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6.0 Propositions and conclusion: Enterprise solutions to poverty

Written by: Shell Foundation

Article Overview: 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.

6.0 Propositions and conclusion: Enterprise solutions to poverty

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.

Related Articles
  6.3 Come Together: Enterprise solutions to poverty
  2.0 Introduction: Enterprise solutions to poverty
  1.15 Building an employment agenda: Working Out of Poverty
  1.9 Building local development through cooperatives: Working Out of Poverty
  1.1 Our mandate: Working Out of Poverty

Article Tags: enterprise, enterprise creation, enterprise development, enterprise growth, enterprise interventions, interventions, poverty reduction



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