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Micro-lending vs Macro-thinking: Which one stands better chance of ending poverty?
As I was reading Jacqueline's book this past weekend I was reminded of an essay I read last year by James Surowiecki called What Microloans Miss.
"...most microbusinesses aren’t looking to take on more workers. The vast majority have only one paid employee: the owner. As the economist Jonathan Morduch has put it, microfinance “rarely generates new jobs for others. This matters, because businesses that can generate jobs for others are the best hope of any country trying to put a serious dent in its poverty rate. Sustained economic growth requires companies that can make big investments—building a factory, say—and that can exploit the economies of scale that make workers more productive and, ultimately, richer." (James Surowiecki, 3/17/08)
I would never suggest microlending doesn't have it's place and I don't imagine Surowiecki does either. Who can deny the amazing effect Muhammad Yunus and Grameen Bank have had? But not everyone is or wants to be an entrepreneur.
Shifting business practices to accommodate unconventional (poverty-stricken) venues means injecting a little creative disturbance into the marketplace. At the end of the day, Jacqueline is a very good venture capitalist. She and her team spend a long time searching for serious innovators who cross sectors, locating the right entrepreneurs and the gutsiest local talent. Which means she's catalyzing systems (as opposed to individuals) that are not dependent on random good will.
Jacqueline responded to Surowiecki's essay on the Acumen blog: "My own experience corroborated James’ findings that only a small percentage of borrowers went onto create larger businesses that employed significant numbers of people. But we’ve learned how to deliver at least one product to the poor, and we have an unprecedented opportunity not only to build larger businesses that employ people but also to deliver other critical products — healthcare, clean water, housing and alternative energy — to the poor in ways they can access and afford. Our investments typically range from $300,000 to $2 million, or the “missing middle” as Surowiecki calls it. These investments have helped create more than 20,000 jobs while also bringing tens of millions of people products they’ve never before been able to access."
Jacqueline writes a lot about the dignity of work. What I find most remarkable is her ability to hold the discipline of the market and deep compassion at the same time. That's what's going to change the world.
"...most microbusinesses aren’t looking to take on more workers. The vast majority have only one paid employee: the owner. As the economist Jonathan Morduch has put it, microfinance “rarely generates new jobs for others. This matters, because businesses that can generate jobs for others are the best hope of any country trying to put a serious dent in its poverty rate. Sustained economic growth requires companies that can make big investments—building a factory, say—and that can exploit the economies of scale that make workers more productive and, ultimately, richer." (James Surowiecki, 3/17/08)
I would never suggest microlending doesn't have it's place and I don't imagine Surowiecki does either. Who can deny the amazing effect Muhammad Yunus and Grameen Bank have had? But not everyone is or wants to be an entrepreneur.
Shifting business practices to accommodate unconventional (poverty-stricken) venues means injecting a little creative disturbance into the marketplace. At the end of the day, Jacqueline is a very good venture capitalist. She and her team spend a long time searching for serious innovators who cross sectors, locating the right entrepreneurs and the gutsiest local talent. Which means she's catalyzing systems (as opposed to individuals) that are not dependent on random good will.
Jacqueline responded to Surowiecki's essay on the Acumen blog: "My own experience corroborated James’ findings that only a small percentage of borrowers went onto create larger businesses that employed significant numbers of people. But we’ve learned how to deliver at least one product to the poor, and we have an unprecedented opportunity not only to build larger businesses that employ people but also to deliver other critical products — healthcare, clean water, housing and alternative energy — to the poor in ways they can access and afford. Our investments typically range from $300,000 to $2 million, or the “missing middle” as Surowiecki calls it. These investments have helped create more than 20,000 jobs while also bringing tens of millions of people products they’ve never before been able to access."
Jacqueline writes a lot about the dignity of work. What I find most remarkable is her ability to hold the discipline of the market and deep compassion at the same time. That's what's going to change the world.
Replies to This Discussion
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Permalink Reply by Thom Nealssohn on
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There is dignity in being able to take care of your family. The microlending programs I've experienced understand that. It's the driving force that encourages the borrower to repay the loan. I think the "missing middle" comes from the fact that personal dignity and the vision to become an entrepreneur do no naturally follow one another. If my concern is to raise my children, see my family fed and live with a little more stability, I may not see beyond the microloans that allow me to grow to my personal capacity.
Entrepreneurs have an innate sense of self that drives them to risk more for greater gain. It places the dignity at risk (what if I fail - how will my family live?). This, in my opinion, is the greatest difference. What Jacqueline has done is help teach small venturists the tools to reduce the likelihood of failure and help them dream of a tomorrow beyond what they may have envisioned for themselves. Jacqueline has found the niche that expands the possibilities and widens the dreams.
It's a fabulous place to be - both scary and fulfilling. Were we all to be so lucky!
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