Al Hammond

A New Model for Success at the BOP: Interview with David Wheeler, Part 2

This post is a continuation of an interview Nextbillion conducted with Prof. David Wheeler, who recently wrote an insightful piece on how sustainable local enterprise networks can enable bottom-up development at the base of the pyramid. The interview will conclude next week. To read the first post, click here.

What components of Sustainable Local Enterprise Networks are crucial for their success? How strong is the empirical support for this model?

We found four classes of asset growth to be common in virtually all examples of successful ?sustainable local enterprise? we studied: social capital (goodwill), human capital (skills and know how), ecological capital and financial capital. Where these asset classes received synergistic investment or re-investment the network grew in scope and resilience. From this perspective we can begin to understand why so much development assistance has failed in the past.We have bilateral development agencies who think that private sector development is just about ?financial deepening? ?e.g. improved access to micro-finance but do not think about where the entrepreneurship skills are coming from. We have NGOs that are comfortable with human capital investments – support for rural farmers and co-ops, etc?- but who feel less able to promote for-profit business solutions for ideological or other reasons. We have governments that draw down ecological capital for short term gain rather than preserving or enhancing it for longer term sustainability. So most of all we need holistic thinking with all actors supporting integrated long term investments in all asset classes.

Happily there are now examples of bilateral and multilateral agencies, NGOs and governments that get this and it is to them that we should look for more examples and more success stories. We have been especially impressed by the depth of thinking on these questions by some of the international development banks like the IFC (World Bank), NGOs like CARE and a number of governments in Africa, Latin America and Asia for whom ?what works? is more important than ?who controls?. Of course there are plenty of examples of organizations that do not think like this!

The empirical support for the model is substantive: fifty cases explored over 3 years. Methodologically we took a genuinely grounded approach which in qualitative social science research means not making presumptions about outcomes. We were very fortunate in gaining access to a number of unpublished cases and we are working with our partners to get these cases formally published in due course. The model went through multiple iterations before we decided it was robust enough to publish. It was important to us to be methodologically rigorous because there are plenty of commentators pointing to ?one off? examples of private sector development without making clear the context and the special circumstances in each case. So whilst we do not think we have all answers, we do believe we are pointing towards a new way of thinking about development that with luck may be replicable across different contexts and geographies.