posted by Terrence Isert, December 6, 2016.
The US EDA awarded $15 million in entrepreneurship and innovation in 19 states throughout the US. Perhaps most notable is the concept that through these grants economic inclusion is not only fostered but considered essential to promote economic growth and more importantly, community stability and resilience to build foundations for future prosperity. Read more here.
Posted by Terrence Isert, April 16, 2015
The idea that poor people and their families can save anything meaningful seems as ludicrous as the assumption by Muhammed Yunus in 1976 (Price of Dream) that small amounts of credit could help build poor families start businesses in Bangladesh. Jeff Ashe and Kyla Neilan’s In Their Own Hands demonstrates both. In fact, the poor can do so effectively, on their own and with little to no outside help – a departure from the approach of the microfinance movement. When NGOs train participants and then “get out of their way” — these rural and urban groups perform best. Women and men in each group manage themselves and their money more effectively than constant NGO-interaction or supervision. The savings group movement enables not only the poor but the very poor to do what they could not do before: save first, then borrow from each other and continue the process over and over again without help from the outside.
Mr. Ashe’s chronicles his own personal journey from the Peace Corps volunteer forming solidarity groups in Guatemala to microfinance practitioner in Boston. He admits his own misgivings with the micro-lending movement (see this 2007 SSIR article here) and its microfinance institution-building efforts in the 1990s. He poignantly tells of his own sartorial discovery of these groups thriving in Nepal and his own efforts afterwards to launch them in some of the harshest climatic, economic and political environments across Africa and Latin America.
The novel is a compelling read for anyone interested in exploring a poverty-reduction model that is easily scalable, highly-efficient, low-cost to implement and teaches people and their communities to help themselves by putting the power of choice in their own hands.
Pathways for Sustainable Jobs and Enterprises
Posted on October 5, 2014 by Terrence Isert
What is needed to predict where and how youth will succeed in either a new job or enterprise?
How are markets and market opportunities identified? Do youth weigh the risks of each or use different criteria to make their decisions? Some recent research sheds some light on the importance of understanding the factors that can influence youth and ultimately impact their entrepreneurship choices. Factors include both external and internal considerations. Youth need social supports, accessible markets, and useful programs from institutions (schools, training, etc.). Some of the most important internal factors for youth highlight their needs, attitudes, personality traits and preferences. All of these factors form part of larger framework for youth to succeed in any job or enterprise they choose.
Cognitive and non-cognitive abilities are internal factors that play important roles in predicting youth success. Cognitive abilities or intelligence have been studied more frequently. They relate well to achievement levels in school, future wage earning, and a range of social behaviors. One study (Journal of Labor Economics, 2006) illustrated the significance of non-cognitive abilities and their impact on youth decision-making. Non-cognitive abilities such as personal preference and personality traits on economic and social behavior have been studied less. These abilities also have an important influence school, future earnings and employment. Traits such as charm, persistence, motivation for example are undeniably important factors that influence future success in attaining work or creating a business.
What could be considered by some to be out of youth’s sphere of control are conditions equally necessary for success at job and enterprise creation. An effective way to classify these is with the Capability Framework (Sen 1992, 1999) which identifies three categories: institutional, social and material conditions. Government policies for example create (institutional) support for new employment opportunities. Communities valuing youth savings groups and earning potential are just two examples of shifting social support to youth. Various life and skills training programs highlight how schools (institutional) can partner with communities (social) to provide new opportunities for youth. Families and households can also be a rich source of (material) resources, even moral support (material conditions) to promote youth businesses. NGO programs that mitigate obstacles to these external factors help youth succeed. Youth can then focus on developing good decision-making, confidence and other “soft” skills to increase their chances for success.
Goals and outcomes of entrepreneurship programs are directly influenced by choices as to “who and how” to target. Necessity entrepreneurship and opportunity entrepreneurship as defined by USAID speak to the end game of a typical youth enterprise development program. Which one is yours? The former has a goal of poverty alleviation. It promotes microenterprise and livelihood opportunities as a way for young people to gain revenue through an income-generating activity or microenterprise creation to escape from poverty. The latter makes the assumptions that youth are sufficiently motivated, that they have no constraints on their choices and that they already operate an enterprise. With sufficient skill sets and training, youth will be positioned to grow their existing businesses. It presupposes at some level that conditions are supportive and that any obstacles or constraints for economic growth can be overcome.
