We have argued throughout that the expansion of enterprise, particularly SMEs, is critical to economic and poverty reduction. This is hardly a new or revolutionary argument. It has been advanced by many others starting probably with Adam Smith.
Indeed, a great deal of government policies and IDC interventions over the years have focused on creating the enabling environment for the expansion of the private sector in poor countries.
But given the proven importance of enterprise development in poverty reduction, direct intervention to promote enterprise and especially SME development has not been as high on the spending agenda of the IDC in recent years as it perhaps it should have been. And a lot of what was done to promote SMEs in particular has not been particularly effective.
The central role that enterprise development could play in the fight against poverty is also not getting a lot of ‘airtime’ in the context of the current ‘Make Poverty History’ campaign. Nor does it feature very prominently in the many recommendations being made to the IDC by commentators and experts about what it should be doing now.
The IDC and poverty campaigners are not alone in the way they address the role of enterprise in tackling poverty. MNCs, whose very existence is enterprise-based, historically devoted only a small fraction of their CSR spend to pro-poor enterprise creation in developing countries. In more recent times, their focus has shifted more in this direction. But there is still a very long way to go before tackling poverty through enterprise creation becomes a top ‘business issue’ or public engagement priority for the senior management of a majority of big companies.
The above analysis leads us to our first set of conclusions. There are obviously many other poverty priorities that need to be addressed but the IDC and the international business community need also to give more effective attention to catalysing enterprise in the poorest countries. And their exploration of this issue might perhaps be structured around the following questions:
First, how to increase the scale and effectiveness of pro-poor enterprise interventions?
Second, how to make the objective of pro-poor enterprise growth an integral part of povertyreduction strategies advanced by the IDC and pursued by developing countries?
Third, how to more effectively engage the private sector but especially big business in IDC efforts to tackle poverty through enterprise both directly and as a source of insight, advice and skills transfer?
In Sections 2 and 3, we drew on the Shell Foundation experience and approach to explore two routes to answering these questions. These are the application of business thinking to pro-poor enterprise interventions; and how deploying value-creating assets belonging to international businesses can greatly enhance the impact of enterprise interventions.
The Shell Foundation’s experience to date is still far too limited to generalise. But there are others operating in the same space as we are, and all are seeking to harness the power of business thinking and finance to the challenge of overcoming poverty.
Taken together, this accumulated experience suggests a number of more specific propositions for wider debate and consideration by the IDC and international business community around the specific challenge of catalysing pro-poor enterprise development.
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