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BK Blog Post
Posted by Mal Warwick, writer.
Mal Warwick is an ex-Peace Corps volunteer (Ecuador 1965–69) turned entrepreneur and impact investor who has championed social and environmental responsibility in the business community nationwide for more than two decades.
By Jose Rene C. Gayo – BusinessWorld Online, Manila, Philippines
THE TITLE of this article was inspired by the book by Paul Polak and Mal Warwick entitled The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers, published in 2013.
Let me quote from the book’s introduction: “Right now the number of people living on $2 a day or less is more than the entire population of the world in 1950. These 2.7 billion people are not just the world’s greatest challenge — they represent an extraordinary market opportunity. By learning how to serve them ethically and effectively, businesses can earn handsome profits while helping solve one of the world’s most intractable problems.”
These words should find resonance in our country where close to a third of our population is living in miserable existence. What is reported regularly by government statistics is the poverty level. In 2013, it stood at 24.9% (25.2% in 2012 and 26.3% in 2009).
The poverty income gives the level of income enough to keep body and soul together. Thus, those “living below the poverty line” are those, we can say in layman’s term, “in destitute conditions.” The other important data are “those who are poor.” Unfortunately, the government does not provide these figures. A proxy variable to this is what is reported by groups doing regular surveys on those who “rate themselves poor.” Last year, Filipinos who rate themselves poor stood at 54%. Thus, aside from those below poverty, 29.1% more Filipinos are poor. Poverty has been the greatest scourge in our country for decades now.
The war against poverty might just be the longest battle mankind has waged, and there seems to be no end in sight. While many countries (so-called developed economies) have won the battle, the great majority of the world is still struggling at it.
While our Asian neighbors managed to bring down the poverty incidence significantly in the past 40 years, the Philippines today registers one of the highest in Southeast Asia.
We have pinned our hopes on the government (with the help of other governments via their various aid programs and other multilateral agencies like the World Bank and agencies attached to the United Nations) to solve this problem. In fact, PNoy got elected based on his election promise “Kung walang corrupt, walang mahirap.” But can the government alone solve this problem? I say, NO.
For decades now, international bodies, aid organizations, and direct government-to-government programs have been waging anti-poverty programs. But why is it that such programs have not benefited the great majority of the poor?
The book that I referred to earlier has this to say. “It’s shocking. After the world’s rich nations invested more than $2.3 trillion over the past 60 years to end global poverty, billions of our fellow humans remain desperately poor… Top-down development programs administered by governments, international agencies, foundations, or big NGOs rarely work because they’re so vulnerable to government corruption, bureaucratic inaction, the distance between the planners and the supposed beneficiaries, and both distrust and a lack of interest on the part of people who live at the grass roots.”
The Philippine case is not much different. With such a failure, we have to look to the business sector to provide solutions to poverty. But will the Philippine business sector stand up to the challenge?
To start with, philanthropy is not as established in the country as in the United States. It’s true that there are a number of corporate foundations that have existed in the country for decades now. But why is it that poverty still persists? Unfortunately, for many of these corporate foundations, they act simply as public relations offices of their parent companies. Projects that they pursue, in most cases, follow along the lines of their business interests and their profit motives of course.
Maybe we just have to wait for a new breed of business entrepreneurs whose business models and interests truly serve the needs of the poor.
C.K. Prahalad, a business guru from the Harvard Business School, was the one who promoted the idea of business enterprises to serve the bottom of the pyramid (meaning the poor). There are vast opportunities waiting to be tapped for products and services well within the budget of the poor. Taken as a whole, these opportunities can run to millions of pesos.
Business models that produce a healthy profit stream and also benefit the bottom of the pyramid are still something to be seen in the country. I hope to find some of these soon.
There is so much talk about corporate social responsibility, but many seem to pursue it for their own business interests. There are also those who call themselves social entrepreneurs. But when you look closely into what they are doing, profits end up paying for their hefty salaries or go to their shareholders. For a distinction between business entrepreneurs and social entrepreneurs, see the article on “The Emerging Third Sector” in the book 4Es: Pathways Out of Poverty.
In the field where I have devoted a good part of my professional life, many businesses act like traders. They pay farmers a pittance for their produce and then sell it at the highest price possible. Thus, today farmers are still the poorest of the poor, although prices of their products are high at the retail end. We have one of the highest retail prices of food products in this part of the world.
What’s the proof? Just take a look at the barangays and towns in the country. Who are the rich and the middle class? Many of them are traders. I am not saying that all traders are preying on farmers, but I hope that among their ranks, some are truly making a difference in the lives of poor farmers. May their tribe increase.
Or maybe what was said by the authors I quoted earlier should be put to heart by our businessmen: “By learning how to serve them [the poor] ethically and effectively, businesses can earn handsome profits while helping solve one of the world’s most intractable problems.”
Jose Rene C. Gayo is a member of the MAP Agribusiness and Countryside Development Committee, the project manager for MAP’s Farm Business Schools project, and the dean of the MFI Farm Business School.
This article was reprinted from BusinessWorld Online, originally published in Manila, Philippines, on January 26, 2015.