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Thursday, 11 October 2007

Spending $2 a day, Revisted..

A previous blog Spending $2 a day, discussed how the poor still retain some choice over the little they have, and in some cases spend it on luxurious items. Little was said on the implications for policy, although a later blog Fighting poverty...Ugandan way touched on this issue. Well, Aneel Karnani's recent paper - Employment, not Microcredit, is the Solution touches on this:

The business guru CK Prahalad has said “if people have no sewage and drinking water, should we also deny them televisions and cell phones?” Writing about the slums of Mumbai, he argues that the poor accept that access to running water is not a “realistic option” and therefore spend their income on things that they can get now that improve the quality of their lives. This opens up a market, and he urges private companies to make significant profits by selling to the ‘bottom of the pyramid’ (BOP).

The real issue which the BOP proposition glosses over is: why do the poor accept that access to running water is not a realistic option? Even if they do, why should we all accept this bleak view? Instead, we should emphasize the failure of government and attempt to correct it. Giving a ‘voice’ to the poor is a central aspect of the development process. That is what the civil society, for example Oxfam, is attempting to do.

In many developing countries, an autocratic government has denied a voice to the poor. Even in developing countries with a representative democracy, the political process has been hijacked by various vested interests. The business community, bureaucrats, politicians and the media are full of self congratulations on the booming private sector – for example, on the increased penetration of cell phones. However, the representative image of a developing country is not a cell phone, but rather defecating in public. For example, in Mumbai, the business capital of India, about 50% of the people defecate outside. There is no magic solution, but the starting point is passion and anger at the failure of the state to provide these basic services
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