazil) are today's failures. Much of this volatility is inexplicable and unpredictable. To give credit to whatever leader happens to be in power during a burst of high growth is just circular reasoning (How do we know they were a great leader? Because there was high growth!).
The details of success are equally unpredictable. Where are the experts who guessed in advance that an obscure Indian company making edible oils would become a $10bn-plus company (Wipro) providing information technology services and call centres? Or that a lossmaking Brazilian state enterprise (Embraer) would go on to capture a lot of the world market for regional jets after being privatised? Or that South Korean entrepreneurs would create a carmaker (Hyundai) with greater market value than General Motors or Ford? Or that a schoolteacher named Dong Ying Hong, formerly earning $9 a month in Datang, China, would become a millionaire making socks?
What to do in a world of such unpredictability? There are some general principles and they do not require experts. Another Nobel laureate gave the crucial insight a long time ago - the answer is freedom for multitudinous individuals to figure out their own answers. Friedrich Hayek said: "Liberty is essential to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realising many of our aims. It is because every individual knows so little and ... because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it."
The International Chamber of Commerce (ICC), the United Nations Development Programme (UNDP), and the International Business Leaders Forum (IBLF) have opened nominations for the 2008 World Business and Development Awards in support of the Millennium Development Goals (MDGs). The awards recognize the contribution of the private sector to help achieve the MDGs through their core business. Recent winners of these awards have been De Beers for its HIV/Aids programme, ITC eChoupal and Procter and Gamble's PuR water purifier. The MDGs are eight goals that promote poverty reduction, education, maternal health, and gender equality, and aim to combat child mortality, HIV/AIDS and other diseases (for more information click here). The World Business and Development Awards is one of the central events this year that will recognize the key contributions of the private sector to achieve the MDGs. The deadline for nominations for the World Business and Development Awards is 15 June. Companies, institutions and associations of all types and sizes are invited to participate by nominating projects that document business activities leading to progress in achieving one or more of the MDGs. The winners will be announced on 24 September during a presentation ceremony in New York. For more information about the awards, including eligibility criteria and nomination forms, please go here.
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May 22, 2008 - 10:00,
The Economist
On the Poverty Line
From The Economist Print Edition
Has "a dollar a day" had its day?
In December 2007 the World Bank unveiled the results of the biggest exercise in window shopping in history. Scouts in 146 countries scoured stalls, supermarkets and mail-order catalogues, recording the price of more than 1,000 items, from 500-gram packets of durum spaghetti to low-heeled ladies' shoes.
This vast enterprise enabled the bank to compare the purchasing power of many countries in 2005. It uncovered some statistical surprises. Prices in China, for example, were much higher than earlier estimates had indicated, which meant the Chinese income in 2005 of 18.4 trillion yuan ($2.2 trillion at then-market exchange rates) could buy less than previously thought. At a stroke, the Chinese economy shrank, in real terms, by 40%.
Since then, many scholars have wondered what this economic demotion means for the bank's global poverty counts. It famously draws the poverty line at "a dollar a day", or more precisely $1.08 at 1993 purchasing-power parity (PPP). In other words, a person is poor if they consume less than an American spending $1.08 per day in 1993. By this yardstick 969m people suffered from absolute poverty in 2004, a drop of over 270m since 1990. The world owed this progress largely to China, where poverty fell by almost 250m from 1990 to 2004.
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