THE POST DEVELOPMENT READER

EDITED BY MAJID RAHNEMA WITH VICTORIA BAWTREE

ZED BOOKS             1997

PART 2

Introduction by Majid Rahnema (cont.)

The contributions to this Reader have been classified in five parts.

Part One pictures a number of world societies in the pre-development era. It starts with excerpts from Marshal Sahlins’ Stone Age Economics. In this revolutionary text, which has now become a classic, the author, basing himself on recent anthropological findings, shows how the economist bias has served to give a totally distorted picture of life in the so-called archaic or primitive societies. According to Sahlins, hunters/gatherers were not poor. Rather, they were free. They were indeed leading quite a simple and frugal life. Yet, as a rule, the people’s material wants were satisfied. The fractions of people who went to bed hungry every night was paradoxically much smaller than in the present world of ‘affluence’ where it is still one-third to one-half of the population.

Helena Norberg-Hodge shows, in turn, how the preservation of the cultural sap had enabled another society, this time in Ladakh, to continue enjoying a good life until development broke in forcefully. Here again, an unbiased testimony shows how a population, internationally labeled as one of the poorest and least developed of the world, can still give the most ‘developed’ lessons of wisdom and virtue in every walk of life.

For Hassan Zaoual, a major reason why the development ideology has failed to grasp the rich complexity of the non-economized societies is its blindness to the specificity of their sites, in particular their symbolic dimensions. On the African sites, notices the Moroccan economist, ‘the economic logic rests on the native social soils’ and ‘the rational is nothing but the relational.’ These sites, which have been culturally produced with a view to saving the African way of life, are today threatened with total destruction by ‘the missiles of development’. People’s resistance to development should be studied in the context of their will to protect their local symbolic sites from destruction.

A testimony coming from a totally different geographic site, that of the American Indians of the Ojibway Nation, shows that the cultures of the world, despite their great diversity, have many things in common. Linda Clarkson, Vern Morrissette and Gabriel Regallet describe how, here as elsewhere, great traditions of wisdom and virtue, and millions of individual and group experiences, have converged to develop ‘customs, beliefs, institutions and methods of social control’ that cannot be dismissed, or worse, replaced from outside.

The taped interview of Gemetchu Megerssa with Dadacha, an elder of the Ethiopian Borana tribe, reveals other aspects of these sites. In this truly extraordinary document, Dadacha points his finger at the heart of the question. What is important to his sisters and brothers is fidnaa, a concept based on the ‘necessary harmony between God and people’, which ‘does not end with growth’ but with ‘something else which we call gabbina’ (well-being and splendour) and ‘is similar to that of a ram’s horn growing in a spiral’. The limaati, or the new concept of development, that is proposed to the people not only reduces their perception of a good life to an abstract economic formula but threatens to destroy ‘the flow of civilized life’.

In the small ‘boxes’ illustrating the main themes of Part One, many inspiring thoughts articulated by well-known thinkers, from Marcel Mauss to Jerry Mander, as well as less famous but even more significant people like the anonymous Inouit, show how the rich world of societies labeled as ‘underdeveloped’ continues to be misrepresented.

Part Two discusses the different aspects of the development paradigm – paradigm being taken here as the sum of the assumptions underlying the concept, and the beliefs or the world-view it both prescribes and proscribes. Teodor Shanin starts the discussion by examining the genealogy of the paradigm, which goes far back to the idea of progress. For Professor Shanin, this attractive ideology soon became ‘an immensely “energizing” tool of policy and counterpolicy’, ‘a particular expert style’ which took away from the majority ‘the right to choose and even to understand why their own experience was increasingly being negated’.

For Marshall Berman, Faust can be traced as the first developer, after he sells his soul to Mephistopheles and decides, at any cost, to develop an entire region around him. The arrogance that grows with his ambition to develop his services leads him to ask his new friend Mephistopheles to kill Philemon and Baucis, the sweet old couple who were offering hospitality to shipwrecked sailors and wanderers, and who refuse to sell him their little cottage. This tragic blindness to others’ feelings leads him ultimately to pronounce his own death sentence.

Using Foucault’s methodology to dissect the development discourse, Arturo Escobar shows how the discourse made it possible for the rulers ‘to subject their populations to an infinite variety of interventions, to more encompassing forms of power and systems of control’, including ‘killing and torturing and condemning their indigenous populations to near extinction’.

As Ivan Illich was perhaps one of the first thinkers who, as early as the late 1960s, had perceived most of the dangers inherent in the development discourse, ‘Development as Planned Poverty’ is inserted here as a prophetic message. For him, ‘underdevelopment’ is ‘the surrender of social consciousness to prepackaged solutions’, a phenomenon that was actually fostered by development. Focusing on the school system as it was introduced in the ‘Third World’, he shows how ‘schools rationalize the divine origin of social stratification with much more rigour than churches have ever done.’

A quarter of a century later, we see the flowering of Illich’s earlier thoughts in the interview he granted as specially for this Reader. The gist of his message, as I understand it, places a totally different type of responsibility, and perhaps a much heavier one, on the shoulders of every one of us: ‘The possibility of a city set up as the milieu that fosters a common search for good has vanished. Dedication to each other is the generator of the only space that allows what you ask: a mini-space in which we can agree on the pursuit of the good.’

My own essay on ‘Development and the People’s Immune System’ closes this discussion on the development paradigm by taking up the history of homo oeconomicus as one of the main agents of development, and the way he historically introduced himself in vernacular niches, as the HIV does in the T4 cell, replacing the genetic codes of the latter by its own. In all economized societies, the stage now seems set for homo oeconomicus to ‘become’ his victims. To what extent, and how, could they resist the invasion? Are there ‘fields of power’ still left to the people exposed to the new ‘virus’, which may be reinforced in order to help them drive it back or destroy it? What could each of us do in the David-and-Goliath-like struggles that lie ahead? These questions can be better addressed if one gains a clearer notion of the institutions or the vehicles used by development in achieving its goals.

It is in Part Three of the Reader that some of these ‘vehicles’ are discussed. The articles in this section deal with economy, the nation-state, education, science, the colonization of minds, the hegemony of ‘the one and only way of thinking’, the media, and the international organizations.

Addressing the role of economy, as one of the most important vehicles of development, Serge Latouche defines development as ‘the trickle-down effect of industrial growth’. He submits that, for mainstream thinking, growth has been identified with ‘the good’. But the good it claims to represent ‘is not the quality of life, but the quantity of gadgets considered as useful by the mere fact that they are being produced and consumed’.

The problematique of the nation-state, another fundamental vehicle of development, is described in all its complexities and ambivalences by Rajni Kothari. As a thinker who, through all his writings, has denounced the abuses committed by the modern repressive nation-state in the name of development, he notices that, at a time when the state is being rendered weak and disembodied by the overriding forces of technology and the world market, it is facing another major challenge from a totally opposite direction: the assertion of cultures, ethnicity, nationalities, pluralism and the violence of terrorism and fundamentalism. ‘It us also ceasing to be an embodiment of civil society and a protector of the poor, the weak and the oppressed.’

The various aspects of education as a factor of ‘cultural defoliation’ are then discussed in a ‘multi-voice’ report by five authors well versed in the impacts of the imported school system on indigenous populations. They include Cheikh Hamidou Kane of Senegal, the author of The Ambiguous Adventure, and the Burkinabé historian Joseph Ki-Zerbo.

Vandana Shiva follows with an analysis of science and its ‘reductionist and universalizing tendencies’ that tend to destroy local knowledge. For her, it is not just development that is a source of violence to women and nature, but ‘at a deeper level, scientific knowledge, on which the development process is based which is itself a source of violence’.

In societies abruptly exposed to processes which systematically produce at all levels modern needs and expectations, these different vehicles of development have been highly instrumental in extending the old forms of colonization to the mind of their victims. Ashis Nandy’s analysis of the colonization of the mind gives a vivid picture of this new and pernicious type of control. At the level of the very societies that have been mainly responsible for such a colonization, the same processes have led to the institution of ‘the one and only way of thinking’. Ignatio Ramonet sees in this phenomenon an ‘intimidating force that stifles all attempts at free thinking.’ On another plane, James Petras discusses the role of the media in the cultural domination of societies exposed to development. Finally, Pierre de Senarclens discusses the role of the United Nations system and international assistance in prolonging the ‘colonial’ type of development.

