Private Sector JobsThe private sector makes up nine out of 10 jobs in the global market and with about 735 million people living at or below the extreme poverty line, it is essential that this vulnerable population has access to private sector jobs. The private sector, also known as the citizen sector, is owned by private corporations rather than the government and companies all around the world make up the majority of the economy with private sector jobs. Companies within the private sector can greatly benefit from providing people living in poverty with jobs as an investment that will lead to global poverty reduction.

The Role of the Private Sector in Poverty Reduction

It is crucial that the private sector takes responsibility for providing jobs, even in situations that require extensive training and infrastructure, as an investment in people living in poverty will lead to competition within the market as well as exponential growth within the company. The Global Impact Sourcing Coalition (GISC) created a toolkit to provide private sector companies with the skills and knowledge necessary to reduce poverty through employment. This toolkit outlines the benefits of workplace inclusion for people living in extreme poverty, not only from an economic standpoint but as a social responsibility as well. Outlined in the toolkit is the importance of networking and creating opportunities for people to fight poverty.

Microlending as a Poverty Reduction Tool

The Foundation for Economic Education (FEE) prioritizes microlending from the private sector as a source of poverty alleviation. Microlending is the act of loaning out very small amounts of money to self-employed individuals living in developing countries by banks and institutions. The FEE highlights a famous example of this, Grameen Bank, founded by Muhammed Yunus in Bangladesh in 1983. The Grameen Bank makes loans of $30 to $200 per person and has been able to reach millions, majority of whom are females who use the money to buy supplies in order to make and distribute their products. This is just one example of private sector work being done to connect people with limited access to resources to the job market and create opportunities.

Social Impact Matters

Traditionally, poverty has been a focus of governments rather than private companies and institutions, however, recently, partnerships between these two have been sought as the U.N. Sustainable Development Goals are focused on poverty alleviation. These partnerships between governments and private organizations are focused in areas of development, education, health, agriculture and climate change, all of which prioritize private sector jobs to fight poverty. One motivation for the private sector to participate in expanding its labor force to vulnerable communities is that of reducing reputational risks and beneficial brand awareness. PYXERA Global looks into the opportunities provided by public-private partnerships through the lens of economic development and explains that customers are now more than ever likely to consider the social impact of a specific company when it comes to purchasing products.

Social Responsibilities of the Private Sector

In order for private sector jobs to fight poverty, it is essential that organizations and corporations take social responsibility to invest in vulnerable populations that will lead to long-term positive impacts for the global economy. Strategies to employ impoverished communities in the private sector workforce have already been put in place and will continue to be essential in both alleviating poverty and expanding the global economy.

– Caroline Pierce
Photo: Flickr

Private Sector Fighting Poverty
When it comes to global poverty, the solution should involve collective effort from different organizations and individuals as well. These involve various participants from volunteers and nonprofit organizations to the government or even celebrities who are contributing their time to raise public awareness and much more. In fact, even private sector fighting poverty via Corporate Social Responsibility (CSR) is crucial too.

Corporate Social Responsibility (CSR)

Many large businesses and corporations are doing their bit for the world. Examples of private sector fighting poverty are not only motivational but also help to eliminate the sources of and causes leading to global poverty. Each year, different companies take action to do what is necessary for their community. The concept was introduced in the 1800s when the U.S. Supreme Court stated that corporations are people and they should be good citizens.

There are several ways for companies to practice Corporate Social Responsibility. Environmental efforts, volunteering, ethical labor practices and philanthropy are some of the examples. The private sector fighting poverty is reflected in many of the world’s biggest and most profitable businesses. CSR has become so critical that, for example, in the U.S., more than 60 percent of citizens hope that business will drive social and environmental changes in the absence of government actions and regulations.

Private Sector Fighting Poverty

Print giant, Xerox, has been focusing on different social areas with many projects, but it’s most recognizable one is the Xerox Community Involvement Program. Through this program, Xerox encourages its employees to work on social projects of their choice. They can also get a paid leave of absence to focus on their respective projects.

Another company that has been running several projects for the social good is the shoe company, Toms. Their well-known project One for One Campaign came into existence after the company’s founder, Blake Mycoskie, witnessed the difficult life of Argentinian children who grow up without wearing shoes. The idea of the project is really simple: Toms provides shoes to the children in need in 60 countries as it donates one pair of shoes for every pair of shoes sold.

Microsoft is another company taking responsibility for social issues. According to Forbes, the company holds the second highest rating on CSR score for all their educational and environmental contributions worldwide. It’s also known that the company’s co-founder and former CEO, Bill Gates, started the Bill & Melinda Gates Foundation to combat infectious diseases, promote equality, empower the poor and much more.

