The key to poverty alleviation

I had never heard of Indian-born Prof. Reuben Abraham until I stumbled over his article titled "Entrepreneurship key to escaping poverty". Now I'm convinced Mr. Abraham's article is a must read for everyone interested or working in the field of poverty alleviation. For everybody else, supporting charities and fighting globalization, this article helps understand why the only way out of poverty is a business approach.

Mr. Abraham's points at a glance:

• Entrepreneurship is an agent of economic development - no other intervention than economic growth has ever alleviate so many people out of poverty.
• Wealth creation before wealth distribution.
  
• Three kinds of entrepreneurship: a) the street vendor business, b) the small and medium sized enterprise, c) the Apples and Starbucks.
• The street vendor business is not an enterprise, it's a means of survival.
  
• Survival activities should be replaced by employment opportunities with regular income and benefits.
• Government (and international aid) should work on providing conducive framework to attract enterprises able to provide employment.
  

Mr. Abraham soundly voices my honest opinion about how to tackle poverty in under-developed countries: the business environment has to be conducive for companies, either small and medium sized or big internationals, to settle. Why? Jobs. We have to stop romanticizing the image of a street vendor, who is his own boss and makes ends meet. It's not romantic or empowering. This picture portraits survival and coping mechanism.

I've seen it. I've worked with people selling goods at the market to feed themselves and their families at night. They are not risk-loving entrepreneurs. All they want is a regular income, a home, food.

But that's what aid agencies wish to believe and support: making an entrepreneur out of a farmer, a home-based mother, a person with a 6th grade school degree. We provide training trying to install that "entrepreneurial spirit" along with business management & accounting, and product development skills. That's what is then called "enterprise development".

I don't know about you. Despite my education and resources I don't feel attracted by the thought of running my own business. I'm happy in the role of an employee. Entrepreneurs are a special breed. It takes guts to take the plunge.

My take on economic development and poverty alleviation is different. That is, much more in line with what Mr. Abraham says. The key out of poverty is to attract or support the "real" entrepreneurs with the right skills and resources. The goal is job generation.

Where do aid agencies and their support fit in? Well, depending on the level of intervention--grass root support or policy shaping--development resources should help build that conducive business environment. From education and skills training to government policies, they all have to be in line to support local or foreign investment.

The Strategic-Corporate Community Partnership (SCOPE) program, which I'm heading in the Philippines, is designed following this philosophy. Working on a grass root level, we engage with the local private sector to identify opportunities to embed local producer groups into their value chains. This provides small scale producers with an ensured market, and the opportunity to add value to their produce based on market-demand resulting in an increased income. Some of the SCOPE assisted producer groups were able to grow into small and medium enterprises. They are now the ones providing employment and income, supporting Mr. Abraham's idea of promoting (real!) entrepreneurship as an agent for economic development.