May 24, 2010| 2

Business and Global Poverty: Aid-Centric to Trade-Centric

Jeff KeenanIs the fight against global poverty making a much-needed paradigm shift from being aid-centric to trade-centric (i.e., business-centric)?

None other than the "front man"  for global poverty - Bono, of U2 fame - seems to now be saying as much, as witnessed by his recent Op-Ed in the New York Times.

After completing his recent "listening" tour of Africa, Bono expressed his excitement about things as un-aid like as entrepreneurship, business partnerships, investment (the business kind) - and even seed capital. (Maybe his relatively unknown pastime as a venture capitalist in Elevation Partners is starting to reap some unintended dividends for the fight on global poverty!)

But as much as I admire Bono's efforts on behalf of the world's poorest people, it was not his excitement about business that actually captured my attention. Rather, it was the passion of the business people he met in Africa, many of whom were challenging Bono's (and by proxy, our own) aid-centric thinking about the problem.

And not just politely challenging it, but provocatively challenging it.

One of those business people is named Mo Ibrahim, a Sudanese-born, British-based telecom industry billionaire. In his conversation with Bono, Ibrahim in effect "lays down the gauntlet" to Western capitalism - almost daring Western business people and investors to enter the African marketplace. Bono quotes Ibrahim as saying, "Guys, you Americans are lazy investors. There's so much growth here, but you want to float in the shallow water of the Dow Jones or Nasdaq."

To be fair, some businesses and investors are already "floating" in the waters of Africa - literally and figuratively.

EarthWise Ventures is investing to re-establish economically viable ferry transportation on Lake Victoria. Starbucks is up to almost $15 million invested in microcredit loans to farmers, in partnership with social investment funds like Calvert Social Investment and Root Capital. The Initiative for Global Development (chaired by the CEO of REI) is matching CEO mentorships between developing and developed country business leaders.

These are just a handful of examples where businesspeople are choosing to integrate impact beyond the bottom line.

Can business change global poverty? Is venture capitalist Bono's excitement justified? Is business ready to responsibly participate in a transition from aid-centric to trade-centric?

The second blog post in this series will look at various approaches to how we all can begin to "think different" about our investing - whether it's $25 or $25 million - and how that decision making can help to change global poverty.

Jeff Keenan is an author, poverty alleviation activist, and global supply chain leader.

Be Sociable, Share!
Comments (2) Trackbacks (0)
  1. My experience is limited to DR Congo. I hear lots of dreams from Congolese about big and small business ideas. Some of them will work, like the success of 10% of business startups in the US. Some will work for a while, then will close down, like the Circuit Cities of the US. But most outside investment I see is from companies who want their fast returns because they are unsure of the future. Some are ompanies which invest in agreements with the current government, hoping/betting that the government will hold on to power through a 2nd term. Whether local investment of time, energy and resouces, or investment from outside, all have to deal with uneven government, quiet corruption, dishonesty, unofficial taxes, and the family needs of economically poor people. There is also the general impression that western aid and projects benefit the personnel of outside organizations more than the people of Congo. From this end, we see a large lump of money or other aid going into an area. From that end, people see the houses we live in, cars we have, retirement and medical care available, and the average $1 per person in the area we are targeting. What few of us want to do is to risk our futures in another country in the same way we would invest to start a business here. I think that is why we default to aid, because we want to help but are afraid of the personal risks. Even the micro-credit programs tend to be aid oriented from our perspective because we are not investing our futures, but are giving our extra and hoping that the program is well conceived and will ultimately benefit a region, a nation and our world. We need giving, investing, honesty, self-sacrifice and presence where the work is being done, both by people in their own countries and by people elsewhere who want to help.

  2. The stereo-type that I have of the business environment in Africa is one that does not support larger investments from corporations or institutions who have a high risk-aversion because of their accountability to shareholders. Are these the “lazy investors” to which you refer?

    You might be getting to this in your next entry, but it seems that the individuals and organizations who can thrive in my stereotypical Africa, which is full of political and cultural risk, will need to possess a tested mettle of a unique kind.


Leave a comment


No trackbacks yet.