Entrepreneurship Is The Best Antidote For Poverty

The least developed economies do not lack economic resources. What they lack is the capacity to put them into use in a manner that will lead to efficient production. A helping hand with entrepreneurship building and capital can actually achieve a lot, and help in alleviating poverty.
Entrepreneurship is the Best Antidote for Poverty
Source - Wikimedia Commons (https://commons.wikimedia.org/wiki/File%3ASmall_Enterprise_Foundation_-_loan_officer.jpg)

Poverty in developing countries is often a result of lack of access to capital and lack of capacity for entrepreneurship. While there is no dearth of capital, it is often impossible for that capital to reach the person who needs it most. Efforts by United Nations and several independent initiatives have so far promised more than what they have delivered.


Capital & Entrepreneurship is the Need of the Hour

The biggest hurdle in the growth and development of developing countries is the lack of adequate capital. Most of these economies are labor rich. The abundance of labor and lack of capital means

poor labor productivity, low wages and poverty. The only solution is access to capital, and the best way of doing it is to lend directly to entrepreneurs instead of investing in the large monopolistic conglomerates which are able to exploit the surplus labor and make billions at their cost anyway.

The challenge is how to lend directly to an entrepreneur. It is not easy to assess the person's credibility, and it may be very difficult to ensure that it does not fall into wrong hands.

United Nations Efforts

The United Nations entrepreneurship program EMPRETEC has now got an extension to the African continent. Though the results of this initiative in Africa will take some time to be fully known, it is a very positive development that reinforces the importance of supporting African entrepreneurs to bring about development. The need of the hour is to extend this conviction to personal initiatives in a manner that sufficient confidence develops in the global community, so that they can actually lend to an entrepreneur in Africa in a credible manner.

Initiates & Organizations Promoting Self Help

This process is being taken to its logical conclusion by many initiatives today, all of which are playing an important role in building the confidence of small investors in the viability of effectively lending there. Among the organizations or

movements which have under focus, KIVA, OPPORTUNITY, FINCA, ACCION are some of the common names. Then there are certain organizations which are directing their energy primarily towards women, like GLOBAL MAMAS, WOMEN IN PROGRESS etc. There are now another breed arriving on the scene which in addition to lending credibility to the process of micro-investments, are also promising returns, like JARKKOLAINE.

Then there are also many agencies, which are combining investments with development work, and creating employment and capacity building in the process, like the Irish agency, SELF-HELP. The Carter Center also runs similar projects which aim at improving agricultural production and promoting rural entrepreneurs in many African countries.

Limitations of Direct Lending to Small Investors

The process of direct lending to small investors is also being tried, but the effective and sustainable model so far is that of community based disbursement of micro-loans, which is invariably more effective because of peer and social pressure for repayment of the principal, so that the same then can be used by another person.

Between charity and investment, while charity provides immediate relief, long time development can not come without investment and entrepreneurship. The benefits of large investments are cornered primarily by the well off sections of the society. Thus micro investment can play a significant role in uplifting of the most downtrodden. The problem of getting this done requires a certain level of confidence in the process of lending, and its viability. This is exactly where agencies like Kiva will play a very important role in times to come.

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