Private Sector Plays Important Development Role
Brandon Sun “Small
World” Column, Sunday, October 7/07
Zack Gross
Zack Gross
In Stuart Taylor’s experience, bringing a business model to international development leads to more effective programs and greater poverty reduction than traditional aid efforts. Taylor recently volunteered for the Mennonite Central Committee (MCC) in Zambia for three years and has since become Executive Director of International Development Enterprises Canada (IDE), an organization that also operates in the US and Great Britain and believes “that markets can be a powerful force for poverty reduction.”
What IDE focuses on are creating well-designed and affordable technologies and connecting the poor with local entrepreneurs or bringing out the entrepreneurial spirit in the poor. IDE has designed innovative water pumps and low output drip irrigation so that it is easier for farmers to access water and ensure that it is used with maximum efficiency. “Water is no less precious than oil in our world today,” says Taylor. “Both are in short supply.” With growing desertification, especially in Africa, water, which is essential for agricultural production, must be conserved.
A success story on the IDE web site brings technology and entrepreneurship together. A farmer in Bangladesh, who has been forced by his economic circumstances to work away from his fields, decides to purchase a treadle water pump through an IDE micro-loan program. As water is now more plentiful to the farmer through the use of this “appropriate” technology, the farmer quickly has a bumper crop of vegetables and begins to make a better living selling them at market. Ultimately, the farmer decides to sell treadle pumps in his district and thus becomes independent of outside jobs and aid programs.
The treadle pump developed by IDE can easily be powered by a single person and avoids the use of gasoline-powered generators and resulting pollution. In a world that is moving toward carbon credit trading, IDE projects enhance the environment rather than further taxing it. Funding from the Gates Foundation is being used to map local water systems for access, but to also monitor the impact of water usage.
IDE programs are more successful where less traditional aid is available. Taylor asserts that aid programs often depress local markets and hurt the private sector. Why would someone pay for food or mosquito nets or farm equipment, when they can obtain them at low or no cost through an aid program? As well, Taylor believes that people take more responsibility for, and pride in, the material aid they receive when they have to pay something for it.
Getting the business sector involved and supportive in North America hasn’t been too difficult. Organizations such as IDE and Mennonite Economic Development Associates (MEDA) fundraise largely in the Christian private sector with a message of corporate and citizen social responsibility. Getting the private sector and the poor in countries such as Zambia and Bangladesh involved in IDE programs can be a greater challenge.
IDE tries to identify risk takers and “early adopters” to lead their programs, to provide investment capital or use a new technology. Poor people are often averse to taking risks, as they are already insecure and fear falling further behind. This is no different than a Canadian farmer who may plant the same crop using traditional methods every year, rather than try something new, a specialty crop or going organic. Who will support that farmer if things don’t work out right away?
If your market is people making on average $1 per day, as is the case in many aid programs, how do you get private enterprise to back them? Of course, not all development is dependent on individual entrepreneurship. IDE also works with selling groups and co-operatives where the risk is spread out over a larger community. Many NGOs are now involved in programs to bring women, youth and communities into the larger economy, through training programs, micro-loans and finance, and lending circles. Last year’s Nobel Prize Winner, Muhammad Yunnus of the Grameen Bank, pioneered many of these programs in Bangladesh and has been called “Banker to the Poor.”
It’s hard to disagree with Taylor’s approach to development. He has years of experience behind him and he’s passionate about his subject. But not every aid practitioner takes his side. Some believe that development initiatives must come from the not-for-profit rather than the private entrepreneur. The possibility that someone will profit in an “aid” program conjures up concerns about conflict of interest or the well-off getting better off on the backs of those poorer than themselves. But Taylor just points to the success of IDE’s efforts around the world – in bringing forward new technologies and helping poor farmers become more economically independent - and says that is proof enough that their way of doing development works extremely well.
Zack Gross is program coordinator at the Manitoba Council for International Cooperation (MCIC), a coalition of 35 international development organizations active in our province.
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