Part Four starts with a forceful demonstration by Susan George of the ways ‘the poor are developing the rich’, thanks to development practices.

THE POST-DEVELOPMENT READER

EDITED BY MAJID RAHNEMA WITH VICTORIA BAWTREE

ZED BOOKS             1997

PART 1

Back cover

With the collapse of colonialism, the millions who had joined the struggle accepted their leaders’ new call for ‘development’. Little today remains of that enthusiasm. The question they now ask is: can anything be done to stop the process and regenerate the forces needed to bring about change more in accordance with their own aspirations?

This Reader brings together an exceptionally gifted group of thinkers and activists – from South and North – who have long pondered these questions. Diverse in background and experience, they are all committed, however, to seeing through the rhetoric of development, free from the distorting lenses of ideology or habit. They are also interested in looking at ‘the other side of the story’, particularly from the perspective of the ‘losers’.

It is these orientations which make his Reader such an original compilation. The contributors illuminate the wisdom of vernacular society which modern development thinking and practice has done so much to denigrate and destroy. They deliver devastating critiques of the dominant development paradigm and what it has done to the peoples of the world and their richly diverse and sustainable ways of living. Most importantly, in terms of the future, they present some of the experiences and ideas out of which ordinary people are now trying to construct their own more humane and culturally and ecologically respectful alternatives to development which, in turn, may provide useful signposts for those concerned with the post-development era that is now at hand.

Introduction by Majid Rahnema

The disintegration of the colonial empires brought about a strange and incongruous convergence of aspirations. The leaders of the independence movements were eager to transform their devastated countries into modern nation-states, while the ‘masses’, who had often paid for their victories with their blood, were hoping to liberate themselves from both the old and the new forms of subjugation. As to the former colonial masters, they were seeking a new system of domination, in the hope that it would allow them to maintain their presence in the ex-colonies, in order to continue to exploit their natural resources, as well as to use them as markets for their expanding economies or as bases for their geopolitical ambitions. The myth of development emerged as an ideal construct to meet the hopes of the three categories of actors.

For quite a long time, this temporary meeting of otherwise highly divergent interests gave the development discourse a charismatic power of attraction. The different parties to the consensus it represented had indeed their own differences as to the ways development had to be implemented. For an important group, economic development was the key to any kind of development. For another, culture and the social conditions proper to each country had to prevail in any process of development. On another plane, an animated debate witnessed major differences between people who wanted an expert-based and professionally managed development and others who were for an ‘endogenous’, ‘human-centred’, ‘participatory’, ‘bottom-up’ or, later, ‘sustainable’ form of development. These ‘policy-oriented’ divergences seemed, however, too weak to question the ideology of development and its relevance to people’s deeper aspirations. In the 1960s, when an ‘outsider’ like Ivan Illich set out to challenge the very idea of development as a threat to people’s autonomy, his stand was perceived by many as sheer provocation. Development, even more than schooling, was then such a sacred cow that it appeared totally irresponsible to question its relevance.

This almost unanimous support for development was somehow significant of the very gap it had started to produce in societies in which it had been introduced. For now it appears clearly that such a unanimity was far from being shared at the grassroots level, where it was supposed to reach the suffering population. Only the ‘authorities’ who were speaking on behalf of their ‘target populations’ claimed that such was the case. The voices that, here and there, were heard across the barriers separating the rulers from the ruled, showed that the latter had never been seriously consulted.

It may well be said that when the ‘national’ leaders of various anti-colonial struggles took over the movements emerging from the grassroots, they succeeded in making them believe that development was the best answer to their demands. As such, for all the victims of colonial rule, it did appear for a while as a promising mirage: the long-awaited source of regeneration to which they had been looking for so long. But the mirage ultimately transformed into a recurring nightmare for millions. As a matter of fact, it soon appeared to them that development had been, from the beginning, nothing but a deceitful mirage. It had acted as a factor of division, of exclusion and of discrimination rather than of liberation of any kind. It had mainly served to strengthen the new alliances that were going to unite the interests of the post-colonial foreign expansionists with those of the local leaders in need of them for consolidation of their own positions. Thanks to these alliances, societies that had invented modernized poverty could now extend it to all ‘developing’ countries.

This is how, under the banner of development and progress, a tiny minority of local profiteers, supported by their foreign ‘patrons’, set out to devastate the very foundations of social life in these countries. A merciless war was waged against the age-old traditions of communal solidarity. The virtues of simplicity and conviviality, of noble forms of poverty, of the wisdom of relying on each other, and of the arts of suffering were derided as signs of ‘underdevelopment’. A culture of ‘individual’ success and of socially imputed ‘needs’ led younger men to depart their villages, leaving behind dislocated families of women, children and older men who had no one to rely on but the promises of often unattainable ‘goods’ and ‘services’. Millions of men and women were thus mortally wounded in their bodies and souls, falling en masse into a destitution for which they had never been culturally prepared.

For the development establishment and its beneficiaries, this unprecedented tragedy was interpreted only as the inevitable price to be paid for a good life for all. Even now, with a few localized exceptions, the famous economic gap between the ‘haves’ and the ‘have-nots’ continues to reach ever more intolerable proportions, development ideologists attribute its failures only to political or other causes external to the development ideology. The very fact that, only recently, on the occasion of the United Nations’ fiftieth anniversary, delegates were unanimous in giving their full support shows that development, like the nation-state it serves and the educational systems it promotes, has become one of the founding pillars of the modern ‘global village’ programmed for the 21^st century. Similarly, the majority of books and articles published on development continue to talk about what it needs to grow rather than the threats it poses to its ‘target populations’. For a long time, even students trying to see ‘the other side of the moon’ had difficulty hearing the voices of the great losers and their friends.

• The idea of a collection of essays that would make it possible for students to hear those voices originally started some 12 years ago.
• I owe to Robert Molteno, the inspiring editor of Zed Books, the suggestion in 1991 that a Reader be published having a view of development from the perspective of the ‘losers’ and their friends.
• The first appearance of the word ‘Post-Development’ some 6 or 7 years ago made it necessary to take into account the practices and thoughts that were actually shaping the period following the demise of the development ideology.
• Victoria Bawtree, the former editor of Ideas and Action (a well-known FAO magazine which was doomed to disappear because of many of its ‘subversive’ grassroots positions) joined in the endeavour, bringing to the task her valuable knowledge and experience and the contagious energy of an old development insider.

The texts presented here have at least three qualities in common. They are subversive, not in the sense attributed to this adjective by modern inquisitors, but as Cardinal Arns, of São Paulo, defined it in his courageous statement before an annual meeting of the Society for International Development, in 1983: ‘Subvert’, he said, ‘means to turn a situation round and look at it from the other side’; that is, the side of ‘people who have to die so that the system can go on.’

Hence, the selections are also human-centred; that is they represent a perception of reality from the perspective of the human beings involved in the processes of change. As such, the concern of the contributors to this Reader is not for ‘progress’, ‘productivity’, or any other achievement per se in the scientific, technological or economic fields. It is rather to find out whom these serve or exclude, and how they affect the human condition and the relational fabric of the society into which they are introduced. If some spectacular technological advance delights a minority of individual ‘winners’ to the detriment of an increasing number of ‘losers’. The contributors to this anthology are eager to convey what these losers think about it, and how their lives are affected by it.

Finally, the ideas presented here are radical, not in the polemical sense often intended by the use of this adjective to discredit free thinking, but in the etymological sense of the word: that is, going to the roots (Latin radix) of the questions, ‘pertains to, or affects what is fundamental’.

• The contributors to this volume inhabit a vast spectrum of cultures with all their differences. They represent very different horizons of thought.
• They belong to a generation that went quite far to defend the great ideologies that marked the present century, most drawing their strength from the deeply humanistic traditions of all the world’s cultures.
• As a rule, the majority of the contributors to this Reader have, at some moment of their personal itinerary bitterly experienced the disillusions intrinsic to such ideologies.
• That does not seem to have driven them to discredit the virtues often associated with the birth of such ideologies, but to discover their extraordinary corrupting possibilities, particularly when they tend to colonize one’s autonomous capacity to search for the Truth.

