Date of talk or publication:
2005

Organization:
Shell Foundation

Description:
With the world's poorest countries set to fall woefully short of attaining the 2015 United Nations Millennium Development Goals (MDGs), there is an urgent need to empower entrepreneurs in poor countries to create jobs and generate tax receipts required to make poverty history.

Responding to the challenge, the Shell Foundation publishes its second major report of 2005 entitled: Aid Reform and the Role of Enterprise which shows how the aid industry can finally put poor country entrepreneurs at the centre of the fight against poverty.

The report's author and Shell Foundation director, Kurt Hoffman, says: "Poverty is about a lack of money. With a job and a stable income, the poor can access shelter, education and healthcare. Small enterprise is the vehicle to make this happen, but I'm not sure the aid industry alone can spur the creation of a responsible and flourishing private sector because setting up and running a business is not something aid professionals know much about."

Therefore the Shell Foundation makes the case for reforming the aid industry by applying fundamental business principles to enhance its performance and accountability. It calls on the aid community to give poor people real choice when delivering development, which in turn can be measured against tangible targets such as the number of pro-poor enterprises supported and jobs created.

Kurt Hoffman adds: "No one is saying the aid community can do this alone - nor should they. The private sector - particularly big business - is a massive yet untapped reservoir of enterprise expertise that can easily be applied to poverty eradication. But the aid community has to want to change and improve its performance. This begs the central question of what we as donors and taxpayers expect in return for our social investment?"

The new report has been welcomed by leading names in business and development economics including Alan Patricof, former World Bank economist William Easterly, and Professor William Duggan, an expert in strategic innovation at Colombia Business School.

Alan Patricof, co-founder of leading private equity company Apax Partners and a firm advocate of enterprise solutions to poverty, says: "The aid industry needs a cultural shift in thinking because what they've done to meet the needs of entrepreneurs just hasn't worked as effectively as it might. I don't think perpetuating what's gone on until now serves the market adequately. They would be well served to rethink what they want to achieve."

And commenting on the need for aid industry reform, William Easterly author of the best selling book The Elusive Quest for Growth, says: "The Shell Foundation has asked the important questions in a year when billions more in aid has been pledged. Delivering the Millennium Development Goals will hinge on the aid industry being willing and able to think and act more like a business if it is serious about meeting the needs of the poor across health, education and safe water."

Meanwhile, Professor William Duggan, who spent 20 years working in the aid industry before leaving to study private sector innovation, says: "By comparing the humble plight of an entrepreneur to the workings of the multi-billion aid industry, the Shell Foundation has brought home the yawning gap that exists between the two. The aid industry reforms required to close this gap are as important, if not more so, than the money itself."