Entrepreneurship is hip in development circles. It’s the new buzz word and is increasingly portrayed as the solution to social and economic inequality. Academics and practitioners alike have argued that entrepreneurship can drive economic growth, reduce inequality, and foster innovation.
Entrepreneurship initiatives for development teach poor people how to market goods and services and use the profits. Foundations, companies, aid agencies, and NGOs across the world are making significant investments in these efforts.
However, these initiatives typically emphasise Western ideas of entrepreneurship such as individual profit maximization that do not always fit the outlook of communities in the Global South.
There is a need for funders and other organisations to rethink Western entrepreneurship initiatives for development. Incorporating local people’s values into initiative design could create value in multiple ways. And considering those values could also change the form of entrepreneurship in the West.
Entrepreneurship — defined as “the activity of setting up a business or businesses, taking on financial risks in the hope of profit” –– has recently been portrayed as the last option to lift people out of poverty.
One such entrepreneurship initiative is the macro-credit model, invented by a Dutch organisation African Village Development Inc.
Beginning in 2008, African Village Development Inc. gave rural villages in East Africa macro-credits, loans given to entire communities with which communities could set up their own village enterprises.
African Village Development Inc.’s primary goal was for village enterprises to thrive so that the profits generated would lift communities out of poverty. The second goal was to get repaid in order to fund other village enterprises in East Africa.
African Village Development Inc. wanted villages to take ‘local ownership’ for their business activities and their profit re-distribution, so village enterprise managers spent their profits as they saw fit.
Village enterprise managers felt responsible for using the generated profits for their communities’ needs. Serving community needs meant less savings. Thus, when African Village Development Inc. asked for repayment of the macro-loans, the village enterprises had not saved enough. After several attempts to retrieve repayment, African Village Development Inc. abandoned its operations in East Africa and put the macro-credit idea on hold.
Perhaps entrepreneurship for development initiatives need to focus on training local populations to save and prioritise ‘saving’ over serving community’ needs.
Also, another way forward would be to involve local communities in designing an entrepreneurship for development initiative. Taking this approach, Western funding organisations might need to move away from the idea of needing to scale such locally-designed and geographically-bound development initiative. They might also need to further relax control over the enterprises’ functioning, KPIs, and goals.
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Source: Network for Business Sustainability, 24 May 2018