The contributions to this Reader have been classified in five parts

Part One … (to be continued)

THE FORTUNE AT THE BOTTOM OF THE PYRAMID

ERADICATING POVERTY THROUGH PROFITS

C.K. PRAHALAD

REVISED AND UPDATED 5^TH ANNIVERSARY EDITION

WHARTON SCHOOL PUBLISHING                  2004/2010

PART II

PART I: PRIVATE SECTOR AND POVERTY

PROGRESS DURING 2004-2009

New Introduction: Private Sector and Poverty: Progress During 2004-2009

Five years is not a long time to evaluate the diffusion of an idea; much less its impact on the ground. It has been less than five years since the book The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits was published. The first article on the subject appeared in 2002. At the time, the proposition that the private sector had a critical role to play in alleviating global poverty was generally met with skepticism. The idea that they could have the greatest impact through profitable business serving 5 billion people who represented the “invisible, unserved market” was even more radical. I am profoundly grateful; for the people in government, nongovernmental organizations, and large corporations who were willing to listen and experiment. The poor, of course, have long been hungry for change. Their enthusiasm and insights have been a huge inspiration to me.

We are a long way from solving the problem of global poverty. But I find reason to be optimistic that the conditions for creating significant and sustainable change are emerging rapidly. First, the idea that the private sector can and should be involved in creating market-based solutions for the world’s poorest consumers is gaining credibility. The market success of some multinationals that have taken up the challenge has created momentum. Respected business leaders such as Bill Gates championing the cause of creative capitalism has also contributed to a shift in perception.

Second, actively engaging with consumers in Bottom of the Pyramid markets has resonated with consumers in developed markets as well. The attitudes of the general public have begun to shift away from direct aid to an exchange of ideas and capital. For as little as $25, anyone can evaluate business plans and extend micro loans to Bottom of the Pyramid entrepreneurs through Kiva.org. A few clicks on Novica.com grants access to a network of traditional crafts and artisans, and purchases are accompanied with a note from the artist. Cell phones are a part of the lives of the rich and poor alike. Today, citizens are engaging with each other in ways that would have been difficult to imagine even a few years ago. As a result, awareness of the conditions and nuances of the Bottom of the Pyramid is increasing. This has translated for the push for companies to help in uplifting the Bottom of the Pyramid from civil society, governments, and nongovernmental organizations.

• There is evidence today that the innovations in the BOP can have produced profitable business, and consumers in these markets have shown that they are as savvy and demanding as those anywhere else.

There are five major themes I talk about explicitly:

1. How has the role of the private sector evolved in poverty alleviation?
2. What have large firms, including multinationals, learned as they actively pursue nontraditional opportunities in the Bottom of the Pyramid markets?
3. What are the key lessons for developing these market opportunities?
4. Are these markets forcing a “new social compact” for business?
5. What are the emerging “rules of engagement” that should inform our approach to BOP markets?

The Role of the Private Sector

• The UNDP is now fully engaged with the idea of the private sector’s contribution to poverty alleviation.
• Similarly, organizations such as the World Economic Forum have focused private sector groups in developing solutions to poverty.
• There is growing recognition that marrying the local knowledge of the nongovernmental organization with the global reach of the multinational firm can create unique and sustainable solutions.
• The private sector cannot solve all problems but can bring technical and financial resources, the disciplines of organization, accountability, and entrepreneurial drive to bear on the problems.

Who and What Is the Bottom of the Pyramid?

What Have We Learned?

• The extensive study by World Resources Institute/International Finance Corporation has given granularity to the composition of the next 4 billion by country and by income level.
• It has also shown that BOP consumers account for $5 trillion in Purchasing Power Parity terms.
• A recent study by the Economist concluded that half the world can be classified as the emerging middle class; defined as a population living on $2 – $13 at 2005 Purchasing Power Parity prices.
• They have discretionary income and spend on education, health, energy, transportation, and personal care.
• This market includes 2.6 billion people in 2005 and is rising fast.
• Asia alone is expected to have approximately 60% of the global middle class.

We can draw multiple lessons from the heated debates about what constitutes the BOP during the last five years:

1. There is a clear recognition that 4 billion micro consumers and micro producers constitute a significant market and represent an engine of innovation, vitality, and growth.
2. The 4 billion people who constitute the BOP are not a monolith. There is no single universal definition of the BOP that can be useful.
3. We can choose to serve any segment of the 4 billion. No institution – a firm or nongovernmental organization – needs to serve all of the BOP. They can pick and choose. Serving the “next billion” is as legitimate as serving “the bottom billion.”
4. There is a segment of the 4 billion who are so destitute, so deprived, and so consumed by war and disease that they need other forms of help. Government subsidies, multilateral aid, and philanthropy are all legitimate tools to deal with this segment. Even here, our goal should be to build capacity for people to escape poverty and deprivation through self-sustaining market-based systems.
5. Active engagement at the BOP markets requires a new and an innovative approach to business. Retrofitting business models from the developed markets will not work.

BOP as a Business Opportunity

• By 2011, more than 4 billion cell phones will be in use. Most of this growth is in BOP markets.
• India alone added 11 million new subscribers in January 2009.
• The cell phone revolution has demonstrated beyond doubt that there is a market for world-class goods and services if they can be made available at affordable prices.
• The cell phone is the device of choice for not only communications but also some computing, entertainment, and the delivery of a wide variety of services such as medical care (as described in the Voxiva case in this book and reconfirmed in the update.)
• It has transformed the lives of the poor. We can “do well and do good” simultaneously.
• The cell phone has broken several long-held beliefs: There is no market at the BOP; they won’t pay, they will not accept or do not need advanced technologies; the BOP cannot be a source of innovation; and multinationals do not need them.
• Being a multinational or a large domestic firm does not guarantee  success; the capacity to adapt and innovate at the BOP does.

Key Lessons from Experiments

Even at this early stage of experimentation at the BOP, multinational firms are learning valuable lessons. Although the market is large and potentially lucrative, this potential cannot be realized unless managers are willing to experiment and innovate. They have to selectively “forget” traditional developed market approaches to business. The dominant lessons follow:

1. The innovation sandbox (embraces constraints): The primary task of the private sector is often converting the BOP consumers from unorganized, inefficient local monopolies to an organized and efficient private sector. Awareness, Access, Affordability, and Availability are the key ingredients.
2. Build an ecosystem: It is impossible to enlarge the market for cell phones without building a large network of micro entrepreneurs who will sell prepaid cards. There are more than 1 million such entrepreneurs. No amount of investment is a substitute for the skills and knowledge that an ecosystem can provide. The message is “don’t go it alone.”
3. Co-create solutions: BOP markets demand that managers acquire “local knowledge and local trust” before they develop markets.
4. A new concept of scale: Amul in India, the largest processor of raw milk in the world, originates the milk in 10,000 villages covering more than 2.2 million farmers. By paying farmers for quality and by sophisticated logistics from collection centers to world-class processing units, Amul totally avoided the problems of managing large herds centrally. Decentralized origination, centralized processing, and marketing seem to be the key.
5. Use technology: Advanced technology is critical for ensuring the quality of product or service delivered.
6. Sustainability will emerge as a source of innovation at the BOP: The planet is under stress – be it access to water, deforestation, pollution, or green house gas emissions. What if we add an additional 3 to 4 billion to the current 2 billion? Sustainability will become a major impediment. The pressure to serve an additional 3 to 4 billion and at the same time protect the environment will focus attention on sustainability as never before.
7. The challenge is market development: The goal is to build new markets, organize the “unorganized markets,” build new ecosystems, and create new business models. The challenge is about innovating the management processes within the firm that allows managers in the field to defy received wisdom and build a model that works.
8. BOP markets are evolving rapidly:

Business and the New Social Compact

• Business leaders who have engaged themselves actively with the BOP have started to reexamine the role of business in society. Many CEOs have come to look at business with a new lens – the BOP lens.