How CSR Benefits the Private Sector

Numerous big giants such as the BMW Group, Google, Samsung, LEGO Group, The Walt Disney Company, etc., have been taking action. Many of these companies benefit from their CSR as well. For example, Google Green is a social effort geared toward using resources effectively and increasing the use of renewable power. Ever since this cultural change occurred, Google’s data centers’ power requirements have reduced by about 50 percent. This means that what is saved by a social project can now be used for other operations.

Fighting global poverty and its causes needs to be a collective effort and the involvement of the private sector is highly crucial.

– Orçun Doğmazer

Photo: Flickr

SheaMoisture's philanthropic efforts in Africa
As brands in the U.S. continue to see the importance of fair trade and ethically-conscious practices in business, many have also developed philanthropic initiatives. SheaMoisture’s philanthropic efforts in Africa have helped thousands of economically disadvantaged women and children gain resources to educational and entrepreneurial resources.

The hair and skin care brand was established under Sundial Brands, which was founded by Richelieu Dennis in 1991. Since then, SheaMoisture acquired an estimated $300 million in revenue before it was sold to Unilever in 2017.

SheaMoisture’s Philanthropic Efforts in Africa

Nations that have benefitted from SheaMoisture’s philanthropic efforts in Africa include Ghana and Liberia. In these two countries, women face cultural oppression in the areas of education and entrepreneurship.

In a report published by the U.N., it was stated that women in Ghana are more vulnerable to poverty than men due to gender discrimination and increasingly difficult access to productive resources. This has also led to women facing greater challenges with obtaining a post-primary education.

Women in Liberia face economic challenges due to a poor governance structure and low private sector capacity that has resulted in a weak business environment within the nation. Furthermore, Liberia’s labor force lacks many skilled and literate people, which has resulted in lingering business corruption.

Over the years, SheaMoisture’s philanthropic efforts in Africa have included initiatives such as Community Commerce, the Girls Entrepreneurship and Technology (GET) Program and the Sofi Tucker Foundation.

Community Commerce

SheaMoisture established a special line of products under their Community Commerce initiative, where 10 percent of sales support women in Ghana, among other nations. This venture has been a success because it has brought economic opportunities to women threatened by poverty and educational disadvantages.

Over time, Community Commerce has invested an estimated $2.1 million in its programs, which have brought needed resources to an estimated 14,500 Ghanaian women. The company, in turn, has been able to meet its product demand, with an estimated 420,000 kilos of shea butter having been produced by women who are beneficiaries of Community Commerce.

The GET Program for Students

Another initiative SheaMoisture has established is the GET Program, which was established in partnership with SMART Liberia. The program provides women between the ages of 18 to 35 the opportunities to start their own businesses by giving them resources like training and business investments.

In its inaugural year in 2016, the program selected 50 young women in Liberia to participate, several of whom have gone on to start and manage their own businesses.

The Sofi Tucker Foundation

Another philanthropic initiative established by the company is the Sofi Tucker Foundation, which was named after the woman who inspired the SheaMoisture brand.

The organization has awarded other non-profits with grants up to $25,000 to continue philanthropy work. One organization that has benefitted from these efforts is Todee Mission School in Liberia, which provides quality educational resources to children from first grade to ninth grade from 140 villages in rural Liberia.

As of now, thousands of people initially threatened by poverty have been able to establish stronger financial and educational platforms for their futures. This is due to SheaMoisture’s philanthropic efforts in Africa and the ongoing efforts brands have made over the years to combat poverty in nations with fragile economies.

– Lois Charm

Photo: Flickr

Fashion companies that address extreme poverty
Some would say that fashion is their life. Others say they don’t care about what they wear. For fashion companies that address extreme poverty, finding a middle ground can make all the difference. Companies like the ones below would argue that fashion can both impassion the apathetic and give cause to the already passionate.

Raven and Lily – Empowering Women. Alleviating Poverty.

Live thoughtfully. With this as one of her life axioms, Kirsten Dickerson created her unique and ethical brand of fashion, Raven and Lily, in 2008. In 2013, Dickerson met a group of female Afghan artisans living for decades as refugees on the Pakistan border. The experience moved her to expand her business.

Since then, Raven and Lily formed 17 partnerships throughout 10 countries while employing more than 1,500 women. Dickerson provides jobs and educational opportunities as well as an ethical and sustainable product. “We are genuinely trying to think through all levels of our production practices and how people on the planet are affected,” Dickerson said.

