Enterprise Solutions to Poverty

Enterprise Solutions to Poverty

For too long, approaches to economic development and eradicating poverty have centered around official development assistance. Live8 concerts around the world provided a highly visible and robust focus on global poverty, designed to increase foreign assistance commitments from G-8 countries to the poorest countries – an important, but by no means the best hope, for eradicating poverty. Rather, it is the sea change that is taking place in attitudes and in the proliferation of non-governmental efforts to address poverty that offer the best hope.

The urgency, one might say the fear of global poverty and its impact has prompted many to think outside the box and to diversify the approaches to poverty and its related ills. Encouraging, bold and innovative efforts are underway. Grameen Foundation led the way with lending to the very poor who lacked collateral and microfinance mechanisms proliferated. Organisations like S3IDF (Small scale social Infrastructure Development Fund) are expanding access to the rural and poor for a more effective and efficient social infrastructure and micro enterprise development. And now funds for small and medium enterprises (SMEs) are growing as increasing numbers of multinationals are getting serious about corporate social responsibility.

Various organisations are taking a merchant bank approach “to catalyze and scale-up market and enterprise solutions to poverty”. People have started appllying business solutions to eradicating poverty, directing financial resources and transferring “business DNA” (imparting technical and business know-how) to SMEs.

There is a great deal of microfinance, a good bit of project finance and venture capital for the big projects but insufficient financing for the SMEs which face the same problems that microfinance addresses, i.e., no collateral, no business track record and therefore deemed a high risk by lenders and investors. Yet SMEs are often the engine of employment growth for many economies. Capital is needed to grow a business and to take it to scale. Grants never seem to end the dependence on that funding nor enable projects to reach a self-sustaining level.

The fight against global poverty is continuing and it needs an entrepreneurial approach and enthusiastic social entrepreneurs, who can really take over the whole responsibility and win the war. There are examples, which proves the ability of SMEs in eradicating poverty and accelerating development. We an feel the change in social environment due to various reasons, which is forcing us not only eradiating poverty but also growing fast in order to survive in this era of competitions. Even if a significant number of individuals and organisations are coming forward to accept this challenge, we need a combination of multiple resources from multiple sources. More efficient steps need to be taken from the Private side as also from the policy makers.

There is no doubt, that this approach will make important contributions. It may be even broader and more significant yet by providing a model of assistance that can be replicated by hundreds, even thousands of foundations and corporations around the world. That would offer the best hope to “make poverty history.”

"Enterprise leads to employment which further leads to income generation and results in poverty reduction and improve in quality of life"