It's been a pretty heady introduction to all the fantastic innovation that's brewing out there, and I find myself oscillating between the heights of inspiration (how could you not be inspired by people deciding to take on some of the toughest global challenges and coming up incessantly with "Eureka!" ideas?) and the depths of despair (how can I ever match the brilliance that is out there and achieve anything comparable?).
Preamble aside, I'm finding that the social enterprise approach perfectly brings together my interests in:
- small-scale approaches to economic development
- grassroots empowerment
- institutional innovations for supporting micro-entrepreneurs - the corner shop owners, the tea stall owners, the auto repair shed managers, the street vendors...
The discussion below further bolsters my earlier ideas about providing business advisory services to small and micro enterprises in developing countries, services that would provide a critical supplement to microfinance and microcredit services (as I wrote about here and here and here).
Everyone in the social sector picks that one battle which most excites them. I'm excited by this specific area of work because it would allow us to simultaneously further the dual goals of socioeconomic inclusion and economic growth. An alternative to the "trickle down" approach to development, this means that we would be directly tapping the potential of those at the bottom of the economic pyramid to make the entire country economically better off. And this
is not just economic potential in the form of existing micro businesses but also in the form of the micro-entrepreneurs themselves - their skills and intellectual capital.
I think that this perspective empowers those at the bottom of the economic pyramid rather than making them seem like passive recipients of welfare. And I think that politically, this is an important perspective to discuss given the conservative rhetoric that has become so frustratingly mainstream in the United States and elsewhere.
The article, Development: Towards a bona fide bazaar was just published in the Financial Times. Overall, it is about the informal economy in Arab countries and how it would be tremendously efficient for economic growth if the millions of informal actors were brought into the formal economy.
It talks about the problems associated with having a huge percentage of a country's economy be an unregulated, fragmented, disorganized economic system. In Tunisia for example, apparently 40% of the national economy is informal. Such statistics along with accompanying consequences have been endlessly discussed for the case of India.
- One of the problems discussed in this article is from the consumer's perspective - consumers buy products that have not been inspected by any regulatory authorities or subject to quality control.
- The other problem is from the seller's perspective - no access to any of the business support services that medium and large scale businesses can afford, services that could allow these micro-entrepreneurs to scale up and grow into more profitable ventures.
- The article discusses specific problems that these micro-entrepreneurs face; I've pulled these out into a list:
- They cannot get access to financial help via banking institutions.
- They cannot benefit from public advertising displays or market their products or attend trade fairs with a name and title that gives them the capacity to grow.
- They have no health or retirement benefits.
- They lack access to credit that could help them build their businesses and move beyond subsistence.
- They are often at the mercy of the authorities, who in several countries have launched crackdowns against them.
Now I'm not saying anything brand spanking new. But the thing is that this problem has to be tackled in a comprehensive, large scale manner. The informal sector in developing countries is extremely diverse, and its problems are very, very contextual. So addressing this at an adequately wide scale will require both social innovation and massive economic policy reform. If you want ideas to get you started, try looking up the organizations that are trying to organize informal workers (a fantastic example is SEWA, an organization that targets self-employed, low income women in India with a comprehensive set of financial and advisory services).
Hence rather than being intimidated by the scale of this problem, I am tremendously excited by the size of the potential waiting to be tapped here! How can one not be excited by the amazing returns such investment would yield?!