By providing steady employment, including fair wages and education, Raven and Lily has established itself among the fashion companies that address extreme poverty on the most foundational of levels.

Accompany – Where Every Purchase has a Purpose.

If asked about its mission, Accompany will say its first priority is to help human beings. Ranked among the fashion companies that address extreme poverty head-on, the organization has an uncomplicated approach to the way it does business. Its three-tier system ensures the products have a purpose by:

  • Being handmade.
  • Abiding fair trade practices.
  • Having philanthropy at the center.

The results of this system are exponential: cultural heritage is preserved for generations to come, self-sufficiency is rooted in a new-found education and services are provided to the community at large. In short, change happens.

Socially-conscious industries help create that change. When Jason Keehn founded the organization, his vision was to leverage a thriving industry for global communities in need. As they boldly proclaim on their website: Welcome to a New Style Culture. It’s a culture that seems to be shared by all fashion companies that address extreme poverty.

Apolis – Advocacy through Industry.

With Apolis, the name says it all—a name that means “global citizen.” When they created their company in 2004, brothers Raan and Shea Parton believed business could be the impetus for social change. They have taken that belief, along with their investment in people, and have created a model for other fashion companies that address extreme poverty.

A certified B Corporation, Apolis meets high standards with regard to social and environmental performance, transparency and accountability. When asked about their brand of activism, Shea Parton stated, “[it’s] really about how you can go into an impoverished country and find a resource or product or raw material that allows you to bring it into the marketplace and to give an opportunity rather than charity.”

This mindset likely formed from a young age, according to Parton, who says “our parents knew that if we stayed in Santa Barbara, we would never know how good we had it.” With constant travel to countries like Uganda and India, the Parton brothers learned perspective early on, and they have put their perspective into action.

Bloom + Grace – Beautifully Made. Ethically Sourced. Globally Minded.

Bloom and Grace was founded in 2013, a jewelry company resulting from an inspired founder. When Dani Lachowicz found herself working in sub-Saharan Africa, she seized an opportunity she knew would change the lives of children in developing countries. Partnering with the U.N. Foundation’s [email protected] campaign and with local artisans, proceeds from Bloom and Grace go toward life-saving vaccinations.

Just how life-saving are vaccinations in developing countries? Here are some facts:

  • A child dies every 20 seconds from a disease that can be prevented by a vaccine.
  • The World Health Organization, UNICEF and the Global Alliance for Vaccinations have already seen a 99 percent reduction in polio and a 78 percent reduction in measles-related deaths.
  • Increasing access to vaccines can prevent 1.5 million deaths each year.

It is Bloom and Grace’s hope to empower communities and to promote entrepreneurship, while also living up to their namesake by allowing children the opportunity to bloom by the grace of socially-conscious patrons.

Krochet Kids, Intl. – Creating Jobs. Changing Lives.

Kohl Crecelius, Stewart Ramsey and Travis Hartanov founded Krochet Kids, Intl. from a shared high school hobby of crochet. Krochet Kids Intl. looks for ways to empower people to rise above poverty and provides life-changing job opportunities for women in need in Uganda and Peru.

With each purchase, consumers are invited to meet the maker of their product and are encouraged to write a note of thanks and encouragement. With this very personal approach to business and a partnership with We Are Capable, an organization with 10 years of experience fighting extreme poverty, the organization is able to stay committed to its desired areas of impact:

  • Women in poverty-stricken regions
  • Job opportunities
  • Education

Fashion companies that address extreme poverty understand that behind every fabric is a face, and behind every accessory is an opportunity for access to those who wouldn’t otherwise have it.

– Daniel Staesser

Photo: Flickr

Arguments for and Against the Overseas Private Investment CorporationSince the Trump administration has taken office, the International Affairs budget has come under attack. Among the many potential items to be cut, the Overseas Private Investment Corporation (OPIC) has been singled out by the administration as a particularly unnecessary agency.

As a result, a slew of arguments for and against the Overseas Private Investment Corporation have been published in recent months. This article is an attempt to provide clarity about the role of OPIC and suggest that its overall benefits outweigh its costs.

Established by President Nixon in 1971, OPIC provides loans and political risk insurance to private American companies seeking to invest in developing countries. Developmental financing was conceived as a complement to governmental aid insofar as it facilitated the transference of private capital to developing economies.

Critics of OPIC often argue that, as a public institution, the agency crowds out private banks that should, in theory, be more efficient financiers of international development.