The views of Mr. Patrick Cescau, the retired CEO of Unilever, reflect the growing appreciation of the role of the private sector in protecting the planet and at the same time serving the poor.

“For one, there is a growing recognition that the social and environmental challenges facing us in the 21^st century are so complex and so multi-dimensional that they cannot be solved by governments alone. Industry has to be part of the solution. But perhaps the biggest catalyst for change has been the increasing awareness within business itself that many of the big social and environmental challenges of our age, once seen as obstacles to progress, have become opportunities for innovation and business development. We have come to a point now where the agenda of sustainability and corporate responsibility is not only central to business strategy but has become a critical driver of business growth.”

Democratizing Commerce:

The Challenge for the 21^st Century

• I would like to define “democratizing commerce” as bringing the benefits of globalization to all micro consumers, micro producers, micro innovators, micro investors, and micro entrepreneurs.
• Everyone must have the right to the benefits of globalization. All must be treated with dignity and self-esteem – as micro consumers.
• They must be able to exercise choice and have access to world-class goods and services.
• We have to start with respect for individuals irrespective of their current condition.
• Those of us who have the pleasure to see firsthand the extraordinary intelligence of the “uneducated” and how they “make do with what they have” are convinced that capability building for personal choice is a critical component of democratization of commerce.

The organizing idea that illuminates this new social compact must be:

v  Respect for the rights of the individual

v  The use of transparent transactions or a focus on market-based solutions

v  Scalability to solutions

v  Reducing the rural-urban, rich-poor divide through information technology and organization

v  Focus on entrepreneurship and innovation

v  Focus on ecologically sustainable solutions

PART II: THE ORIGINAL TEXT OF THE BOOK

Chapter 1: The Market at the Bottom of the Pyramid

Chapter 2: Products and Services for the BOP

Chapter 3: BOP: A Global Opportunity

Chapter 4: The Ecosystem for Wealth Creation

Chapter 5: Reducing Corruption: Transaction Governance Capacity

Chapter 6: Development as Social Transformation

PART III: CEO REACTIONS TO THE CONCEPT AND THE BOOK

PART IV: CASE STUDIES AND CEO COMMENTS

PART V: VIDEO CLIPS

ENDING GLOBAL POVERTY

A GUIDE TO WHAT WORKS

STEPHEN C. SMITH

PALGRAVE MACMILLAN         2005

PART VII

Chapter 4: Basic Education

In rural areas, and among the poorest families, even with the abolition of primary school tuition, many children do little more than enrol in school, if even that. Though school may become nominally free, in many communities in South Asia and elsewhere teachers or officials must be bribed. Expensive uniforms must be bought. School schedules may interfere with children’s work on farms, shepherding, fishing, or other activities. Once children are healthy enough to learn in school, how can schools better reach the poor and serve their needs?

A Good Beginning: Pratham’s Accelerated and Computer-assisted primary learning in India

Pathways out of poverty: Progress in Southern Mexico

Spreading the word: BRAC’S nonformal primary education solution

Giving Children a Chance: Save The Children’s nonformal primary schools in Uganda

Chapter 5: Credit for Poverty Reduction, and Insuring Opportunity

Chapter 6: Bottom-Up Market Development: Assets and Access for the Poor

Chapter 7: Entitlement to New Technologies and the Capability to Benefit from Them

Chapter 8: Sustaining the Environment for Ending Poverty

Chapter 9: Social Inclusion and Human Rights for the Poor and Voiceless

Chapter 10: Community Empowerment and Development

Chapter 11: Ten Strategies for Innovation in Ending Global Poverty

PART III: WHAT YOU CAN DO TO HELP

Chapter 12: First Steps

Chapter 13: Further Questions

Chapter 14: Stepping Up

Chapter 15: What Businesses Can Do

CONCLUSION

Chapter Some Closing Words: The End to Global Poverty

This book has shown why poverty is a trap, explained what the poor need to escape poverty traps, and described some of the most innovative and effective strategies now being used in the world’s poorest regions to help people escape from the bondage of extreme poverty. The struggle to end global poverty is an epic drama in which we all play a supporting role.

We live in a special moment of history. There are real reasons for optimism. Economic growth is fairly high, technological progress and the spread of new technologies around the world is rapid, market efficiencies are improving, democracy and freedoms are reaching an ever-larger number of people, and measurable progress has been made toward ending global poverty. In one very possible future, we could virtually end extreme poverty in the next quarter century.

But a different and far worse future is also possible. We could still lose the struggle to end global poverty. This is a time of dramatic change, and social and economic patterns have not become set. In the developing world, instead of gaining new rights and freedoms, the poor could find themselves subjected to wider abuses and denial of basic rights. Hundreds of millions of people could sink further into hunger and disease, with large regions of the world trapped in poverty indefinitely. Elite in the developing world, aided negligently by global business, could view globalization as an opportunity to exploit the poor more effectively. Stifled by debt, the poorest countries could enter into a new period of stagnation. Worst of all, as the natural environment continues to deteriorate, all of the benefits of improved knowledge and productivity could be exhausted just in the effort to compensate. Frustrated by growing gaps between images of the distant developed world and the close-by realities of impoverishment, peoples could be driven to the false promises of demagogues, whose policies could enslave and impoverish them.

• In developed countries, a growing focus on the war on terrorism to the exclusion of other social objectives, and a frustration with the slow pace of progress, could lead to a loss of resolve.
• If the priority for aid is to end extreme poverty, then we need to focus attention on what the poor need, what capabilities and assets they lack, and what local and global forces are holding them back.

While we still grapple with how to accelerate growth in countries such as Kenya, Zambia, Bolivia, and Pakistan, we have learned a great deal about how to improve the lives of poor people even when growth is low. We can do this by helping the poor to capability that they need to escape from poverty traps. In so doing, we improve the breadth of the human resources of the country and thus indirectly help to strengthen and improve the markets and institutions needed for successful development. Once the keys to capability have spread as widely as possible throughout a country, the people themselves, through their own institutions and reform efforts, will then be better positioned to determine the most effective development strategies for their own context.

• Successful cases of development usually involve a unique, local response to local constraints that outsiders are not in a good position to understand.
• Despite progress in understanding some of the key sources of growth and the role of institutions in improving market efficiency, remarkably little is known about how to design and implement policies to ensure that growth in the developing world effectively lifts the poor out of poverty.
• In the world of policymaking as much as in the world at large, the voices of the rich can be heard loud and clear while those of the poor barely register.
• The internet changes many things. It makes information cheaper and easier to find. It enables groups to organize. In the fight against poverty it enables donors to identify programs that fit their values and ideas bout what can work.
• We must emphasize more than ever the need to get the greatest poverty reduction impact per aid dollar spent, and this means that objective, rigorous, and independent evaluation should be a condition of funding.
• Donors need to greatly scale-up funding for programs of proven effectiveness, and not overemphasize funding “innovative” programs simply for the sake of appearing innovative.
• Donors should consider greater emphasis on decentralized discovery of effective poverty strategies and the diffusion of these ideas.

Every era has its compelling moral issues. For Ralph Waldo Emerson it was slavery. He would have preferred to contemplate, and to discuss philosophy with his friends. but in the end, Emerson felt he had to risk everything to take a very public stand against slavery at a time when it was perceived as an extreme and inflammatory position. Today’s compelling issue is poverty. In an age of such overflowing abundance, there is no justification for those of us who have been so blessed to stand by while others suffer the most terrible deprivations. In one way, to take a stand on poverty is easy: it is hard to find anyone who admits to being “for” poverty. But it takes risks to stand against farm subsidies and textile protection, and to call for more spending on aid, and more restrictions to preserve the global environment so that the poor in the developing countries do not suffer further. To effectively end poverty will require some sacrifices, even though the ultimate benefits will be great for us all. The struggle to end poverty should also transcend all political calculations. Republican and democrat; Conservative, Liberal, and Labor – all should find ways to put aside their other differences and unite for this urgent cause.

