Here you'll find a selection of brief 'case studies' of commercially successful businesses that are demonstrating excellence in providing enterprise solutions to poverty.
Stories of Excellence
Unilever is a leading transnational in hygiene, personal care, food and cleaning products. Hindustan Lever, its subsidiary in India, has found a novel way to increase market penetration while raising incomes and hygiene standards in remote rural communities. Key to its success has been providing the capital and training necessary to enable women in such communities to act as entrepreneurs for their products. As they are able to work from within these communities, they become effective ambassadors for greater standards of health and hygiene at the same time as generating sustainable income streams. The company now works with 15,000 underprivileged women to bring its products to 70 million rural consumers. In doing so it is helping to meet the Millennium Development Goals (MDGs), especially those in the area of poverty eradication, education, gender equality and the empowerment of women (see below for a list of these Goals). Website: www.hll.com
Professor Jeffrey Sachs, an economist at Columbia University, has teamed up with a group of business leaders to launch a campaign to that aims to provide a framework for businesses who want to help in the fight against poverty but are not quite sure how to go about it. This problem often occurs because they need to be able to judge between a plethora of wealth generating projects all vying for their time, expertise and money. While in the short term this campaign, called the Millennium Promise, is using corporate philanthropy, especially in areas of extreme poverty, the long-term strategy is to encourage private investment to spur markets and accelerate economic growth, thus removing the need for charitable donations. For the full story, see www.millenniumpromise.org
Reducing poverty through growth
The Millennium Challenge Account (MCA) is a scheme to stimulate economic uplift by providing development assistance to those countries that rule justly, invest in their people, and encourage economic freedom. Initiated by the US government, with strong bipartisan support, the Millennium Challenge Corporation (MCC) was established to administer the MCA, Congress providing nearly $2.5 billion in initial funding. The MCA draws on lessons learned about development over the past 50 years:
For more information, see www.mca.gov
Combating trauma with hope
Decades of armed conflict have left Colombia with the third largest displaced population in the world (only Angola and Sudan have larger internally displaced populations). Two to three million people in Colombia have fled their homes because of threats, fear, assassinations and massacres associated with guerilla warfare, lawlessness and drug-trafficking.
James Morris, Chief Executive of the UN World Food Programme says of this situation:
'Life for the displaced is extremely harsh, with most living in conditions of extreme poverty and struggling for access to sufficient food.'
Despite this crisis, Opportunity International has managed to make small loans available to help displaced people set up their own businesses. This is helping to transform the trauma of the past into a future of hope.
One such displaced person is Dona Cecilia. With her small loan she has set up a kiosk selling household goods. Read about her here.
Flourishing under Flores
In the last twelve years, El Salvador has seen unprecedented prosperity: the poverty rate has dropped from 60 percent to 30 percent; infant mortality rates have plummeted; unemployment rates have halved; school and health care availability has increased dramatically. From 1999 to 2004, this reconstruction was overseen by President Francisco Flores. After finishing his term as president, Flores continued his work for freedom by founding the America Libre Institute in Washington, D.C. He spoke with the journal Religion & Liberty of the Acton Institute in Grand Rapids, Michigan. Read the interview here.
Social capital in development
If Starbucks considers relational capital a crucial part of its commercial success (see previous story on this page), the World Bank sees social capital - to which relational capital is closely associated - as crucial to poverty alleviation.
Understanding social capital as the norms and networks that enable social cohesion and collective action, the World Bank claims that increasing evidence shows that social capital is critical for sustainable human and economic development.
The Bank has set up an excellent web site to link external partners, researchers, institutions, governments and others interested in understanding and applying social capital for sustainable social and economic development. Click here.
Via the web site you can even watch an 80 minute online video on Social Capital, Empowerment, and Community Driven Development.
According to research carried out on Fortune 1000 companies at the Kellogg School of Management, top-performing companies focus on moving beyond a transactional mindset to develop trust-based and long-term relationships with key constituencies: customers, employees, suppliers and alliance partners.
Starbucks is one of the companies that excels in this area, which it terms 'relational capital'.