Why is this important? Some programs may confuse activities that support existing businesses with poverty alleviation and therefore attempt to move necessity entrepreneurs away from livelihood activities and into riskier endeavors. Conversely, business development may not provide poverty alleviation in a given community or region. However it may be a very effective strategy for helping a few youth expand their business or employment opportunities. Therefore, it’s essential to survey youth to gain a thorough understanding of their socio-economic profiles, their varied personal traits and preferences, and the context. Armed with these external and internal factors, supportive programming can be constructed around youth to meet their varied needs and guide them to successful development.
By Terrence Isert, January 8, 2014
What builds a successful ecosystem to support entrepreneurship development? The concept of focusing on enabling environments is a global concerns for development practitioners and complementary to efforts to support entrepreneurs individually or in groups. The Aspen Network of Development Entrepreneurs provides a diagnostic toolkit for development practitioners to assess entrepreneurial ecosystems. Access the complete toolkit here.
A recent report from the World Economic Forum also details similar contextual challenges and opportunities that entrepreneurs face to launch and sustaining their businesses. The importance of access to markets, human capital and financing constitute a trifecta of priorities for budding entrepreneurs. Find the report here.
After my recent research into community economic development in Atikokan and Siene River First Nations (Ontario) in September, my travels will take me to Ely, MN this month to discuss similar economic potential with business and community leaders. Like so many other rural communities, this small rural community on the doorstep of the Boundary Waters Canoe Area wilderness managed by the USFS is at a crossroads of an aging demographic and lower patronage rates to the park resulting in fewer tourism dollars. Sulfide mining presents an opportunity both in terms of jobs, increased local business growth and a future for youth so that they may stay in the area. . It is a chance for communities, similar to Atikokan to survive. A central question that I will continue to explore in future posts is whether extractive industries are the only option for a community’s survival, particularly for the retention of its youth or other options available such as expanding environmental tourism or a blend of both? Check out a couple rural perspectives in these links here in Ely and MN
And elsewhere.
Posted on August 26, 2013 by Terrence Isert
As the summer hiatus is winding down here in North America, I finished up some business and vacation travels that took me from the Midwest through parts of southern Ontario and Quebec into New England. What strikes me most when I pass through some of these small communities is their proximity to nearby tourist destinations and how little some have appeared to benefit economically from this. I wondered what sustainable community development from an economic perspective looks like if towns don’t benefit from these typically large “revenue-generators”. Where is the intersection of tourism and sustainable community development located and what does this symbiotic relationship look like? There are several perspectives and resources accessible here that can provide some intellectual momentum for finding these complex solutions.
Posted on June 10, 2013 by Terrence Isert
Does rural economic growth differ depending on where you are or are the principles applicable everywhere? Last week I trotted up to Ontario to visit our neighbors to the north and begin an informal survey of some local communities in southern Ontario that include nearby First Nation communities. Does rural development, economically-speaking look the same as it does States-side? What constitutes sound, sustainable rural development for a community such as Atikokan for example? Is it different for this tiny rural town, nestled in the rugged, timber-covered lands on the northern boundary of Quetico Provincial Park in southern Ontario than one of its First Nation neighbors such as Seine River? Are they both dependent upon the tourism industry to bring visitors and their purchasing power or is the key to economic development the extraction of precious metal mineral resources such as gold deposits identified just 23 km north of Atikokan in 2009? Or does it come from Canadian provincial government intervention programs such as RED (LINK) to create entrepreneurship via local partnerships in technology, social enterprise and cultural? Is there a happy medium? What avenues exist for geographically-isolated First Nation communities such as Seine River with limited local assets such as a health center, education facility and a community center? This survey will look to tease out key factors in the coming months that these local communities can leverage to revitalize and strengthen their local human capital to link to regional and national economic growth and ultimately answer the question of what works best in rural economic development for these isolated communities?