There are other compelling issues. One of the most important is preservation of the environment, and I understand that some put it in the first position. But there is more synergy than tradeoff. Sometimes, to solve environmental problems you have to solve poverty, poverty that is leading the poor to carve unsustainable farms in rainforests, burn unclean fuels, cut environmentally needed trees for cooking fires, and overuse the soil to have more food that particular year when they so desperately need it. And poverty is worsened by climate change that expands deserts, causes more severe weather and more frequent flooding, worsens erosion, and now threatens to submerge heavily populated coastal areas.

• Terrorism is another pressing problem. Muhammad Yunus, founder of the Grameen Bank that assists the poor in Bangladesh, said “One of the major causes of terrorism is poverty.”
• Uneducated people who sense that they have no other future are more willing recruits as foot soldiers for terrorist leaders who make false promises.
• The existence of gross disparities in wealth, and such unnecessary suffering, is not the only source of alienation among young people in the developing world, but it is one important source.
• Within as well as across countries, extremes in relative inequality will have to be addressed, for gross inequality in itself, whether deprivations such as hunger and illiteracy are found or not, can also have adverse effects on society, the economy, and individual well-being, ultimately leading to its own forms of absolute deprivation.
• To end global poverty will require everyone’s help. The next step is yours.

THE FORTUNE AT THE BOTTOM OF THE PYRAMID

ERADICATING POVERTY THROUGH PROFITS

C.K. PRAHALAD

REVISED AND UPDATED 5^TH ANNIVERSARY EDITION

WHARTON SCHOOL PUBLISHING                  2004/2010

Back cover: An Idea Can Change the World

v  How to serve the world’s poorest people and make a profit

v  New strategies and tactics for building winning businesses in today’s emerging markets

v  New bottom of the pyramid trends in technology, healthcare, consumer goods, finance, and beyond

v  Insights from top CEOs succeeding in emerging markets

v  New and updated case studies – from Jaipur Rugs’ revolutionary supply chain to Reuters’ data services for farmers

Five years ago, C.K. Prahalad’s The Fortune at the Bottom of the Pyramid showed companies how they could reignite profits and growth by serving the world’s five billion poorest people. Hundreds of firms have successfully taken that path – building large, profitable businesses that are reducing poverty and eliminating human misery at the same time.

Now, Prahalad has updated his extraordinary book to reflect the lessons of the past five years: business-building strategies, techniques, and innovations proven to work in emerging markets. The fortune at the bottom of the pyramid: doing well by doing good or doing good by doing well!

Front cover

Inspired by C.K. Prahalad’s breakthrough insights in the original edition of The Fortune at the Bottom of the Pyramid, a wide variety of firms are identifying, building, and profiting from new markets among the world’s poorest people – while at the same time helping eliminate poverty and human misery. Five years after this book’s first publication, Prahalad’s ideas are no longer isolated instances of innovations. They are proven, widely practiced “reality.”

Now, in this 5^th Anniversary Edition, Prahalad updates his book to give readers a picture of how this idea is being implemented in poor regions around the world.

Prahalad also offers an up-to-the-minute assessment of key questions such as: Is there truly a market? Is there scale? Is there profit? Is there innovation? Is this a global opportunity? Five years ago, executives could be hopeful that the answer to these questions would be positive. Now, as Prahalad demonstrates, they can be certain of it.

v  Solving the unique problems faced by bottom of the pyramid customers. How to make a profit by helping people escape poverty and misery.

v  Breakthrough forms of innovation for emerging markets. From rugs to cellphones, finance to energy, supply chains to state-of-the-art technology.

v  Building new ecosystems for wealth creation. You can’t do it alone – but you can do it together.

v  Scaling up to impact the enterprise – and society. Beyond “micro-businesses” and prototypes: large presence, large wins.

About the author

C.K. Prahalad is Paul and Ruth McCracken Distinguished Professor of Strategy at the Ross School of Business, the University of Michigan. He is a globally recognized management thinker. Times of London and Suntop Media elected him as the most influential management thinker alive today in 2007. He is coauthor of bestsellers in management such as Competing for the Future, The Future of Competition, and The New Age of Innovation. He has won the McKinsey Prize for the best article four times. He has received several honorary doctorates, including one from the University of London and the Stevens School of Technology. He has worked with CEOs and senior management at many of the world’s top companies. He is also a member of the Board of NCR Corporation, Pearson PLC., Hindustan Unilever Ltd., The World Resources Institute, and the Indus Entrepreneurs (TiE).

Preface by C.K. Prahalad

This book is a result of a long and lonely journey for me. It started during the Christmas vacation of 1995. During that period of celebration and good cheer, one issue kept nagging me: What are we doing about the poorest people around the world? Why is it that with all our technology, managerial know-how, and investment capacity, we cannot make even a minor contribution to the problem of pervasive global poverty and disenfranchisement? Why can’t we create inclusive capitalism? Needless to say, these are not new questions. However, as one who is familiar with both the developed and the developing world, the contrasts kept gnawing at me. It became clear that finding a solution to the problems of those at the bottom of the economic pyramid around the world should be an integral part of my next intellectual journey. It was also clear that we have to start with a new approach, a “clean sheet of paper.” We have to learn from the successes and failures of the past; the promises made and not fulfilled. Doing more of the same, by refining the solutions of the past – developmental aid, subsidies, governmental support, localized nongovernmental organization (NGO)-based solutions, exclusive reliance on deregulation and privatization of public assets – is important and has a role to play, but has not redressed the problem of poverty.

Although NGOs worked tirelessly to promote local solutions and local entrepreneurship, the idea of large-scale entrepreneurship as a possible solution to poverty had not taken root. It appeared that many a politician, bureaucrat, and manager in large domestic and global firms agreed on one thing: The poor are wards of the state. This implicit agreement was bothersome. The large-scale private sector was only marginally involved in dealing with the problems of 80% of humanity. The natural question, therefore, was this: What if we mobilized the resources, scale, and scope of large firms to co-create solutions to the problems at the bottom of the pyramid (BOP), those 4 billion people who live on less than $2 a day? Why can’t we mobilize the investment capacity of large firms with the knowledge and commitment of NGOs and the communities that need help? Why can’t we co-create unique solutions? That was the beginning of my journey to understand and motivate large firms to imagine and act on their role in creating a more just and humane society by collaborating effectively with other institutions.

It was obvious that managers can sustain their enthusiasm and commitment to activities only if they are grounded in good business practices. The four to five billion people at the BOP can help redefine what “good business practice” is. This was not about philanthropy and notions of corporate social responsibility. These initiatives can take the process of engagement between the poor and the large firm only so far. Great contributions can result from these initiatives, but these activities are unlikely to be fully integrated with the core activities of the firm. For sustaining energy, resources, and innovation, the BOP must become a key element of the central mission for large private-sector firms. The poor must become active, informed, and involved consumers. Poverty reduction can result from co-creating a market around the needs of the poor.

• This book is concerned about what works. I am focused on the potential for learning from the few experiments that are going right. These can show us the way forward.
• This book is about all the players – NGOs, large domestic firms, MNCs, government agencies, and most importantly, the poor themselves – coming together to solve complex problems that we face as we enter the 21^st century.
• The process must start with respect for Bottom of the Pyramid consumers as individuals. The process of co-creation assumes that consumers are equally important joint problem solvers.
• New and creative approaches are needed to convert poverty into an opportunity for all concerned. That is the challenge.

This book is in five parts. In Part I, a new introduction outlines the progress in the BOP agenda since the publication of the book in 2004. It is an update five years later that confirms the growth and sustainability of the idea. In Part II, which was part of the original 2004 edition (left unchanged), we develop a framework for the active engagement of the private sector at the BOP. It provides the basis for a profitable win-win engagement. The focus is on the nature of changes that all players – the large firm, NGOs, governmental agencies, and the poor themselves – must accept to make this process work. Part III contains letters from CEOs of major corporations supporting the approach, while Part IV describes cases, in a wide variety of businesses, where the BOP become an active market and brought benefits, far beyond just products, to consumers. The cases represent a wide variety of industries – from retail, health, and financial services to agribusiness and government. They are located in Peru, Brazil, Nicaragua, Mexico, and India. They represent a wide variety of institutions working together – subsidiaries of MNCs, large domestic firms, startups, and NGOs. They are all motivated by the same concern: they want to change the face of poverty by bringing to bear a combination of high-technology, private enterprise, market-based solutions, and involvement of multiple organizations. They are solving real problems. The newest of these case studies, that of Jaipur Rugs, opens a new perspective on building global supply chains that benefits the BOP producers. Part V contains the videos that accompany the case studies (available on the CD and www.whartonsp.com/Prahalad).

