New Strategies to Engage Poverty: Part I, Bottom-Up

Fishing for profit.

A wave of fresh ideas has been emerging that literally turns upside-down the paradigm for helping the poor.  Development leaders are introducing strategies labeled “bottom-up” and “bottom of the pyramid.”  These ideas focus on helping the poor to help themselves out of poverty through jobs creation.  The poor have the creativity and energy to work and earn—they just need help getting started.  

Don Eberly, who held senior positions in the White House and at USAID, is a proponent of the “bottom-up” strategy.  He believes that, “Conventional efforts by elite policy experts and bureaucracies to bring about prosperity in the twentieth century have mostly failed.  As a result, confidence in the ‘top-down,’ bureaucratic solution is declining, while confidence in ‘bottom-up’ innovation by business and non-profits is growing.” He adds, “We are entering an era of ‘bottom-up’ innovation and discovery.  In our lifetimes, major advance will be made in reducing global poverty and in eradicating disease and illiteracy.”  [The Rise of Global Civil Society: Building Communities and Nations from the Bottom Up (New York: Encounter Books, 2008), viii.]

C.K. Prahalad, former Distinguished Professor of Corporate Strategy at the Stephen M. Ross School of Business in the University of Michigan and top management consultant, believed a new approach was needed to help the poor.  In his book The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, (Upper Saddle River, NJ: Wharton School Publishing, 2005), Prahalad says globalization will open up new sources of investment and wealth creation for the poor, empowering what he called the “bottom of the pyramid” (BOP).  “What if we mobilized the resources, scale and scope of large firms to co-create solutions to the problems at the bottom of the pyramid?  Why can’t we mobilize the investment capacity of large firms with the knowledge and commitment of NGOs and the communities that need help?”  Prahalad lamented that the poor were not seen as a pool of potential consumers or that they were too isolated or too technologically unsophisticated to be a part of the world economy.  He believed these assumptions are inherently wrong and becoming outdated by technology.  “Poor nations,” said Prahalad, “are incubating new business models and innovative uses of technology that in the coming decade will begin to transform the competitive landscape of entire global industries, from financial to telecom services to health care and car making.”  

Small business and the poor.

Stephen C. Smith, professor of economics at George Washington University believes that far too little is known about the poor.  In his book Ending Global Poverty: A Guide to What Works (New York: Palgrave Macmillan, 2005), Smith argues that little effort has been made to study the poor and their daily lives.  The poor need to be given ownership of the programs that serve them and, “…genuine authority must be given to organization of the poor, not just those who would like to work with the poor.”  Smith adds, “…to escape from poverty requires empowered people within a community that is empowered to function within the wider world.  Communities of the poor must be collectively empowered.”    

One of the means to empower the poor is through “micro-credit.”  Our next blog will look at Muhammad Yunus, who won a 2006 Nobel prize for helping thousands in Bangladesh obtain needed capital to begin or expand their small businesses.