Pareto Efficient

In search of pareto improvements

Posts Tagged ‘entrepreneurial poor

My niche — Becoming a Social Entrepreneur

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My Niche

I will work with the entrepreneurial poor of Kampala and Gulu Uganda in ways that create sustainable returns whereby a portion of the value is realized immediately and the rest is played out in perpetuity.

Reasons:

  • Being an entrepreneur myself, I feel connected to them
  • Many Ugandans speak English, so communication isn’t as much of an issue
  • Despite some unrest in the north, Uganda has a gov’t/infrastructure that will support small business
  • Micro-finance institutions (banks for the poor) proliferate
  • I don’t want to help people break even; I want to help them break out, and these guys can do it!

My Approach

I split the poor into three (admittedly imperfect) groups so I could make sense of the situation.

  1. The ultra poor.  These people do not have enough to eat and they are not getting any help.
  2. The dependent poor.  These people work for someone else or are dependent on international aid of some kind.  They cannot subsist on their own and they often have one marketable skill or no skills at all.
  3. The entrepreneurial poor.  These people run their own businesses.  The break even, but are unable to  accumulate wealth on their own.

Then, I thought about the recurring incremental value of every additional dollar (at the margin).

  1. The ultra poor clearly need help.  A ton of money (not enough) is applied to this problem every year.  For example, the UN World Food Programme, alone, dispersed 4 million metric tons of food to 87.8 million people in 78 countries and spent $2.9 billion in 2006.  These people are far from self-sufficient and they will likely, continue requiring aid each year.  Sadly, the marginal dollar here has a long way to go before it begins throwing off recurring value.
  2. The dependent poor require new skills development and/or transportation to another local market where their existing skill can yield a higher return.  Or, they might just continue requiring aid each year.
  3. The entrepreneurial poor.  Many in this group could, with investment, expand their businesses, accumulate wealth, and become truly self-sufficient.  If self-sufficiency is achieved, then they will no longer require aid.

Now, what method will I use to efficiently deploy resources?

Written by thetyson

March 2, 2008 at 2:46 pm