• The BOP consumers get products and services at an affordable price, but more important, they get recognition, respect, and fair treatment. Building self-esteem and entrepreneurial drive at the BOP is probably the most enduring contribution that the private sector can make.

PART I: PRIVATE SECTOR AND POVERTY

PROGRESS DURING 2004-2009

PART II: THE ORIGINAL TEXT OF THE BOOK

Chapter 1: The Market at the Bottom of the Pyramid

Chapter 2: Products and Services for the BOP

Chapter 3: BOP: A Global Opportunity

Chapter 4: The Ecosystem for Wealth Creation

Chapter 5: Reducing Corruption: Transaction Governance Capacity

Chapter 6: Development as Social Transformation

PART III: CEO REACTIONS TO THE CONCEPT AND THE BOOK

PART IV: CASE STUDIES AND CEO COMMENTS

PART V: VIDEO CLIPS

ENDING GLOBAL POVERTY

A GUIDE TO WHAT WORKS

STEPHEN C. SMITH

PALGRAVE MACMILLAN         2005

PART VI

Chapter 3: Health, Nutrition, and Population (Cont.)

POPULATION AND FAMILY PLANNING:

CARE MAKES PROGRESS IN ETHIOPIA

There are more than ten times as many people living on the Earth as there were 300 years ago. But one of the huge success stories of recent decades is the decrease in the rate of growth of world population. The growth rate peaked in the early 1960s at about 2.2% per year, but has now been cut in half to 1.1%. This is the difference between the population doubling at a rate of every 32 years in the 1960s, and every 64 years today. Although the population is still growing, the number of people added to the Earth each year (the number by which births exceed deaths) is now getting smaller. After a peak of adding 87 million additional people in 1989, in 2002 the world added 74 million people, and this figure is getting progressively smaller. Still, most of the increase is occurring in developing countries that are often already facing growing environmental pressures.

In isolated villages of rural Ethiopia, population growth has been fast and knowledge of family planning minimal. There has been very limited access to healthcare. Women have little power in the family. Fewer than 19% of women in the country can read, and the percentage is even lower in rural areas. On average, a woman in Ethiopia will give birth 6 times, a rate of fertility almost unchanged for decades. Yet the environment is becoming increasingly stressed. The population, now at 65 million, is expected to reach 88 million by 2015. The hope of ending poverty in Ethiopian villages depends on decreasing fertility. The work of CARE’s Population and AIDS Prevention Project (POP/AIDS) in rural Ethiopia shows that this is possible.

This program began in 1996 with a mission to improve the health status of women and children. In CARE’s program, an extension agent (or profession trainer) lives in a village for several months, working in a cluster of between four and nine villages with a local peasant’s association. The goal is to help establish “a culture of family planning” and a framework for community health. The CARE agent begins by identifying and working actively with natural leaders in these villages – people CARE calls “opinion leaders” rather than “political leaders.” The extension agent works to persuade these leaders of the importance of family planning. The leaders in turn play a key role as “change-agents” by convincing others, partly by setting an example through their own behavior. The CARE agent and community leaders often meet, sitting together in a large circle outdoors, to discuss family planning, health issues, or other concerns raised by participants. With the assistance of these opinion leaders, the CARE extension agent then identifies an appropriate local resident who was respected in the community and would serve as the reproductive health representative after the extension agent had transferred to another village.

In the first months after moving on to another community, the CARE extension agent makes a few brief return visits for training. After that point there is follow up from the Ethiopian Ministry of Health, including programs to involve the representatives in immunization, in an anti-polio campaign, and in the distribution of Vitamin A supplements. The involvement of the ministry is intended to help promote program financial sustainability.

• CARE says it works with tacit approval of the official leaders, by making courtesy calls to officials, introducing visitors, symbolically demonstrating respect and acceptance of their authority.
• During a five-year project from 1996 to 2001, CARE extension workers trained and established 344 community representatives potentially serving some 260,000 villagers.
• Contraceptive use rose from 4% to 24% in the Oromiya region south of Addis Ababa. The program worked better where men were more actively involved.

As of the end of 2004 these village family planning representatives were still active and linked to nearby government health facilities for supplies and technical support. This linkage is an important phase in the assumption of responsibility for the program by the local government.

Ensuring that an adequate, steady supply of contraceptives for the village was available after the launch was very important to maintaining use. If costs of contraception cannot be kept very low, the villagers cannot afford them, so continued subsidies will likely be needed for some time. Consistent involvement by community based organizations and the Ethiopian government is needed to ensure the new “culture of family planning.” In this way, an escape from the high fertility trap might be secured.

HEALTH MAKES EDUCATION POSSIBLE:

DEWORMING IN KENYA (ICS IN BUSIA)

Worldwide, hookworm and roundworm each infect about 1.3 billion people, whipworm infects about 900 million, and schistosomiasis infects about 200 million. These parasitic infections can be debilitating. Severe infections lead to abdominal pain, anemia, protein malnutrition or Kwasiorkor, listlessness, and other complications. In Africa, millions of children live in communities where parasitic infections are nearly universal. If all children in heavily infected areas were given safe deworming treatment now available, we could control these infections for an estimated 49 cents per child per year.

In rural Kenya parasitic infections are endemic, including hookworm, roundworm, whipworm, and schistosomiasis. But with so little money available – annual government expenditure on public health in Kenya was only about $5 per person in the 1990 to 1997 period – and so many pressing problems, officials in aid agencies and in the Kenyan government doubted whether these treatments should be a priority. Now an action research project has shown clearly that deworming is one of the most high-impact and cost effective strategies for keeping children in school while improving their general nutrition and health.

• The program is run by the International Christian Support Fund (ICS), an NGO based in the Netherlands.
• ICS implemented its deworming program with cooperation from the Kenyan Ministry of Health, and is working with a Harvard-MIT research team led by Michael Kremer, assessing their poverty programs using the highest standards of rigor: randomised impact evaluations.
• In Busia district, 92% of schoolchildren were infected with at least one parasite, and 28% had at least three infections. The most heavily infected children were more likely to be absent from school on the day of the survey.
• The deworming program was one of the most rigorously evaluated poverty programs in the world, using randomised trial methods.
• The results showed it to be more cost effective than virtually any known program in increasing the level of primary school attendance among very poor children.
• The program cost per additional year of schooling was just $3.50, much less than the alternative methods used to increase school participation, such as subsidies to attend school.
• The result was a well-designed program, rigorously evaluated, with an unusually favourable cost-benefit ratio.
• Nangina Primary School had a sign painted onto a wall that reads: “OUR MOTTO: HARDWORK AND DISCIPLINE LEAD TO SUCCESS.”

ICS has had many benefits from participating in rigorous randomised trials that extend even beyond the knowledge it gains on program effectiveness. They have received many valuable ideas from the researchers, and have acquired an international reputation for innovation and careful program assessment. It is to be hoped that many other NGOs will follow their example.

Chapter 4: Basic Education

ENDING GLOBAL POVERTY

A GUIDE TO WHAT WORKS

STEPHEN C. SMITH

PALGRAVE MACMILLAN         2005

PART V

PART II

ESCAPING THE POVERTY TRAP:

HOW THE POOR ARE GAINING THE KEYS TO CAPABILITY

Even in the poorest regions of the world, far from the major growth engines of the global economy, and in the face of many handicaps, good work is being done to help the poor gain the keys to capability and escape from poverty traps. Part II of the book takes a close look at innovative and inspiring programs in areas such as the Andes, Sub-Saharan Africa, and rural South Asia that remain outside the mainstream of the world economy.

Up to this point, we have looked at what poverty is, why it can be a trap, who the poor are. But what exactly is a poverty program? Many definitions are possible, but the one I use casts a fairly wide net: A poverty program is an intentional and systematic attempt to change the status quo (or equilibrium) in a way that reduces poverty.

