Acumen Fund is committed to sharing the learnings we have collected over our past 10 years. In this spirit, we have published a document called “10 Things We’ve Learned About Tackling Global Poverty.” Each week on the Acumen Fund Blog, we will be posting the next lesson in this series of “10 Things,” along with a guest response from a valued member of our community.
2. Neither grants nor markets alone will solve the problems of poverty
“This isn’t about “trade versus aid,” it’s about building systems that demand honest engagement with low income people.”
In traditional aid, the lack of real feedback loops to donors and donor agencies silences the voice of the customer. When this happens we lose a crucial instrument in designing solutions that really work for the poor. At the other end of the spectrum, traditional venture capital and private equity put investors’ demands first, even when this undermines customers’ needs or bypasses the poor altogether.
We are not going to solve the problems of poverty by just pouring money on them, nor can we sit back and let markets take their course and pretend that billions of poor people’s lives will be transformed by an invisible hand. This isn’t about “trade versus aid,” it’s about building systems that encourage – indeed demand – real, sustained, and honest engagement with low income people as active participants in their lives.
Patient capital makes markets work for the poor by balancing seemingly competing aims: it is an investing approach with long time horizons, because the companies we invest in build markets where they’ve never worked before; it focuses on financial sustainability but incorporates grants and smart subsidies; it uses markets not to maximize profits but as a listening device, because when someone has the choice to pay for a product (even at a subsidized price) she has the chance to have a say about what she desires, what she feels is worthwhile, what she does and does not want.
Click here for a response post on Lesson #2 from Seth Godin, and click here for the full “10 Things We’ve Learned About Tackling Global Poverty.”
Tags: 10 Things We've Learned About Tackling Global Poverty, 10-Year
Indeed grants or aid is not enough to solve poverty. I will never forget the story of an encounter with an Ethiopian, currently living in the United Kingdom. Being originally from Rwanda, we started talking about things to improve in Eastern Africa. We got to his life story, and he went through the whole ”US AID” in the 80s. He told me that he cannot longer eat rice: ”it reminds me of the whole aid of distributing rice to refugees. But the International aid ogranisation did not even ask us if we like rice. In my region bread and wheat were more common, nevertheless they never asked us and forced mothers to feed their own kids with rice. This ingredient makes me remember of the hard times.”
This was an enlightement on my part to understand how aid can have the best intentions, but the worst consequences. It all starts with having an understanding of what people want and more specifically why they are in a situation where they cannot longer sutain living in. It is good to see an organisation like Acumen working on this and more importantly sharing their experiences from their previous projects.