Sustainable Businesses & Human Capital: The New Aid Model?

Reuter's Africa Blog recently posted a story discussing what is labeled as a "new" aid model: a project in Ethiopia that pays young women to work. The pay is quite small, but women involved in this project actually do something of value, learn some skills, and earn enough to pay for a few things they desire (such as classes in night school).

The blog entry points out: "the whole point isn’t to hand out money for free: but to help women who would be on the street get a job, an education - and a future."

I readily admit that I'm dismayed that this seems like a new insight. Encouraging and supporting opportunities for people in the developing world to create sustainable businesses and strengthen their human capital should be at the heart of development efforts. This is the strategy Indego Africa adopts. Cooperative members are partners who co-create greater prosperity together with Indego staff and volunteers, and US consumers.

This is also the approach taken by the US African Development Foundation, a small US aid agency that focuses on supporting poor and marginalized communities in sub-Saharan Africa (SSA). Created in 1980, USADF provides relatively small-scale grants (no more than $25o,000) directly to Africans who are creating and running businesses or solving social problems in their countries. The agency focuses on "support[ing] African-designed and African-driven solutions that address grassroots economic and social problems." Here is a recent brochure describing the agency's mission, its priorities (which include increasing efficiency, working directly with local people in a participatory manner, tracking outcomes, and operating transparently), and the scope of its involvement in SSA.

In some interesting ways USADF's priorities mirror Indego's: empower local people by supporting the creation of financial and socially sustainable businesses. And while the USADF model is not new it surely is not the norm among official development agencies - but maybe it should be!

- Karol

The women in the photo are sorting coffee beans in Kigali -- I took this photo back in 2007.