Keep in mind that identification of effective or innovative programs is not a science; it relies on a combination of statistical and case study methods tempered by judgment. Moreover, there are many other excellent poverty strategies. Although chosen carefully, programs featured in this book are not necessarily superior to many others that are not covered. Instead, these cases are intended to be illustrative of the broad range of promising work now being carried out, and to encourage thinking outside the box about what could be done to meet some of the less-obvious needs of the poor.

Chapter 3: Health, Nutrition, and Population

Our hopes for ending global poverty depend on better health for the poor. Health begins with safe water. But water is all too often scarce, far away, contaminated, or a combination of the three, threatening our efforts.

SOUTH AFRICA:

SAFE WATER AND HEALTHY CHILDREN

In rural South Africa, the poor often live one or two miles or more from sources of water, which must be drawn from streams, or, for the lucky, drawn from hand pumps, although either method is physically straining on tired women, who are generally the ones who fetch the water. Risks of cholera and other diseases found in contaminated water are high. Needless to say, the poor cannot afford the piping and power pumps (even if they could get electricity) that are used by the rich. So the women must trudge twice a day to collect water, wasting desperately needed hours. You can often see their children following sullenly behind. When a little older, the children themselves must fetch the water. These children have generally never enjoyed the playground equipment that we take for granted.

The solution: enter Roundabout Outdoor with its ingenious invention, the Roundabout Playpump. The company developed a low-maintenance merry-go-round (also called a roundabout) for children to spin around in, started and sped up with their feet: the kind of playground staple many of us remember from childhood. But the spinning action is used as power for pumping water out of a well dug nearby, which is then sent up to a water tank a few meters above the ground. The design has an innovative way of converting the circular motion of the toy into up-and-down motion for drawing water using only two moving parts. The children get a playground toy that they really delight in. the Playpumps are often placed in schools, giving children an additional incentive to attend (at least they like the recess time). The children help their families and communities get better access to water simply by having a good time. Children at play may be one of the great renewable resources of the world. The only problem is convincing the kids to get off the Playpump when it is time to come home.

• The pump is effective to a depth of about 100 meters, and at 40 meters is considered remarkably efficient – significantly better than what a hand pump could deliver with great effort.
• The Playpump costs about $5,000 – an investment that is quickly returned just from the time saved in fetching water.
• Many Playpumps have been financed through grants. The project was a winner of a $165,000 World Bank development marketplace award.
• Over 500 Playpumps have been installed to date, and over 200,000 South Africans have benefited.
• Though maintenance costs are low, these are not trivial to impoverished villagers. Maintenance is financed with small advertising billboards on the sites.
• The project is clearly something that can be replicated in many parts of the world in thousands of villages, and interest is growing in transferring this new technology to other countries in Africa and Asia.

FIGHTING HIV/AIDS:

THE AIDS SUPPORT ORGANIZATION, UGANDA

Now the leading cause of death of working-age adults in the developing world, if unchecked AIDS may condemn Sub-Saharan Africa, the hardest hit region, to grinding poverty for at least another generation. In 2004, some 42 million people worldwide were infected with HIV, with over 34 million of these in Sub-Saharan Africa. There the prevalence rate is now estimated at 8.8% of the adult population, with women representing 55% of the infected. The impact of the disease is approaching that of the bubonic plague of Medieval Europe.

The World Health Organization (WHO) estimates that, by 2002, nearly 22 million people had died from AIDS since the disease was identified in the 1980s, with the large majority of deaths occurring in Sub-Saharan Africa. Throughout the region AIDS is now the leading cause of death of adult males in economically active years. Although infectious childhood diseases still kill far more people in developing countries, AIDS strikes those who have successfully run this gauntlet of child killers. Their societies need the energies and skills of precisely the part of the population most afflicted.

• In the developing countries as a whole AIDS is primarily transmitted by heterosexual intercourse. In addition, infected blood and needles, both by drug abusers and in hospitals, and perinatal transmission (from mother to fetus) play significant roles.
• In low-income countries average survival once AIDS symptoms set in has been less than one year.
• Lifesaving drugs are still not available to the overwhelming majority of the infected in Africa and South Asia because of limited availability of low-priced drugs, slow implementation, and inadequate health system infrastructure to get the medicines to patients in these countries. In the absence of these drugs, treatments have generally been limited to aspirin, antibiotics for infections, and cortisone for skin rashes.

Some NGOs are responding to AIDS with innovations that have resulted in a significant humanitarian and poverty alleviation impact. Uganda was the first country to be hit hard with an AIDS pandemic, but, partly through the work of NGOs, the country became a model for how to contain such an explosion of HIV and to treat its victims with dignity. The AIDS Support Organization, or TASO, has played a crucial role in treatment, family assistance, and counselling. It has been instrumental in prodding government into action, and helping Uganda respond to AIDS.

A Uganda-based and locally governed NGO, TASO was founded by Noerine Kaleeba in 1987, after her husband died of AIDS contracted through a blood transfusion. Its goal is to help people to “live positively with AIDS.” Patient testimonials suggest that the counselling makes a big impact on how people live after learning they are HIV positive. Some of these patients have themselves become activists in the organization, and many other TASO staff and volunteers are also people living with HIV/AIDS.

Uganda-based TASO was the first indigenous NGO in Africa to respond to the needs of people living with HIV/AIDS, and it has received accolades for its pioneering and successful efforts to disseminate AIDS education to the local grassroots levels and relieve the suffering of AIDS patients. TASO won the King Baudouin International Development Prize in 1994. Recently TASO has garnered much attention, with visits by U.S. Secretary of State Powell in 2001 and by President Bush in2003.

• The AIDS Support Organization has played a crucial role in Uganda’s long fight against AIDS, in the fields of treatment, family assistance, and counselling, as well as general education. Although entirely indigenous, it has received substantial outside funding.

The case for fighting AIDS is slightly different from that of fighting the major childhood killers. In both cases, there is a moral imperative to help when people are needlessly suffering. With small children our obligation is primarily humanitarian. If there were a tradeoff between saving children and adults given limited funds, many would support saving the children. We can afford to do both. Indeed, the two cannot be separated. With adults with HIV/AIDS the case for action is not only humanitarian but is also an investment in reducing future need for aid. Adults who have survived childhood diseases are the ones the children and the elderly count on for support. If Africa loses people entering the prime of their bread-winning years, children and the elderly will become even more destitute, making it that much harder to break out of poverty traps. Moreover, AIDS has tended to strike those with more education and higher productivity – thus having a disproportional impact on economic development. In many parts of Africa today, teachers are dying of AIDS faster than new teachers can be trained. Keeping an HIV+ person with basic education productive as she enters the earning years is a better way to raise national incomes and general well-being (or keep then from falling) in countries such as South Africa than most other investments.

Good work on AIDS is going on now throughout Africa. An excellent recent model developed by church groups in Zimbabwe is to utilize volunteers to visit and provide basic care for AIDS orphans in the homes where they live, which can be homes of child-headed households, foster parents, grandparents, or other relatives. These visits provide a much needed combination of emotional and material support for these orphans. But AIDS must be prevented in the first place. And modern methods of family planning need to be introduced.

POPULATION AND FAMILY PLANNING:

CARE MAKES PROGRESS IN ETHIOPIA

ENDING GLOBAL POVERTY

A GUIDE TO WHAT WORKS

STEPHEN C. SMITH

PALGRAVE MACMILLAN         2005

PART IV

Chapter 2: The Keys to Capability: Eight Keys to Escaping Poverty Traps (Cont.)

The Fifth Key: Access to the benefits of new technologies for higher productivity

Basic literacy and numeracy are of intrinsic value. But to be most effective in helping the poor to take advantage of market opportunities, raise their productivity, and escape from poverty traps, there must also be access to useful knowledge and improved technologies. Access to new technology lets a person with basic literacy become functionally literate in that branch of knowledge – connecting a poor person to some of the technologies that could life her out of poverty.