In a document entitled 'The Barista Principle: Starbucks and the Rise of Relational Capital', Starbucks writes: 'How did a small Seattle company turn itself into a global synonym for Java and Joe? The answer, we believe, lies with an ingredient as central to Starbuck's business as the premium coffee beans it roasts: relationships.'
Read the document here.
Film star Robert Redford recently presented a TV series called the New Heroes, which tells the stories of fourteen aspiring individuals from various countries and cultural backgrounds who use entrepreneurial skills to alleviate poverty, disease and unemployment. Referred to in the series as 'social entrepreneurs' their work brings life-changing tools and resources within reach of people in poverty who are eager to find commercially viable routes out of poverty. A helpful interactive website has been set up in the wake of the series - www.pbs.org
Centre for enterprise
The global energy group BP has established an Enterprise Centre in Azerbaijan. The Centre's aim is to help local companies develop their business in support of major oil and gas operations in Azerbaijan. It provides free training in management, IT, finance, quality control, marketing, health and safety and environmental standards.
The results are positive both for BP and for local Azerbaijani firms. The benefits to local industry help to strengthen the local infrastructure and more competitive local firms offer BP a greater choice of cost-effective suppliers. Building local SME capacity encourages improvements in business practices, staff development, investments in technology, safety performance, transparency, governance and institutional development. As Azerbaijan is a transitional economy in which corruption remains widespread, such improvements are particularly welcome. The Centre's website is www.ecbaku.com
In your pocket is a powerful means to liberate people from poverty. And it's not your wallet. It's your mobile phone! Whereas in rich countries mobile phones often provide little more than additional convenience, in poor countries they are fast becoming one of the most significant lifelines out of the poverty trap. A recent study by the London Business School for Vodafone reveals that rises in mobile phone use in a developing country has a strikingly positive impact, not only on social capital, but also on that country's growth in GDP. One of the reasons for this is that mobiles are simple to use, requiring neither internet access nor the ability to read or write. The impact on GDP is set to increase as technology companies seek to make phones more affordable for poor people. Motorola is delivering 6 million handsets for less than $40 to developing countries and new chips developed by Philips will mean that handset prices are set to drop to below $20. The Vodafone study can be seen here: www.vodafone.com The current edition of the Developments magazine (issue 31) carries several articles on the socio-economic impact of mobile phone technology. These are due to appear in electronic form at www.developments.org.uk
Incentives for enterprise solutions to poverty
A critical factor in poverty alleviation is access to modern energy services. Around a third of the world's population, situated largely in the rural areas of developing countries, lack such assess.
Because of the high costs involved, the private sector is generally uninterested in investing in this sector.
Evidence from Chile suggests, however, that significant public financing can encourage private companies to develop rural infrastructure.
For more than a decade, the government of Chile has used domestic resources and international aid to award subsidies to private electricity suppliers that undertake projects that are financially unrewarding but produce a positive social return.
Subsidies are awarded on a competitive basis, according to best scores achieved in a cost-benefit analysis.
As a result, the coverage of electricity supply in rural areas increased from 53% in 1992 to 76% at the end of 1999. End users pay for less than 10% of connection costs, and their repayment can be spread over time.
This is an example of how well-targeted public funding can facilitate efficient private sector delivery in situations where market incentives are too weak to provide viable business solutions to poverty.
For more on this story, see chapter nine of the World Bank report Energy Services for the World's Poor.
Drop in the market
The World Travel Market (WTM) is the largest and most successful business to business exhibition for the global travel industry, attended by 5,000 exhibitors and 45,000 industry professionals. As such it represents the flagship event of Reed Exhibitions, the world's foremost company specializing in the organization of exhibitions.
WTM staff decided that this event presented a unique opportunity to unite the sector behind a dedicated charity. They therefore created Just a Drop, a charity aimed at providing clean water, sanitation and health education programmes in developing countries.
This, the staff felt, would have synergy with the global travel industry. By helping to support and sustain developing countries, the industry would be able to expand into new destinations and introduce new products.
In fact the creation of Just a Drop has spearheaded a new and innovative marketing and public relations dimension in the intensely competitive world of travel exhibitions, which is thought to be to the benefit of all parties involved.
