Paul Polak and Mal Warwick’s award-winning book, The Business Solution to Poverty, highlights 20 “takeaways” that encapsulate much of the book’s essence. Today we feature the fourth of those takeaways. Future posts will include others.
Although a handful of development initiatives have succeeded in improving the livelihoods of as many as 20 million poor people, none has yet reached significant scale.
When we write “improving the livelihoods,” what we really mean is enabling people at the bottom of the pyramid to increase their families income to the extent that they can lift themselves into the middle class. And, truth to tell, we know of only one such program that has succeeded in attaining this objective: International Development Enterprises (iDE), which has reached that benchmark work since it was founded by Paul Polak in 1981. We know of no other anti-poverty program to rival it.
Yes, microcredit has reached hundreds of millions of poor families around the world — but precious few of them have succeeded in rising out of poverty. Generally, the loans they receive help them weather difficult times caused by poor health, bad harvests, or the need to pay bride prices or sponsor religious festivals. Fewer than ten percent of micro-loans are invested in businesses, and of those businesses only a small number substantially raise family income.
Most other “anti-poverty” programs financed by the World Bank, the UN, foreign aid, and national governments tend to focus on the middle class — if, indeed, they operate at all effectively. And none has achieved scale.
In the final analysis, scale is the bugaboo of the development field.