Randall Kempner :
When the dust settles on the sustainable development goals, and the world knows exactly what targets will determine climate and development policy for the next 15 years, the hard work of actually implementing them will be left to individual governments.
As a result, there has been a lot of talk about how local governments can use the SDGs, but when contexts vary significantly from one country to the other, and even within countries, the idea of “localising” the SDGs can seem daunting.
This is where the power of small and growing businesses (SGBs) (distinct from small and medium-size enterprises) comes in. The entrepreneurs who start these firms are already part of their local communities and are invested in the prosperity of those communities. Often these businesses are distributing products and services – clean cook stoves, solar lanterns, private education – that directly serve poor people and they have a clear stake in making sure their communities thrive and become less dependent on aid.
We know that in low-income countries 78% of the formal workforce is employed through small firms. As these businesses grow, they provide better-quality jobs. While the majority will stay small, the ones that do grow can have an exponential impact on job-creation, which means steadier incomes and better access to critical goods and services for their communities. These enterprises have a ripple effect on local economies as payments go out to suppliers, distributors see more income, and local governments can gain more tax revenue. It is estimated that every $1 invested in SGBs generates $13 in the local economy.
One example is Cajour Espoir in Togo, the country’s first cashew processor. West Africa produces the majority of raw cashews in the world, but exports 95% of them to be processed outside of the region. So in 2004 two Togolese entrepreneurs saw an opportunity to develop local processing capacity, and to create jobs in an area with high unemployment, and where the majority of people were living on less than $1 a day. Since 2004, Cajou Espoir has gone from fewer than 30 employees to more than 500.
But the impact on the community hasn’t stopped at job-creation. It has given women more options to earn a better, stable income. In turn, they have been able to move from mud huts to brick homes and send their children to school. Teachers have reported better attendance by young girls, who can reap the rewards of education.
This is just one example. Other entrepreneurs are working to improve people’s lives through innovations in the provision of eye health, or even providing proper sanitary pads for girls. Entrepreneurs are not limited to one market. They can address challenges in health, education, housing, energy, and more. What they have in common is that they are local people working to change their lives and the lives of people around them. They understand the context better than any outsider ever could. They see themselves as part of the solution, and they are best-positioned to make sure that the communities buy into these solutions.
We’re not suggesting that private enterprise alone will end poverty. Poverty is dynamic and complex, and fighting it requires coordination. Governments have an important role, as do multinational corporations, foundations and civil society. But there is this important group of people who to a large extent have been overlooked: the SGBs.
Employment is one of the most sustainable routes out of poverty and the United Nations and the development community can do much more to cultivate an environment for job-creation. As the financing for development discussions progress, local business leaders need to be invited to sit confidently at the negotiating table, for they are a key component in any job-creation strategy. As well as give them a place at the table, governments need to learn the language of business. In this, examples like that of the government of Tanzania are heartening.
Tanzania has recently partnered with the World Bank to train 20 engineers, lawyers, and financial analysts from the ministry of energy and minerals on the art of negotiation – skills that will ensure local governments structure agreements with partners that work in their national interest.
For too long many countries have lacked the skills or expertise to engage with private enterprise – be it large corporations or small and growing businesses.
The sustainable development goals need local solutions to be sustainable. The entrepreneurs and teams that drive SGBs are a key part of ensuring local solutions to local problems that will reap rewards for generations to come.
When the dust settles on the sustainable development goals, and the world knows exactly what targets will determine climate and development policy for the next 15 years, the hard work of actually implementing them will be left to individual governments.
As a result, there has been a lot of talk about how local governments can use the SDGs, but when contexts vary significantly from one country to the other, and even within countries, the idea of “localising” the SDGs can seem daunting.
This is where the power of small and growing businesses (SGBs) (distinct from small and medium-size enterprises) comes in. The entrepreneurs who start these firms are already part of their local communities and are invested in the prosperity of those communities. Often these businesses are distributing products and services – clean cook stoves, solar lanterns, private education – that directly serve poor people and they have a clear stake in making sure their communities thrive and become less dependent on aid.
We know that in low-income countries 78% of the formal workforce is employed through small firms. As these businesses grow, they provide better-quality jobs. While the majority will stay small, the ones that do grow can have an exponential impact on job-creation, which means steadier incomes and better access to critical goods and services for their communities. These enterprises have a ripple effect on local economies as payments go out to suppliers, distributors see more income, and local governments can gain more tax revenue. It is estimated that every $1 invested in SGBs generates $13 in the local economy.
One example is Cajour Espoir in Togo, the country’s first cashew processor. West Africa produces the majority of raw cashews in the world, but exports 95% of them to be processed outside of the region. So in 2004 two Togolese entrepreneurs saw an opportunity to develop local processing capacity, and to create jobs in an area with high unemployment, and where the majority of people were living on less than $1 a day. Since 2004, Cajou Espoir has gone from fewer than 30 employees to more than 500.
But the impact on the community hasn’t stopped at job-creation. It has given women more options to earn a better, stable income. In turn, they have been able to move from mud huts to brick homes and send their children to school. Teachers have reported better attendance by young girls, who can reap the rewards of education.
This is just one example. Other entrepreneurs are working to improve people’s lives through innovations in the provision of eye health, or even providing proper sanitary pads for girls. Entrepreneurs are not limited to one market. They can address challenges in health, education, housing, energy, and more. What they have in common is that they are local people working to change their lives and the lives of people around them. They understand the context better than any outsider ever could. They see themselves as part of the solution, and they are best-positioned to make sure that the communities buy into these solutions.
We’re not suggesting that private enterprise alone will end poverty. Poverty is dynamic and complex, and fighting it requires coordination. Governments have an important role, as do multinational corporations, foundations and civil society. But there is this important group of people who to a large extent have been overlooked: the SGBs.
Employment is one of the most sustainable routes out of poverty and the United Nations and the development community can do much more to cultivate an environment for job-creation. As the financing for development discussions progress, local business leaders need to be invited to sit confidently at the negotiating table, for they are a key component in any job-creation strategy. As well as give them a place at the table, governments need to learn the language of business. In this, examples like that of the government of Tanzania are heartening.
Tanzania has recently partnered with the World Bank to train 20 engineers, lawyers, and financial analysts from the ministry of energy and minerals on the art of negotiation – skills that will ensure local governments structure agreements with partners that work in their national interest.
For too long many countries have lacked the skills or expertise to engage with private enterprise – be it large corporations or small and growing businesses.
The sustainable development goals need local solutions to be sustainable. The entrepreneurs and teams that drive SGBs are a key part of ensuring local solutions to local problems that will reap rewards for generations to come.
(Randall Kempner is executive director of Aspen Network of Development Entrepreneurs.)
