Corporate Responsibility: Local enterprise 'is key to reducing poverty'

Graham Willgoss

Businesses do not have to spend the earth to save the planet, according to the Shell Foundation.

The charitable arm of the chemical giant outlined the vision it thinks the international development community should adopt in its paper Enterprise Solutions to Poverty, published last week.

The report advocates the role of risk-sharing in development projects and stresses the value of small to medium-sized enterprises (SMEs) working at a local level. Aid money, it argues, has a limited impact. "There's not enough public finance on the planet to lift 2 billion people out poverty," said Kurt Hoffman, the author of the report. "Instead, we must focus on economic growth and job creation."

In the report, he argues that combining business principles with local enterprise can "set poor people on the economic ladder to personal betterment".

The foundation encourages partnerships between SMEs and local banks, citing as an example a venture in South Africa that has created nearly 1,000 jobs.

"The expansion of enterprise, particularly SMEs, is critical to poverty reduction," says the report. "The role that enterprise development can play in the fight against poverty is not getting enough airtime in the context of the current Make Poverty History campaign.

"Nor does it feature prominently in the many recommendations being made to the international development community by commentators and experts about what it should be doing."

This argument has significant implications for donors, who the report says should act "less like charities and more like investors". It adds: "When donors spend money through their normal partners - government agencies, NGOs - the primary outcomes they should seek are measurable impacts."

Hoffman believes getting donors to have a stake in the outcome is key to increasing enterprise. "The failure of many projects in our portfolio can often be traced to the fact that the project partners were not focused on best meeting the needs of their real customers," he says in the report.

"The logic of the approach we are proposing is simple. The challenges involved in actually implementing it are not. It requires donors and recipients to think very differently about what they do."


Emma Hunt, head of sustainable finance, Forum for the Future

I welcome the work the Shell Foundation has done, and the plans included in the report. Other companies can learn from it. The foundation is focused on very small and very practical areas, but this means that what they do is easily scaled up to reach a greater number of people.

It has not tried to be unique, and that is its beauty - it is easily replicated. Because Shell is such a big company, others will take notice.

Too much work is done by charities forming separate enterprises that they cannot then sustain.

It is a positive move be-cause it encourages change for which it intends to provide long-term support. A number of initiatives have been introduced in the past 10 years, but they were donor-reliant and did not have the depth or staying power the Shell Foundation can provide.

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