Fighting Poverty Together

Since Muhammad Yunus pioneered the concept of microcredit in 1976 and founded the Grameen Bank in Bangladesh, microcredit has become a major movement.¹ The Nobel Peace Prize for 2006 was awarded to the Grameen Bank and its founder, and the Nobel Committee affirmed that microcredit must play “a major part” in eliminating poverty, noting that, “from modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed microcredit into an ever more important instrument in the fight against poverty.” The United Nations designated 2005 as the International Year of Microcredit, and it states on its website, “Currently microentre-preneurs use loans as small as $100 to grow thriving business and, in turn, provide [for] their families, leading to strong and flourishing local economies.” Kofi Annan, then Secretary-General of the United Nations, declared that providing microloans to help poor people launch small businesses is a recognition that they “are the solution, not the problem. It is a way to build on their ideas, energy, and vision. It is a way to grow productive enterprises, and so allow communities to prosper.”² C.K. Prahalad, in his popular book The Fortune at the Bottom of the Pyramid, argues that we should recognize the poor as “resilient and creative entrepreneurs,” and commends commercial banks, such as ICICI in India, for expanding into microcredit.

For six decades now, various institutions have been addressing the challenges of reducing poverty: local governments, developed-country governments, international organizations (such as the World Bank and the United Nations), aid agencies, and civil society.¹ So far, the intellectual discourse on poverty reduction has been largely in the fields of public policy and development economics. More recently, large companies, management experts, and business schools have entered this arena, arguing that business should play the leading role in reducing poverty.

Even as the economic gap between the rich and the poor is growing steadily larger, the physical gap between the rich and the poor is narrowing.¹ Slums are often just a short walk from upscale beaches or border posh neighborhoods, and shantytowns can be found near luxury resorts. The media brings images of the poor into the living rooms of the advantaged everyday. It is not possible, nor politically correct, to just ignore poverty. The affluent can actually visit poor neighbourhoods and photograph or film the poor in their “natural habitat,” either sanitizing or romanticizing their lives. Indeed, entertainment and poverty have come together: poortainment.

The poor, of course, have many unmet needs.¹ It would be a painless solution to the problem of poverty if business could satisfy all (or most of) these needs and make a profit in the bargain. That, as we saw in Chapters 3 and 4, is the seductive appeal of the BOP proposition. However, while the BOP proposition is not the solution, and while there are too many examples of businesses that profit by exploiting the poor, some opportunities do exist for firms to make profits and simultaneously help alleviate poverty. We need profitable businesses that sell products and services that benefit the poor and genuinely improve the quality of their lives, at prices they can afford. After an extensive survey, Monitor Group, a consulting firm, concluded that there are very few examples of profitable large- scale businesses that market truly beneficial goods in low-income markets.² The challenge is to design creative market-based solutions for alleviating poverty.

As we have seen, in the popular stereotype, public organizations are unresponsive, bureaucratic, inefficient, and corrupt. For-profit businesses are criticized for being exploitative, rewarding greed, lacking in human compassion, and producing socially unjust outcomes. Whether true or not, these perceptions have led to an increasingly passionate search for a new approach and a proliferation of new buzzwords: “third way,” “new middle,” “social innovation,” and “social entrepreneurship.” It is essentially a hope that social entrepreneurship will occupy the space between the market and the state, offering an effective combination of private structure and public purpose.¹ A vast array of organizations—hospitals, universities, professional organizations, development organizations, environmental groups, community associations, soup kitchens, and many more—do try to fulfill societal needs.

UNICEF in its 2009 report The State of the World’s Children states: