Fighting Poverty With $2-a-Day Jobs
Monday, July 17, 2006
Excerpt: Jacqueline Novogratz, a veteran of the Rockefeller Foundation and a former consultant to the World Bank, talks enthusiastically about the development of a company in Africa where some 2,000 women earn, on average, $1.80 a day producing antimalarial bed netting. With the assistance of a $350,000 loan from an American investor, the business started making the nets nearly three years ago and is likely to add 1,000 more jobs within the next year.
Ms. Novogratz is not an outsourcing executive at a multinational company. Rather, she is the chief executive of the Acumen Fund, a philanthropic start-up based in New York that uses donations to make equity investments and loans in both for-profit and nonprofit companies in impoverished countries. One of the stars of her small portfolio is the bed-netting maker, A to Z Manufacturing, a family-owned company in Tanzania ? a country where 80 percent of the population makes less than $2 a day.
Social activists have typically railed against large multinationals that have sought the lowest-priced labor they can find in developing countries. But for some members of a new generation of philanthropists, schooled in the techniques of venture capital and Wall Street, fighting poverty effectively relies on the creation of low-wage factories, as well as the establishment of lending institutions that charge rates that many Americans would deem usurious. Rather than work through global aid bureaucracies, they believe that affluent Westerners should become more directly involved in the developing world?s credit and labor systems, and invest in and support businesses that are self-sustaining and replicable.