Entrepreneurship in Different Worlds Dead-end jobs hardly help to get ahead
Issues for those living in and around poverty are complex but there is one constant and that is that everyone is always concerned about income and earnings. Being raised in, as well as working in poor communities in Mexico and the US, I can assure you people worry about two things 1) meeting basic needs, such as food, shelter, health, etc. and 2) getting ahead so that you don’t have to constantly worry about basic needs.
For those living in and around poverty getting a job doesn’t fill both buckets. The jobs people get are likely dead-end jobs as a laborer, dishwasher, security guard, etc. You are lucky if you get a cost of living increase. Often working two jobs, my mother and our friends did side jobs selling dresses or tamales to supplement the meager wages from their employers. Those side earnings were the dollars my mother saved so that I could go to college and allows families to pursue whatever goals they have.
In developing countries like Liberia, there are not enough jobs being created by government or corporations for even survival, so entrepreneurship becomes the primary avenue to get ahead or survive. The helping sector interested in closing the wealth gap needs to better understand that supporting entrepreneurship has to be a priority. Entrepreneurship is a self-help effort whether done individually or with partners. Such efforts are more likely to surface personal talents which are not recognized when you are washing dishes.
A Tale of Two Entrepreneurial Experiences
After teaching at Princeton in 2020 I had the privilege of serving on Princeton University’s Keller Center eLab Advisory Committee. Our committee included investment advisers and expert alumni who helped students develop small ventures of their choosing. One group of student entrepreneurs was designing a line of clothes targeting “angry” young people, while another group hoped to sell British crumpets to Americans. The students in the program received weekly advice and mentoring to develop their ventures, and they had a chance to pitch potential investors at Princeton’s annual Demo Day with an audience of over 200 investors and other interested parties.
In addition to accessing expert networks, Princeton has also set up an angel investment fund just for these nascent student entrepreneurs. As they gain experience there is also a broader investment system that can provide seed and staged capital, rather than loans, to start or grow businesses. These support systems exist because those in privileged social networks are viewed as potential innovators and job creators. They are considered societal assets that must be cultivated. Society provides them an encouraging, supportive eco-system that allows for innovation, mistakes and risk taking, all without jeopardizing their social status and future. Those in privileged social networks are seen as contributors to society, the “makers” of our economy.
On the other side, those entrepreneurs living in and around the poverty level are viewed as “takers” from society, and they face an environment that creates barriers to their entrepreneurship, discouraging yet thankfully, not extinguishing initiative. My mother, like the Princeton students, was an entrepreneur. She was a talented seamstress and dress designer. At night after a long day of working as a clerk, cooking dinner, and doing the nightly ironing, she would spread newspapers on the kitchen floor and, using my crayons, draw the pattern for the next dress she had taken an order to sew. She was good at this work and her dream was to start a dress shop selling her designs, much like the Princeton student’s ambitions.
My mother’s best friend, Camila, cooked the most wonderful tamales and other Mexican delicacies. She also had the skills and a customer base to expand her business and create jobs for the economy. But, unlike the Princeton students wanting to sell crumpets, she was not viewed as an asset to society. Without rich parents or the credibility of an elite social network, there was no systemic mechanism for either Camila or my mother to show their talents to potential investors and grow their talents. They (and countless others) end up cleaning houses or working as clerks instead of adding new jobs and creativity to our society. Those like my mother and Camila are wrongly assumed to be talentless charity cases, who are “takers” from society.
Informal economic efforts are not viewed as useful in developed countries. They are discouraged and the only financing mechanism is debt, generally micro-loans. Our Princeton committee discouraged our young entrepreneurs from utilizing debt to start or expand their ventures. Patient capital or equity is needed for any business to adjust to the marketplace and become competitive. That type of capital is not available to entrepreneurs like my mother or Camila.
The Community Independence Initiative, CII, has been testing equity-like investments in Liberia with amazing results as noted in previous postings and you can see some of those efforts on the Liberia Mutuality Platform. In the near future CII will be setting up a global ‘investment fund’ similar to what Princeton has set up for its students. It will be a part of the "Center for Peer-driven Change" that will be launched this summer.
For more information or to comment contact Marie Zernovoj at mariezernovoj@gmail.com
* This posting contains excerpts from an article "Investments for All"
Scaling Change Directly -Doubling the income of 200 families?
The most successful efforts don’t require the leadership of an NGO or the World Bank. Over 6 years ago the World Bank agreed that theKing Gray Fishing Communitynear Paynesville Liberia, would benefit from a refrigeration facility. They funded that project through a local NGO and a contractor who only finished the building and ran off with the funds for the power and refrigeration units. If the project had been completed the villagers would be able to store their daily catches and sell fresh fish at higher prices to restaurants, etc., which could more than double their earnings. Over the ensuing years, the villagers, still needing the facility, have contributed some of their earnings to finishing the building and infrastructure. Now they only need about $10,000 to purchase a 13 KVA generator and 3 large freezers. They have bids on the equipment and know how to get this done. They are done with outsiders running things.
Funders, however, are accustomed to only funding nonprofits, NGOs. Yet those of us in the ‘helping sector’ know that if we gave $10,000 to a nonprofit, which is a small grant, the funds would get eaten up almost immediately to pay staff and operations. But a direct grant to an entire village that already has its own trusted leadership structure, which already has skin-in-the-game, would almost immediately benefit 200 very low-income villagers. And by charging other fishing villages a fee to also store fish for resale the enterprise would benefit others and become self-supporting. We need to consider funding self-organized efforts. Funding directly is a better way and the nonprofits then become facilitators or field catalysts.