Economic empowerment is critical for poor people's wellbeing. Freedom from hunger, adequate income, and security of material assets are central issues in poor people's lives. Even in natural disasters such as floods and earthquakes, poor people often refuse at peril of their lives to leave their meager assets, knowing that lost assets mean a slow but just as certain death. In Gujarat, India, work by the Self-Employed Women's Association is demonstrating that post-earthquake rehabilitation efforts that focus on physical reconstruction without simultaneously focusing on livelihoods do not address poor people's central concerns, and result in long-term destitution.
Poverty and vulnerability will not be reduced without broad-based growth fueled by private sector activity. Economic growth cannot be sustained if poor women and men, who may be 50 percent or more of a country's population, are excluded from optimal engagement in productive activities. Involvement of such large numbers of poor people in more productive livelihoods can only happen when a country's overall domestic investment climate fosters entrepreneurship, job creation, competition, and security of property or benefit rights. This is not enough, however. While the overall business climate for investment is important, micro and small enterprises face constraints and exclusion that are not automatically corrected by improvements in the macro investment climate. Hence the need for "liberalization from below." Poor people are often excluded from equal access to economic opportunity because of regulations, because they lack information, connections, skills, credit, and organization, and because of discrimination. Empowerment strategies can help overcome many of these barriers that prevent poor people's entry into new markets and limit their productivity despite their unremitting hard labor.
Understanding the business investment climate for farmers, microentrepreneurs, and small and medium businesses-as well as for large firms-is critical to inform policy change that supports economic development and increases productivity, security, and empowerment. Governments can accelerate the development of markets for financial and nonfinancial services appropriate for poor women and men by promoting innovation in products and delivery mechanisms, and by building institutional capacity. A market-oriented approach to these services is critical to avoid unsustainable and ineffective public programs. A key component is carefully structured and time-bound subsidies within an overall approach incorporating market features, product innovation, and wide dissemination of institutional innovations.
This section highlights the application of the four empowerment elements to support poor women's and men's entrepreneurship through (a) business development services for micro, small, and medium enterprises, (b) financial services, and (c) microinsurance and housing loans. The use of different empowerment elements across these three activities is highlighted in the table below. Tools and Practices 11 (see Empowerment Resources) highlights innovations that support microentrepreneurs, while Tools and Practices 12 highlights innovations in provision of financial services to the poor. Local and international NGOs and international agencies have played important roles in supporting innovations by subsidizing research and development, experimentation, and investment in organizational development. However, in almost all cases, achieving financial viability was central in the experimentation.
Pro-Poor Market Development —
Examples Classified by Major Empowerment Element
One-stop shops, Bali, Indonesia
Metalworkers' and hammock makers' networks, Honduras
|E-commerce: Novica.com, PeopLink.org||Urban Property Rights Project, Peru|
Rice millers' association, Cambodia
Self-help groups, credit ratings, Andhra Pradesh, India
|SEWA microinsurance, India|
Smart cards, Swaziland and India
|New MFIs, Bolivia and Kosovo||SPARC guarantee loan, India|
ATM banking, South Africa