The Business Solution to Poverty:
Designing Products and Services for Three Billion Customers
By Paul Polak and Mal Walwick
Review By John E. Wade II
Part III
Part One
Only Business Can End Poverty
I agree quite fervently that only business can end poverty, not only in the Global South, which is the subject of this book, but that premise applies globally. The authors describe examples of poor rural people; reading this is a must if you intend to get a serious idea of their life. There are a few general characteristics—“The poor just get by,” very much in a survival mode, “The poor receive little news. Most of the information poor people receive comes by word of mouth from families, neighbors, and friends, and occasionally by radio, filtered through a village culture little influenced by national and global news.”
“The poor rarely travel.” They are isolated and are “…rarely aware of the new ideas and new opportunities that surface so frequently in today’s fast-changing world.” “The poor have few choices.” The modern world is out of reach. Instead “…one out of five of their infants die of preventable illness…They’re vulnerable to whatever else comes along in the village where they live, whether it’s inferior health care, substandard food, dangerous transportation, or illegal activities by the police or village officials.”
“The poor live with misfortune never far away.” Things from uncertain rainfall to children’s bouts of severe diarrhea surround the poor. It’s not just because income is limited, but “…because what income they receive is irregular and unpredictable.”
The book provides some serious wisdom about this poverty in the chapter, “What is Poverty?” “It’s shocking. After the world’s rich nations invested more than $2.3 trillion over the past 60 years to end global poverty, billions of our fellow humans remain desperately poor…Top-down development programs administered by governments, international agencies, foundations, or big NGO, [Nonprofit Government Organizations] rarely work because they’re so vulnerable to government corruption, bureaucratic inaction, the distance between the planners and the supposed beneficiaries, and both distrust and a lack of interest on the part of people who live at the grass roots.”
“Giveaways breed dependence and self-doubt instead of change. Philanthropy isn’t the answer, either. Despite the severely limited funds available, they’re squandered on a great diversity of uncoordinated, small-scale efforts to address every problem under the sun. We can’t donate our way out of poverty. Even Bill Gates, with $70 billion at his disposal, has referred to his wealth as a drop in the bucket in our $70 trillion global economy.”
It is estimated that 925 million people go to bed hungry at night globally. “Poor people as we have come to know them in the Global South typically experience un- or underemployment; encounter barriers to opportunity based on their gender, race, ethnicity, or religion; lack some or all of the basic human needs, including clean water, nutrition, health care, education, clothing, and shelter; and all too often, lose hope and lack even the most basic self-esteem.” Surely we can do something about this. The light at the end of the tunnel is, in my opinion, this book, and its application with determination and persistence.
The next chapter is, “What Can Government and Philanthropy Do?” Since World War II global GDP went from $4 trillion to $70 trillion in 2012. The authors explain that the main improvements have been in public health and primary education. And it is true that the percentage of the planet’s people living below subsistence level has decreased from about a half to thirty-eight percent. But in absolute numbers of desperately poor people, there are more today (2.7 billion), than sixty years ago (2.6 billion).
United Nations aid (about $5 billion in 2012), non-military U.S. aid and other aid has had significant effect in particular places, but “their net effect on the incidence of global poverty is nil.” The author’s Takeaway is “The most obvious, direct, and effective way to combat poverty is to enable poor people to earn more money.” “Building infrastructure—the World Bank’s longtime favorite mission—allows top government officials to award construction contracts to their families, friends, and supporters, often with kickbacks in return. Unfortunately, massive foreign aid is often diverted to armies and police forces to preserve the power and hidden bank accounts of ruling elites, to the disadvantage of the country’s poor people.”
There are more than five million citizen-based organizations globally which attempt to fight poverty. While these efforts are earnest, admirable and effective, these organizations “…tend to be scattershot and are almost always on a small scale. Scale is the overarching issue for the citizen sector.” From time to time these groups develop effective ideas such as one which CARE introduced, a micro savings and loan program “…based on savings rather than debt and is managed by members of the community rather than professionals…These ‘village savings and loans’…now serve some six million people in 58 countries.”
Worldwide, microcredit is now considered “…one of the most favored methods undertaken to fight poverty.” However, it appears that many in the “$70 billion microcredit industry, practice fraud, demand usurious interest rates (sometimes even greater than those of moneylenders), and in at least two celebrated cases have made huge fortunes for their investors at the expense of their clients. In some countries, the results have been tragic: poor people overloaded with debt and nothing to show for it—and even, in one extreme case in India, a wave of dozens of suicides brought on by aggressive debt collectors.” Even in Bangladesh—“home of the microcredit movement and the country where it has expanded the most”—the country has gone down on a UN measure of poverty from 136th in 1991 to 146th twenty years later.
But not all is bad news. In health care, “The eradication of smallpox and the near elimination of polio, plus recent efforts to combat the spread of HIV/AIDS, have saved millions of lives and captured the public imagination.” The authors laud the efforts of the Bill & Melinda Gates Foundation in donating major sums of money to improve health care, “But so much more needs to be done!”
Education has been largely a success with literacy increasing significantly “…in recent decades in every region of the world.” UNESCO estimates that world literacy went from about fifty-six percent in 1950 to eighty-two percent in 2000. The authors explain, however, that schools in the Global South pay their teachers a pittance and have high teacher absenteeism. These children do learn how to read and write in some fashion though. The book encourages further efforts by governments in education, as there has been success previously, but states that better teacher salaries in the Global South would be helpful.
Other possible government advancements could be “…upgrading the legal system, expanding physical infrastructure, and improving business conditions. In practice, making police and the courts accountable would be a big step forward. Building more all-weather roads would help a lot, too. And the thickets of often obscure laws and regulations that make establishing a business a months-long nightmare in many countries should be streamlined.” Continuing, “in countries where they’re permitted (or can function under wraps where they’re not), citizen watchdog organizations can make a big difference by publicizing corruption, systematic uses of violence to stifle dissent, and other sins of government. International organizations such as Human Rights Watch, Transparency International, and Amnesty International are excellent examples on the global scale.”