There have already been great benefits of new technologies for poverty reduction, from contraception and medicines, to high-yielding crop varieties, to telecommunications. In India, computer-assisted learning for the poor coming to school at a somewhat older age has proven highly effective. When electrification has reached rural villages, and been distributed in a way that gives access to the poor, clear benefits have been recorded. A child who works in the fields after school can now do his homework at home after dark. Cellphones in Bangladesh have made an enormous difference. For example, you don’t have to spend the whole day going to the city in order to have a conversation with someone or resolve a problem. This way people can use their time more productively, working on their farms or businesses. But cellphones and access to the Internet do not come automatically. In many cases NGOs concerned with poverty have taken the vital first steps.

Ultimately, the poor need more than just specific job skills – these may become obsolete. They need to learn to learn, to learn how to adapt and make flexible use of new technologies. Teaching new skills in the context of immediate problems faced by the poor reinforces learning and helps participants to move to the next steps needed to escape from poverty. The contexts in which the poor learn new skills become important in themselves. Learning skills as a member of a solidarity group can also help build confidence, offer personal support, and reinforce learning.

The Sixth Key: A non-degraded and stable environment to ensure sustainable development

Lake Victoria beckons from the history books and the map, an apparent oasis, a great lake of Africa. Surely the people who live there, if anywhere, have a beautiful environment and a steady source of food. The reality on the ground is far different.

Watching the Kenyan boys fish along the shores of Lake Victoria, one sees some of the limits to the old catchphrase, “teach a man to fish, feed him for a lifetime.” There are many impediments to making this simple solution work. Fishing skills are of limited help in a dying lake. In Kenya the human population is rising and the fish population is falling, due to a combination of overfishing and pollution. Water hyacinths, introduced from Asia, choke out other life and provide a breeding ground for malarial mosquitoes and parasites.

Just as we have seen an escalating pace of new diseases emerging in the world, no doubt there will be an acceleration of environmental shocks, the results of which we cannot anticipate. Some result from the accidental importation of pests, such as the Asia beetle invasion in the United States, a byproduct of increased world trade. Others, like global warming, result from accumulated choices of millions of people decentralized around the globe, especially those of us in the rich countries. Rising sea levels from increased warming threatens to inundate many islands and densely populated coastal regions of developing countries. Eight million people in densely populated Bangladesh live in coastal areas likely to be affected by rising sea levels in the next few decades. Environmental crises are looming as the biggest barrier to progress against poverty. As Walt Kelly put it so well, “We have met the enemy, and he is us.”

Rapid population growth creates a race between needed and available resources. It challenges carrying capacity and can ultimately led to ecological collapse, as indeed looms in parts of the Sahel, where desertification and other forms of environmental degradation threaten to make growth unsustainable and the cost of ecological restoration unattainable.

The poor are both the victims and also unwitting perpetrators of environmental degradation. A common conjecture is that the richest billion and the poorest billion do most environmental damage. The poor have a high rate of fertility. They practice slash and burn agriculture in the tropical rainforests. They over use soil, overforage for fuelwood. The cause is poverty.

With increasing income, the poor are able to improve their environment, through both individual and collective action. With the aid of NGOs, the poor learn how to maintain the environment, and to get help with environmental protection when it is needed. In part because of the damage that we in the rich countries are indirectly doing to the environment of the poor countries, we will have to accept that there will be a need for assistance for poor countries for some time to come.

• Problems of the urban environment receive less attention than rural problems. But slum dwellers can face environmental hazards that can exceed those in rural areas.
• The rich find ways to insulate themselves from the worst of it, although they are by no means immune, but the poor suffer the greatest impact.
• Located just a short walk from the modern high-rise office buildings and hotels of downtown Nairobi, Kibera is Africa’s largest and most infamous slum.
• A UN study found that a majority of the landlords of Kibera were actually government officials and politicians.
• Without empowerment, in many cases the poor can do little to protect their own environments.

The Seventh Key: Personal empowerment to gain freedom from exploitation and torment

Personal empowerment may be the most important key to capability, because it can unlock the strongbox where other keys are found. Professor Yunus, founder of the Grameen Bank said, “a $20 loan is really just a pretext to give a woman an opportunity to find out who she is, to give her a chance to open up her natural creativity.”

Poverty and powerlessness are two sides of the same coin. When the poor are powerless they remain poor. Those without power find it very difficult to get the power and resources they need to make a better life. All too commonly, local elites work to reinforce this vicious cycle. When elites benefit from others’ poverty or powerlessness, they often actively perpetuate both. They do this with coercive exploitation enforced with terror. When you ask the poor about their lives, they frequently speak of their feelings of impotence and fear. “Today we’re fine, tomorrow they will throw us out,” said the squatter in Ecuador. “If you don’t know anyone, you will be thrown to the corner of a hospital!” said the man in rural India.

The Voices of the Poor study found that “mental health problems – stress, anxiety, depression, lack of self-esteem, and suicide are among the more commonly identified effects of poverty and ill-being by discussion groups,” particularly in Latin America and the Caribbean. This is starkly seen in the woman in Ecuador who said “I want to commit suicide, I want to run out because to see the kids crying and I do not have one sucre to give them some bread. Life is so sad.” The poor and those who live in close proximity to them are well aware of these links. In parts of Africa, people describe a mental condition associated with poverty as “madness.” Mental health has deteriorated significantly in the former Soviet Union and southeast Europe, along with the general decline in health and incomes.

• Depression an anxiety are often considered afflictions of affluent societies, but they are pervasive among the poor in developing countries.
• These mental health problems are a consequence of poverty, but then become also its cause – another poverty trap.
• Mental illness deprives the poor of “capabilities to function.” Poor mental health, in addition, is also often associated with poor physical health.
• In some African countries AIDS is creating a virtual generation of orphans. Over 10 million AIDS orphans lived in Africa in 2000.
• Providing basic needs for these orphans, ensuring that they are not discriminated against out of irrational fears, and seeing that they are able to obtain the few years of schooling that will help rescue them from absolute poverty is a major challenge in the struggle against poverty.
• Political analysts claim conditions are ripe not only for child abuse and exploitation, but for recruiting children for guerrilla armies led by unscrupulous aspiring dictators or mercenary groups.
• The resulting destabilization and diversion of resources can have a devastating social and economic development impact.
• Individual empowerment must take place in a context of participation in much broader, empowered communities. This leads us to the final key.

The Eighth Key: Community empowerment to ensure effective participation in the wider world

• Having power is critical to your ability to take control of your life, and to take advantage of opportunities to escape from poverty traps.
• Empowering the poor also frees them to innovate, to envision new possibilities, to become more productive, to find new ways to solve problems, and to form productive, cooperative relationships with others to achieve shared goals.
• To escape from poverty requires empowered people within a community that is empowered to function within the wider world.
• The poor depend on their community’s security to survive, to defend their rights, and to preserve their opportunities to improve the lives of their families.
• Communities must have and maintain peace to be empowered. Civil strife is still one of the greatest impediments to ending global poverty.
• Community empowerment is key to security.
• Your community, or communities, however humble, must be informed, empowered to stand up for their interests, and able to defend their rights.
• The poor need democracy and human rights as much as do the rich.

Empowerment supports the other keys to capability. Without empowerment there may be no access to markets and land. While greater income can do much even in the short run, it cannot guarantee a sustainable escape from poverty traps if the poor are still not in a position to access education and healthcare, if they cannot demand that government provide a functioning road to a wider market, if income can only be gained in a grossly demeaning or dependency producing way, or if the poor live and work in an environment being undermined by outside forces lacking accountability.

The goals and means are often the same in the best poverty alleviation programs. Health, education, environmental sustainability, personal and community empowerment, access to economic opportunity: All these are worthy ends in themselves as well as prerequisites for escaping poverty traps. Effective poverty programs don’t just deliver services – they build capabilities and sustainable assets.

PART II

ESCAPING THE POVERTY TRAP:

HOW THE POOR ARE GAINING THE KEYS TO CAPABILITY

Even in the poorest regions of the world, far from the major growth engines of the global economy, and in the face of many handicaps, good work is being done to help the poor gain the keys to capability and escape from poverty traps. Part II of the book takes a close look at innovative and inspiring programs in areas such as the Andes, Sub-Saharan Africa, and rural South Asia that remain outside the mainstream of the world economy.