Business drives development by efficiently allocating capital and providing opportunities to productive individuals.  In many ways, Business is Development.  In contrast to foreign aid, business is both sustainable and scalable and benefits from the discipline of the market which rewards innovation and value-creation.    

Entrepreneurs are key to business because they are the risk-takers, the people who dare to innovate and succeed on the merits of their product or quality of their service. 

Entrepreneurs in the developing world are the antithesis of the hand-out mentality of much of the official aid business promoted by government agencies,  "development rock stars" and others with similar vested interests.   As CK Prahalad outlined in his book "The Fortune at the Bottom of the Pyramid", there is a market for goods and services among the poor and it is currently being filled by innovative local and global entrepreneurial-minded business people.     

By creating businesses, providing opportunity to productive people and creating goods and services for the poor, entrepreneurs in the developing world  expand economies, improve people’s lives, and bring about competition.  A competitive environment, in turn, gives rise to efficiency, meritocracy, and further innovations and entrepreneurial drive.  Moreover, the potent combination of entrepreneurship and technological innovations contributes to an ecosystem — including government policies — that is conducive to further entrepreneurship and technological innovations. 

Finally, people who work, provide for themselves and contribute to their communities often exhibit the "mindset change" that development agencies try in vain to teach through classes and marketing. 

The purpose of this cause is to explore ways together that we can support entrepreneurship amongst the poor.  This respects the dignity of local solutions.  Are there ways we can make capital allocation to successful or promising entrepreneurs more efficient?  Is there a capital market here?  What about the policy environment?  What can be done to remove some of the obvious policy impediments to productivity in the developing world.

Join me in exploring these issues and making a long term difference in the world through the promotion of business and entrepreneurship amongst the productive and dignified people in the world's poorest communities.

The business mechanisms we take for granted in the developed world - "Equity" in the form of shares in Joint Stock Limited Liability Corporations, and "Debt" in the form of credit created by credit institutions such as Banks, are not necessarily the mechanisms whereby value created in developing nations may be shared equitably with external investors.

New partnership-based mechanisms are now available such as:

(a) "Guarantee Societies" whereby bilateral "trade" credit is subject to a mutual guarantee supported by a default fund managed by a bank as a service provider, and where settlement may be in "money's worth" rather than exclusively in central bank money;

(b) "Capital Partnerships" - whereby investors and users of investment "co-own" a productive asset within a simple cross-border partnership-based framework (eg US LLC; UK, Dubai etc LLP's) and share either the production or the revenues from the sale of production.

A cross border "peer to peer" "Micro-investment" (as opposed to micro-credit) network is now possible using such partnership-based tools.

Capital Partnerships may well be the future for Entrepreneurship in the Developing World.

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  • 08/25/2007 05:09
  • 02/11/2007 04:11
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