• Monday, December 04, 2023
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Creating economic spaces: Reducing poverty through innovation


 What does it feel like to be poor and how easy is it to live in abject poverty in the midst of immense wealth? Deprivation of a need is bad; poverty is bad and must be stopped or reduced to the barest minimum. Question is, how do we perform this ‘miracle’ in Nigeria, with almost 70 percent of the population wallowing in absolute or relative poverty?

The push for sustainable development continues, with the United Nations working to build on the MDGs post-2015. The UN Secretary-General Ban Ki-moon just concluded signing on a 30-member working panel. The panel is expected to come up with recommendations for a post-2015 development agenda. It seeks to build on the MDGs, looking at how to end poverty. Even though considerable progress has been made on reducing poverty globally, there is still more work to be done. The progress has not been equally spread, with some countries or regions doing better than the others.

Whilst we continue to look to the government or multilateral agencies for solutions, particularly to create that “seemingly” unreachable enabling environment, we also need to look inwards. We must begin to see how we can creatively work (if possible) within the confines of our realities. Innovation and the creation of new economic spaces are often from the people themselves. To create new economic spaces at the bottom of the pyramid, the people themselves must be encouraged to innovate and create economic ventures and wealth that will lift them out of poverty.

The concept “bottom of the pyramid” is not used here to denote a situation where corporations create consumer purchasing models that will be best suited for low-income earners. It is used as a concept which seeks to draw attention to the reality that there is a fortune to be made (by creating jobs and employment) at the bottom of the pyramid and can be harnessed by the poor if creativity is deployed. We can draw inference from two different types of economic activities: the “okada” business and the “pure” water business.

“Okada” (commercial motorcycle) business, an income generating venture, was popularised by the poor themselves. A study of the history of “Okadas” shows that “they appeared in the late 1980s, during an economic downturn in Nigeria. Jobless youths began to use motorcycles to earn money by transporting passengers on narrow or poorly-maintained roads to faraway cities and villages” (Wikipedia). Though this model was found to be flawed by certain state governments in Nigeria, it was a source of income to many low-income earners. The capital needed to start an “Okada” business was relatively small. Driving an “Okada” and using it as a means of transportation provided a number of people with service that was needed: the speedy movement of people from one place to the other in a densely-populated city known for bad traffic. However, this service has been banned by some state governments for its flawed implementation.

The Okada operators, for whatever reason, did not deal with the requirements necessary to make the business work. There was also the need to address the issues arising from the use of Okada as a medium for criminal activities, the poor adherence to traffic laws and inability to comply with safety regulations.How can this model, without is errors, be replicated to create massive employment, whilst at the same time ensuring that all its stakeholders are completely satisfied with its operations?

A similar but more successful scenario, the “pure” water business, has also offered and still offers employment opportunities for many low-income earners. This is one venture whose model worked in creating wealth for many at the bottom of the pyramid. “Pure” water was initially an unregulated business that started with traders providing water in nylon bags for people as they went about their business in Nigeria. This business (through regulation which sought to protect the health of the consumer by making sure that its health and safety standards were monitored and assured) became more sophisticated and created wealth and employment for quite a number of people.

Last year, Paul Orhii, director-general of NAFDAC, said the “pure” water business generated more than N7bn daily for the Nigerian economy. This business model is one that shows how all stakeholders can collectively work together to make a bottom-up approach to creating new economic spaces work: the operators complying with regulation, the governing bodies drafting regulation and ensuring that it is justly implemented and the attendant negative side effects of “pure” water grossly minimised. Whilst you will still have some cases of corrupt and unethical practice in the sector, it is at a lower level than that of the “Okada” business. In this case, wealth creation strategies are successfully employed and poverty is alleviated for many.

Can the poor truly be liberated without a bottom-up approach of intervention? Reducing poverty in such a huge population of a largely semi-literate citizenry is a challenge, especially if creativity and good governance are not applied.

Historically, trade, investment and national prosperity have only been known to flourish when governments provide enabling environment for entrepreneurial creativity to grow, hence creating jobs and employment and allowing living standards to improve. What this simply means is that the act of innovation lies with the people, whilst the government must create a system which will enable innovation to thrive and become an economic force. The people’s creativity must be encouraged to thrive through the right form of policies, political and regulatory environment. The start of industrialisation is often linked to a number of innovations which were basically driven by the creativity of a few individuals.

It’s good to see that after many years of aid being pumped into the country with nothing to show for it, perceptions about poverty alleviation have begun to change and many have started to favour more enterprise-based solutions. The aid model must be changed. Charity must be employed to create the capacity for enterprise at the bottom of the pyramid. When we go into a community to intervene, we must not go in to give hand-outs but instead seek to harness those who have the potential to multiply what is being given to them. This will develop enterprises that will create the right kind of capacity for wealth multiplication. This is the next phase of intervention and this is how we will further reduce poverty and create new economic spaces.

Charity (or aid) itself has different dimensions. Practically speaking, the type of aid offered to flood or war victims are different from the type of aid which seeks to increase capacity, drive sustained economic growth by alleviating poverty. It is this type of aid that must be enterprise-building in nature and this is what we call “the future of employed creativity and the future of poverty alleviation”, not only for Nigeria but also for many developing countries.



George is the Area Head of CSR and communication, BAT Nigeria.


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