Posted on April 26, 2013 by Terrence Isert
I sat in on a webinar, Creating Green Jobs for Low-Income Individuals in late March on green job creation at the base of the pyramid (hosted by Jason Friedman, Friedman & Associates) and I was pleasantly surprised. I am a public skeptic (and a closet-optimist!) when it comes to green enterprises and green economy which seems to need subsidies and lots of public goodwill to make a go of it in today’s competitive business world. Green enterprises are nice to talk about but will they ever be profitable and achieve a dent on local economies or create local wealth for communities? Cue two community development non-profits, on opposite coasts of the US that are profitable, create local jobs, serve a substantial client base, and reverse environmental degradation. Too good to be true? Terry McDonald, Executive Director, of the St. Vincent de Paul Society (SVDP) in Lane County, Oregon (near Eugene) doesn’t think so. And he should know because SVDP serves 84,000 clients yearly and hosts no-less than 3 profitable green businesses. One of SVDP’s businesses, a recycled glass company, Aurora Glass realized approximately $1 million US in total yearly sales and employs 25 staff. On the opposite coast, Greater Bridgeport Community Enterprises, Inc. (GBCE) works to create profitable green enterprises in the local communities of Bridgeport, CT. Adrienne Farrar Houëll, Executive Director explains that GBCE launched The Green Team, an environmentally-friendly construction company and Park Green, a mattress reclamation and recycling company less than a year ago. Although in relative infancy, the two green enterprises have already created a total of 33 new jobs in the green sector. GBCE intends to build upon these accomplishments with the goal of creating 100 new jobs in 2-3 new green profitable businesses over the next 4 or 5 years. My skepticism for sustainable green enterprises continues to erode as I watch them grow!
Posted on April 17, 2013 by Terrence Isert
In an effort to increase financial inclusion under a 2005 federal law, the FDIC is attempting to bring more of those excluded or under-included back into the formal banking financial system in the US. A 2011 survey published last fall by the FDIC and US Census Bureau found that unbanked households in the US rose slightly by 821,000 over a two-year period. In fact, the survey found that nearly 1 in 4 of all households in the US were found to be unbanked or under-banked, defined as anyone in a household who doesn’t have access to some type of bank account or any accounts at all. Many turn instead to non-mainstream options such as payday lenders or non-bank money-orders to meet their financial services needs. In the US, minorities are disproportionately excluded with as many half of minority households reported to be unbanked. Financial inclusion is not new or limited to the US. The estimates may vary worldwide, however as recently as 2012 the World Bank calculated that 2.5 billion adults remained unbanked or underserved although defined more broadly as “no access to any formal financial services, products or institutions”. With the linkages between access to financial services and poverty, even a savings account provides a route to economic stability for many poor households and a potential path out of poverty.
Posted on April 8, 2013 by Terrence Isert
An interesting change to food aid to be proposed by the Obama Administration in its 2014 budget involves a restructuring of a 60-year practice in food aid for developing countries. Instead of distributing food from the US, the change would permit food to be purchased locally or provide grants directly to charitable agencies for their humanitarian programs. An interesting debate that has been brewing around this issue for many years centers on US-agriculture global competitiveness versus the crowding out of local farmers. It is no doubt that food aid is a big business and that food is desperately needed. In 2012, the USDA alone estimated that its food aid programs would benefit approximately 9.7 million people worldwide. From 2006-10, the US shipped an average of 2.7 million metric tons of food at an average cost of $2.4 billion/fiscal year, largely (73%) to respond to emergency and relief needs. The GAO issued findings on food aid effectiveness in a 2011 report that stated food aid cost the US government an additional $219 million over a 3 year period (2007- 2010). This was due in part to inefficient monetization, the term used to describe how aid agencies sell US food commodities overseas to get funding for their programs. The GAO study recommended closer market price monitoring by USAID and USDA and reducing maritime shipping costs (a third of overall food aid costs) by increasing competition to reduce this loss. What will be interesting to watch as this debate unfolds is whether the US government, private sector, and the humanitarian community can reform food aid in a meaningful way to more effectively address poverty and other root causes to world hunger. Watch this space for more news.