"The glory of God is man fully alive, and the life of man is the vision of God." -St Irenaeus of Lyon

A Life Marked by Absolute Insanity

I’ll be honest. I’m a risk-taker. I like big crazy projects that seem to have global import. In that spirit, I decided to seek greater understanding of global poverty and international development through creative self-financing, a convenient change in US student loan policies for overseas institutions, a small grant through a private foundation, and a seemingly inane professional choice relative to completing my PhD. For me, helping engineers respond to global poverty required a deeper knowledge of why poverty persists in the world despite claims that the Industrial Revolution had potential to lead to progress for all. Yes, even Adam Smith pointed to the promises of industrialization when it comes to ending poverty. 250 years later, poverty seems more entrenched now than ever. Looking at places of “big promises” it doesn’t seem to matter where you start. The last big push to make poverty history came with the UN Millennial Declaration in 2000; but all forecasts say the goals are likely to remain unmet.

If I have learned anything about poverty in the last year, it is that poverty has more persistence than ever. Lots and lots (and lots and lots…) if people try to “do something” about poverty, but it seems that many blunders come from the well-intentioned. I never mean to fault the well-intentioned. But being well-intentioned still differs from being well-informed.

When an organization has been around a while, commentators can focus rather specifically on one stage of the project. Many people describing how the Grameen Bank works to alleviate poverty focus exclusively on Yunus’s model detailed in the first edition of Banker to the Poor. The Bank employs a very active learning cycle so various forms of financial services have been piloted and developed through Grameen Bank. Moreover, microfinance is a much wider category than the Grameen Bank. Microfinance could be regarded as “development’s silver bullet” in the 1990s with everyone pioneering different models simultaneously. Many people tried to replicate Yunus’s original Grameen model with some varying degrees of success; other more established corporate interests came in on the guise of “financial inclusion” for the poor and highly profitable banking services. The upside is that many mircofinance schemes have been explored and evaluated.

Today I came across a blog post advocating a collective investment model in microfinance. The idea would be to extend a loan to a group that had a business opportunity. Specifically, the following articulation of the plan in action caught my attention:

a person in the BOP forms a group of between ten to twenty people living below the poverty line. The group then goes through one week of training after applying for a loan from a microfinance institution or organization, starts a group investment and hopefully generates income.

It is truly a piece of innovative thinking. I cannot find any reference to the collective investment model in any of the journals I subscribe to. My collection is limited, so I turned to the library supporting my studies in development: collective investment appears nowhere. Google Scholar is temperamental with keywords so I started with “collective investment model” and found one reference in a law journal; scholastically “collective investment” blows up so I returned to a broader Google search to try to figure out where this idea comes from. While Wikipedia is surely not the best source, collective investment schemes have at least one clear history in developed countries where investors pool risk. I started digging around a bit because I cannot imagine how this model would be successful amongst the world’s poorest because the financial lives of the poor reflect incredibly dynamic and social arrangements. The idea of an financial institution enforcing a group repayment system without having some way of interacting at individual level just seems like an absolute nightmare.

Moreover, it is very easy to be looking for the Fortune at the Bottom of the Pyramid apart from some key observations by C.K. Prahalad. Prahalad notes that businesses can be profitably while trying to eradicate poverty, but he also notes that the poor consistently pay premiums on services higher than expected. The poor already use these services. If a business can improve access to the service and while making it cheaper than the existing ad hoc options, then a business likely as a viable shot.

So while I can appreciate the suggestion that a group of poor persons might benefit from some access to venture capital, I’m not sure it makes a lot of sense to start with a biogas facility. The Field Guide to Environmental Engineering for Development Workers has but one mention of biogas in a section on air quality:

Biogas emits less particulate matter and can be obtained from crop residues, manure, and even latrines. However, biogas systems are perceived as being more expensive to implement, and they require a level of coordination and technical experience that sometimes restricts them to larger projects (p 496).

Sustainable Wastewater Management in Developing Countries speaks reasonably highly of biogas systems while proposing that sanitation technologies get evaluated along 6 dimensions according to 10 guiding principles. The system articulated for wastewater processing of a hospital comes reasonably close to the population density of the slums, but this system does not use biogas generation.

Asking the poor to assume financial liability for a biogas facility just seems absurd, especially if the advocates for the Collective Investment Model want the poor to come up with the idea for a biogas facility. With considerable historic NGO practice, it might be a reasonable starting point to ask why the NGOs left the slum. I am not suggesting to leave the slum to its own devices, but it does make some reasonable sense to get the lay of the land.

To be completely clear, I think there is value in cooperative ownership and new models for technology. The poor often make their livelihoods, processing the waste in the rest of the world; expanding opportunities for scavengers might be completely fitting. As an engineer, I think considerable attention must be paid to the right design for the job. Within larger asset transfers to create new livelihoods for the poorest of the poor, I do not think people could go wrong in  talking with BRAC. Acknowledging that there might be economic possibilities for a viable business does not mean that things unfold as planned.


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