TOPICS : Whose business is poverty alleviation?
Siddha Raj Pant
Every business wants to grow. It does so by enlarging its market share as well as revenues and profits. Companies that start with a single product expand in products and services by way of diversification. While the consumers benefit from improved and diversified services from a single provider, the businesses form increased shareholder value. As the business grows bigger so does its territory. Many companies that started in a dark room with one computer are now multinationals and their products have become necessary commodities across the globe. The managers of these businesses are constantly pursuing the markets that are underdeveloped but have consumption potential. At times, to promote their own products the companies customise their products, invest in manufacturing plants and trading networks in the new and potential regions, which boost employment opportunities, transfer of skills and technology. When India introduced computerised ticketing in the railways in the late 80s, sceptics debated computer technology would push millions out of job. But, IT is among the major job provider and export item in India now.
According to the current estimate by the UN, eight million people die each year due to poverty and about 1.08 billion people in the developing countries live on less than a dollar a day. In Nepal 38 per cent live in extreme poverty. At present, there are over 50 poverty-focused INGOs and a couple of parallel government institutions like the poverty alleviation fund and the rural water supply and sanitation fund development board that channel development support through local NGOs. Every year, billions of rupees obtained in the form of grant or loan is spent on combating poverty. Unfortunately, poverty isn’t diminishing, rather it is creating more demand for resources. There is a dichotomy between what is said and delivered.
Obviously the question arises why the development interventions made for so long vanish as soon as the aid is stopped? Only programmes that demonstrated success are those with local people’s participation and based on the business principles such as forest user groups. Otherwise development interventions are becoming synonymous to stretching the rubber band. One of the failures of the poverty alleviation programmes is that the managers have little or no incentive to eliminate poverty in a sustainable manner. Rather, the opposite is true, as also disclosed by a noted economist and professor, Jeffrey Sachs, who is a special advisor to the UN secretary general. “In 2002, the US gave $3 per sub-Saharan African. Taking out the parts for US consultants and technical cooperation, food and other emergency aid, administrative costs and debt relief, the aid per African came to the grand total of perhaps 6 [cents].”
Poverty is a socially, politically and economically complex issue but business isn’t any less influenced by these factors. All it needs is to adapt to the situation and deliver products and services to the people through innovative means such as shampoo in a one-rupee sachet or the consumer financing schemes. Awareness should complement opportunities. If poverty levels are to be reduced through improvement in service delivery, let the private sector manage this business.