The truth is that, although a robust private market for developmental finance exists, private capital oftentimes averts especially risky and poor countries due to the inevitably high premiums and interest rates.

OPIC, on the other hand, is in a unique position to support investments in these countries.

With the backing of the U.S. government, OPIC has been able to recover over 90 percent of its political risk claims. This fact has allowed the agency to offer affordable loans and political risk insurance in countries deemed too risky by private finance institutions.

Other critics of OPIC claim that it represents a form of “corporate welfare,” citing the fact that the agency gives loans to some of the largest U.S. firms, like J.P. Morgan, Citibank, and Wells Fargo.

Although all American firms are welcome to apply for financing, year after year, more than half of OPIC’s commitments go to small- and medium-sized businesses.

Even if one remains unconvinced about the benefits of OPIC, it is important to recognize that the agency imposes virtually no cost on the U.S. government. While OPIC does require federal backing to insure its $20 billion worth of outstanding loans, the agency has been self-sustaining for almost four decades. In fact, it has used its interest receipts to contribute nearly $4 billion to U.S. deficit reduction.

In the end, while there are many arguments for and against the Overseas Private Investment Corporation, the truth is that the agency has a net positive effect on American firms and developing economies alike.

Nathaniel Sher

Photo: Flickr

Husk Power Systems Fostering sustainability is at the forefront of the world development agenda. For a long time, corporations have taken part in facilitating sustainable development by engaging in corporate social responsibility (CSR) initiatives. The companies are, however, faced with an ocean of need when it comes to fulfilling their societal obligations and they often find that CSR cannot adequately rise up to meet these challenges.

Corporations have now realized that they can yield social, financial and strategic returns by investing in inclusive entrepreneurial ventures targeted at individuals at the base of the pyramid (BoP) in what is known as corporate impact venturing.

The largest problem that social entrepreneurs face is accessing adequate financing to enable them to develop and grow their businesses. Traditional financial models such as donations and grants often serve to stultify their development. Most start-ups also lack managerial and business expertise and adequate scalability.

Corporations, on the other hand, lack insight on low-income markets. They often have rigid and bureaucratic structures in place, expect high returns on investment and are generally risk-averse. These are all qualities that make it difficult for them to invest in BoP Markets.

Corporations and social entrepreneurs are quickly realizing that numerous benefits can be realized from working together.

When a corporation invests in a social business, it gains a foothold in low-income markets and increases its brand visibility with BoP individuals. In addition, it acquires valuable market insights and is able to gain access to top local talent. Inclusive businesses gain much-needed capital, scalability and business acumen required to firmly establish their enterprises.

A report by Endeva highlights the three different models that are currently being utilized by corporations engaged in corporate impact venturing: direct investments, third-party funds and self-managed funds.

Direct investments involve organizations funding inclusive businesses from primary accounts, with the investment amount being listed on the company’s annual balance sheet. Self-managed funds involve corporations setting up separate investment companies, while corporates that use the third party method for corporate impact venturing are limited partners in third party funds such as venture philanthropy funds.

This alliance of convenience is not only a win-win for both corporates and inclusive businesses. The biggest beneficiaries are the low-income earners to whom the products and services are geared.

Husk Power Systems is an innovative, inclusive business that was founded by Gyanesh Pandey, Manoj Sinha, Ratnesh Yadav and Charles Ransler in the Indian State of Bihar. The organization provides off-grid energy solutions for people living in rural areas in India and East Africa. They do this by designing, installing and operating small power plants that convert agricultural waste into electricity.

The venture has managed to install more than 80 mini-power plants which provide energy to over 200,000 people in 300 villages in India and 6 villages in Uganda and Tanzania.

The growth that Husk Power Systems has achieved since its inception has been fueled by its strategic partnership with the Shell Foundation. The foundation has provided the start-up with funding, recruitment supervision and research and development guidance.

The Shell Foundation was founded in 2000 by the multinational corporation Royal Dutch Shell as part of its sustainability strategy to deliver environmental and social impact.

“At a time when many companies report that they are stuck on their ascent to sustainability, engaging in venturing through impact investing is a powerful opportunity to achieve results of consequence for both business and society,” says Dr. Maximillian Martin, the founder of Impact Economy. “Companies can become profit-making shapers in a changing world—rendering their businesses future proof while delivering positive impact.”

– June Samo

Sources: Business Fights Poverty, HBR, Husk Power Systems, Impact Economy, Shell Foundation, The Guardian, The Practitioner Hub 1, The Practitioner Hub 2
Photo: Flickr