How Misinformed Ideas about the Poor are Holding Back the World's Poor

Western development aid tends to trap well-intentioned NGOs, INGOs, and governments—the “boots on the ground” of development work—in a Catch-22 called sustainability. Donors expect projects to be financially viable beyond the funding-cycle, and yet generally prohibit charging the project’s target group for the goods and/or services provided by the project (i.e. be financially viable, but without using money). Hugh Whalan, in his article “How Misinformed Ideas About Profit Are Holding Back the World’s Poor” cuts through this vicious circle (which is dehumanizing) by simply charging poor people in West Africa money for goods and services (which he argues is humanizing).

Whalan views venture development, as opposed to charity, as an actual mechanism for lifting the poorest out of poverty. The argument isn’t against poor people, but for making them participants in a market where they demand things with preferences and suppliers supply things for profits. As he says, “Even the poorest people are still consumers.” Coca-Cola, Procter and Gamble, and Philip Morris have made inroads into what is, as it turns out, an economy with huge market potential for buyers and sellers, and yet, as Whalan wonders, why is there an objection to “selling much more meaningful products they [the poor] actually need”? And this is a great question. Why do we object to selling goods and services to poor people?

An answer is that the poor, as it turns out, have often been exploited by capitalism (see link below to a great article by Michael Hobbes on Zambia [1]). However, charity and development aid isn’t a fix, either to the woes of capitalism or to the fact that poor people are poor. I would posit that Whalan’s method addresses factors that actually cause poverty. People aren’t poor because there isn’t enough charity and aid; people are poor (to pull from, of all places, Principles of Microeconomics by Robert Frank and Ben Bernanke) because they don’t have enough income. And markets driven by consumers and suppliers are an excellent (perhaps the only excellent) means of increasing incomes. Selling meaningful products to the poor helps them reallocate their scarce resources, become more efficient and productive, and thus less poor.

The key takeaway from this article is that how we who aren’t poor think about those who are poor needs to change. An application of this is realizing that venture development is more sustainable in real and meaningful ways than more traditional models of charity and aid. In this article, Whalan counters how the West views the rest by insisting that the poorest aren’t that different from us—they’re discerning consumers too. This asks an important question going forward: how to best offer goods and services to the world’s poor in a way that treats them with dignity and power-as-consumer without the exploitation-tendencies of capitalism. It’s a fine line, but it’s more humanizing and effective than the alternatives.

Link:

[1] Hobbes, Michael. "Why Is Zambia So Poor?" Pacific Standard. September 12, 2013. https://psmag.com/why-is-zambia-so-poor-f44dfeedd5ed#.m8itbktft.