NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Editor’s Note: This is the first part of a reflection developed jointly by Pablo Sánchez and Fernando Casado Cañeque, Academic Director of the Base of the Pyramid Laboratory in Spain. It originally appeared in NextBillion Español here.

It is interesting to note how much the development cooperation sector has evolved in recent years and the role that has been given to the communities that seek help. On the one hand, the Paris Declaration on Aid Effectiveness increasingly promotes the consistency of donors and the Millennium Development Goals has an increasing tendency towards a series of common objectives and indicators. On the other hand, low-income communities have also changed significantly.

They were first simply called the poor. But in a short time they have transitioned from passive beneficiaries, to potential consumers or producers, until finally – in recent studies and projects – as strategic partners. However, it is pertinent to consider whether or not they really are being integrated with the innovative potential that can provide proposed solutions.

In this sense there exist two premises that have drastically transformed social development and relationships between communities and organizations, impacting development cooperation programs as much as the generation of inclusive businesses.

On one hand, you cannot eradicate poverty without generating wealth. This fact, apparently obvious, has been the cause of endless debates about the design of appropriate cooperation policies and the roles that sectors should adopt. From Friedman to Keynes, the appropriate model of “the state” versus “the market” has been one of the constants in international debates and duels between neoliberal and progressive economists. However, it is a debate that has been largely obsolete given the complexity and mainstreaming of current global challenges, and it is evident that no one sector alone could provide innovative solutions for the eradication of global poverty. Therefore, the only thing that can eradicate poverty in a sustainable way is working together through strategic alliances between strong private sectors that encourage innovation and generate opportunities, a cohesive public sector that defines the rules of the game and the framework for legal proceedings, and an attentive associative sector, ensuring that all sectors fulfill their assumed responsibilities.

Looking around, today we find a much more complex reality in the inter-sectoral context. Nowadays, it isn’t unusual to find businesses that act as NGOs, private banks that give donations and development banks that establish interest rates above market prices, NGOs that implement projects generating profits and remain profitable, public entities that provide donations to large businesses to eradicate poverty or academic centers that happen to be knowledge generators for business incubators. One wonders if the sectors are overlapping one another or if they have simply become obsolete.

And precisely one of the conclusions of this first premise is that creating innovative, organized structures that respond to the largest challenges we face are increasingly more inclined toward hybrid organizations that integrate a generation of economic benefits with a generation of social and environmental value.

On the other hand, a second premise is related to the actual role that the low-income communities have in the process of generating solutions oriented toward resolving poverty. If it finally seems that they have arrived to recognize the potential of these communities as strategic partners in inclusive business models and cooperation projects, they must now start to consider it essential that they are in the processes of innovation and generating new solutions for development.

In short, it is these communities that are exposed to poverty daily, that suffer each day in their environment and see how limited their possibilities of development are, and that therefore are best able to provide creative and innovative solutions for poverty eradication.