The Shell Foundation’s report Enterprise Solutions to Poverty distils the lessons drawn from the first five year’s of the foundation’s life. It is a potent brew. The report is empirical in its structure and radical in its conclusions.
The two central premises of the report are: first that traditional aid has failed, or at best fallen short of tackling poverty; second that a business-based model is more likely to benefit the poor.
Over a trillion dollars of aid “and many times that amount in effort, exhortation and emotion” has been spent over the last fifty years. While acknowledging some progress against disease, famine and underdevelopment, it asserts: “much aid has been ineffectively and inefficiently used and failed to deliver the broad-based gains in growth and quality of life that had been promised.”
The report criticises representatives of non-profit organisations and the public sector, taking aim at their lack of business acumen. The authors assert “…many civil society actors…do not have business DNA in their make-up. They are, in effect, commercially illiterate. And, in our opinion, these characteristics greatly reduce their ability to develop successful business and market oriented solutions to poverty.” Startling evidence of this is produced in the section on Shell Foundation’s Ugandan and South African energy funds. The foundation estimates that, for every $10 given, $8 reaches the benefiting SME in local currency. In other donor-funded SME energy funds operating in sub-Saharan Africa Shell Foundation estimates that of every $10 only $3 reaches the enterprise, and then in foreign exchange not local currency. If this is so western governments might be better off constructing more efficient aid budgets rather than being obsessed by increasing the headline total.
Shell Foundation’s prescription for a business-based model has recommendations for the international development community and has propositions for engaging the international business community (see sidebar).
The propositions are not easily summarised. They are, however, pithy and commonsensical. A particularly good example of this is the recommendation to “put the poor ‘customer’ in charge, not the rich paymaster.” Applying the test of ‘who’s the market/who’s the customer’ leads the foundation to conclude “we expect a very large share of what is done (and certainly the vast majority of what is studied and written) in the interests of development, is primarily undertaken to meet the agendas of the International Development Community itself rather than the material interests of the poor.”
This is a challenging document. One minor gripe, though. The phrase “pro-poor enterprise” is liberally sprayed round the document. Despite defining what it means by the phrase, it is unlikely that everybody else will use the words to mean the same thing. Articulate people will try to parry the blow delivered by the report by giving their own interpretation of what “pro-poor” is. But it is unlikely the poor will have any say in the matter at all.
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