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1.0 Executive Summary: Enterprise solutions to poverty

Guest post by: Shell Foundation

Article Overview: The modern world has always encompassed extremes of affluence and poverty. But in 2005 the confluence of advocacy, political serendipity and natural disaster has rapidly pushed the plight of the impoverished up the agenda of the wealthy as never before. The sharpness of the challenge being thrown down on behalf of the poor and the pressure on the rich to take action in response is unprecedented, as is the level of debate on a topic previously all but ignored by the public and mainstream media.

1.0 Executive Summary: Enterprise solutions to poverty

A moment in history?

The modern world has always encompassed
extremes of affluence and poverty. But in 2005 the
confluence of advocacy, political serendipity and
natural disaster has rapidly pushed the plight of the
impoverished up the agenda of the wealthy as
never before. The sharpness of the challenge being
thrown down on behalf of the poor and the
pressure on the rich to take action in response is
unprecedented, as is the level of debate on a topic
previously all but ignored by the public and
mainstream media.

As a result of this campaign by the International
Development Community (IDC) and non governmental
organisations (NGOs), rich governments
are likely to raise their aid budgets and expand
debt relief significantly while hopefully revising
international trading rules in a more pro-poor
direction.

This is good news. The more sobering side of this
story is that deploying this political and financial
capital effectively in the war against poverty will be
a complex and difficult undertaking – as a look
backwards tells us. Over the last 50 years, the
international community has spent more than a
trillion US dollars, and many times that amount in
effort, exhortation and emotion, to relieve human
suffering and create the starting conditions for
poor people to escape poverty.

Clearly, this assistance has brought much shortterm
relief, achieved real breakthroughs against
devastating diseases and the scourge of famine and
contributed to the long-term development
prospects of poor countries. But at the same time,
much aid has been ineffectively and inefficiently
used and failed to deliver the broad-based gains in
growth and quality of life that had been promised.

This means past efforts to tackle poverty are not
necessarily a reliable guide to what should be done
in the future. And precisely how the international
development community will use the new
opportunities on offer to eradicate poverty is a
vitally important question for many reasons.

There’s a great deal of public money at stake and
bold claims are being made about using it to
‘Make Poverty History’. More importantly, there
remains great need. After fifty years of international
development assistance, two billion people still live
on less that US$2 per day. Great uncertainty
remains about the mix of policies and interventions
needed to stimulate equitable economic growth.

Yet set against this great need and the doom and
gloom that still inform the aid debate, there are
positive signs of progress in Africa, and elsewhere,
that demand to be acknowledged and supported.

Enterprise first

So the question of what to do now to most
effectively overcome poverty is challenging. Much
advice is being tabled by commentators and expert
committees such as the UN Millennium
Commission and the UK Commission for Africa.
The ultimate focus of all of the wisdom on offer
today is the same basic issue the international
community has been struggling with for many
years. And that is this: how, when and where
should the international development community
intervene to best help developing countries create
the conditions that facilitate sustainable and
equitable economic growth?

This is where the recent experience of Shell
Foundation may be of value. Since 2000, we’ve
been exploring systematically the questions of how
to catalyse and scale-up market and enterprisebased
solutions to poverty – and how to harness to
the same task, the value-creating assets of multinational
corporations.

There are sound reasons for this focus. History
demonstrates that a flourishing, responsible private
sector, built on a broad base of enterprise,
including small and medium sized enterprises
(SMEs) and well-regulated foreign direct
investment (FDI), has been key to delivering the
sort of economic growth in developing countries
that we know pulls poor people out of poverty.
Going forward, common sense suggests the SME
sector in particular must grow on a massive scale if
the Millennium Development Goals are to be
achieved and sustained and if lasting gains are to
be secured from the opportunities created by debt
relief and fairer trade.

Most importantly, the growth of enterprise offers
poor people the hope that there’s an economic
ladder to personal betterment they can climb by
dint of honest effort. If this hope does not exist,
there is a danger they stop looking up and forward
and resign themselves to poverty – permanently.

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Article Tags: development, international development, international development community, the International Development Community IDC



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