The WTM team organise a series of heavily promoted charity events to raise money for Just a Drop. These events benefit the business by bringing together senior industry figures.
The impact, the team believe, is as follows:
Safe water - add powder
Procter & Gamble is one of the world's leading suppliers of toiletries and cleaning products. In the 'Values Added' section of this edition of Enterprise Excellence, we showcase the company's purpose and values.
But this company is also significant in terms of enterprise solutions to poverty, not least because of its Children's Safe Drinking Water programme, which utilizes simple, water purification technology known as PUR™. Proctor and Gamble has committed itself to long-term, not-for-profit provision of PUR in the developing world in an effort to reduce illness and death, particularly in children.
A packet of PUR weighing just four grams treats ten litres of water, effectively killing all bacteria and viruses. Tests reveal that this treatment can cut diarrhoeal illness in children by half. In collaboration with partners, Children's Safe Drinking Water has provided PUR for emergency relief in nearly every major natural disaster in the last three years, including the Southeast Asia tsunami and the hurricanes in the Caribbean.
Children's Safe Drinking Water works with partners to establish social markets, a key component of which is education about the importance of safe drinking water. Efforts are focused on schools and health clinics, the aim being to stimulate long term behaviour change. More...
Big Bad Business?
British businessman Mike Causey reflects on his experience of working as a financial consultant for one of the world's largest oil companies.
The media has it figured: big oil, big profits, big environmental impact - big business is bad. But my experience of working several months for one of the world's largest oil companies challenged these preconceptions.
For sure there was a veneer of wealth - nice offices, well-dressed employees, and Porsches. But my lasting impression is of a different form of wealth - relational capital.
My role was to help ensure compliance to financial regulations designed to prevent another Enron. Even in this high risk area, the company invested amazingly levels of trust in me. It is only natural, of course, that if a company employs you to perform a role, it trusts your ability to do it. But this company gave me all the necessary tools and resources before holding me accountable.
It placed a particularly high onus on building relationships of trust through face-to-meetings. I was therefore encouraged to eschew web conferencing in favour of 48-hour overseas trips. These would be long enough to allow time for conversation in meeting rooms and in restaurants. But they would be short enough to minimize absence from my family.
I conclude from my experience that big business has some important benefits that are overlooked by the critics. Among these is the ability to bring people of different cultures and languages together in contexts that encourage the flourishing of relationships. In a world threatened by clashes between people of different cultures, the importance of this mediatory role cannot be overemphasized.
Business in the fight against AIDS
Three British Members of Parliament (MPs) travelled to South Africa as guests of the business coalition Business Action for Africa (website here) to learn more about what private enterprise is doing to help address the effects of HIV and AIDS.
They found that large corporations such as Anglo American, SABMiller and Merck Sharp & Dohme are running occupational health programmes for their employees and that they are taking HIV/AIDS through comprehensive prevention, treatment and care programmes that reach beyond the workplace into the broader community. The companies are discovering which policies are the most effective in reducing infection rates and ensuring access to treatment for all those who need it.
Anglo American employee Nombuyiselo
But they also found that such good practice needs to be extended to other employers, particularly in SMEs, which employ a large proportion of the workforce. The three large companies just named are not typical - most companies operating in South Africa lack the resources, know-how or moral conviction to implement effective programmes.
The MPs concluded in their report on the trip that strategic public-private partnerships and dynamic business associations are an important means for good practice to spread - isolated actors cannot respond effectively to the high levels of HIV infection and AIDS mortality rates that exist in South Africa.
When the MPs presented their report to John Hutton, the Secretary of State for the Department of Business, Enterprise and Regulatory Reform, and to Andrew Mitchell, the Shadow Secretary of State for International Development, they both expressed strong support for the report's conclusions. Mr Mitchell said, 'By investing in poor countries, business plays a part in tackling poverty by creating jobs, bringing much-needed capital, and sharing technology. It is clear too that business has a vital role to play in tackling HIV/AIDS: looking after employees is 'good business' in both senses of the word. The companies identified in this report should be commended for the lead they have taken.'