Micro finance loans are a technique to empower poor entrepreneurs in the developing world to create wealth for themselves and their family. This technique uses small loans to allow them to invest in their businesses enough to overcome inherent gaps in the indigenous infrastructure. Oftentimes, however, developed countries create cost subsidies for the very products that these entrepreneurs are attempting to sell. This creates a competitive market system in which the poor are pitted against the developed world. This decidedly lopsided environ destroys the entrepreneur's business and his hopes for future independent sustainability.
An example of this is our recent attempt to start a chicken farm in Haiti to provide much needed protein and jobs to the people. After an initial success, we found our model struggling because the developed world was underwriting the cost of eggs sold in the Haitian markets. In fact, it was cheaper for the Haitians to buy American eggs than it was for them to buy chicken feed. While the developed world governments certainly have good intentions, the end results curb micro enterprise.
How can we create sustainable growth in developing world markets in the face of such daunting competition?www.mmdr.org
The necessary changes will require an entire transformation within the international aid community. Governments must realize eventually that the majority of their aid is going to line the coffers of the corrupt leaders. This corruption is one of the most effective form of trickle-down economics as the corruption itself trickles down to every rung in the government ladder.
ReplyDeleteBut when developed countries begin to actually take a closer look at how to positively impact the developing world they will see the need for working from the bottom up starting with the poorest and developing up from there.
Ending subsidies will greatly impact the poorest in the developing world as they are typically small land holding farmers. When their crops are undersold by foreign aid imports they are caught in the vicious and endless cycle of dependency.
Well said. How do we get the point across?
ReplyDeleteYou've re-tweeted this today, and I've got a different take on this situation than some, I'll imagine. If you have a subsidy on a commodity, then I would try to use that subsidy in some way to enhance the business opportunities rather than compete with them.
ReplyDeleteYou've got cheap eggs. Could you use them as a protein source for pigs, rabbits, fish, goats, etc. along with other feed sources? Goats will produce milk as well.
I'm sure there are other subsidies... rice? Use the rice to feed the animals, too? A thought. I don't have the numbers.