Abstract
The book entitled Fighting Poverty Together is an interesting attempt to compile several ideas related to poverty reduction in one place. In this book author Aneel Karnani presents various arguments showing that the fortune is not as much at the bottom of pyramid (BOP) as it has been claimed by several authors, the most notable being C.K. Prahalad. The book is easy to read and written in a very lucid manner. The book is likely to be of interest to a wider audience but has a special appeal for the practitioners who are engaged with the BOP directly and are engaged in formulation of the poverty reduction strategies at multiple levels. The most meaningful reach of the book should happen if it reaches the team of members from diverse fields like private corporations, funding agencies and civil society. The book has the potential to become a direct reference for poverty reduction strategy makers. The book has direct utility for corporations and consultants who are working towards business models for emerging markets. Though the book highlights the limitations of the neo-classical economic framework and neo-liberal geopolitics, yet it cannot be called a critique of the neo-classical framework and neo-liberal governmentality. The main point which the book lacks is its theoretical framework. It expects readers to be theoretically neutral or at best with the neo-liberal framework.
The author has been able to present strong and sustentative arguments for a decentralized poverty reduction strategy. In that way it justifies the subtitle of the book—Rethinking Strategies for Business, Governments, and Civil Society to Reduce Poverty. Rethinking is required as conventional global models of poverty reduction—foreign aid, adaptation of strategies followed in the developed countries for the developing and underdeveloped regions, etc., have not been able to work so far.
The book is divided into two parts. The first part deals with the failure of the libertarian approach. The second part proposes effective strategies.
The book has nine chapters. Chapter 1 entitled ‘Fighting Poverty’ is an introduction to the book. In this chapter the author has been able to establish the point very clearly that though poverty is a complex problem, it is not insolvable. The effective strategy for poverty lies in creating employment opportunities and providing access to public services. Furthermore, the vulnerable consumers need to be protected and products and services need to be made available at affordable prices. We need to deemphasize the role of microcredit and the base of the pyramid approach.
In Chapter 2 entitled ‘Microcredit Misses its Mark’, issues related to microcredit have been discussed. Here, the chapter presents very well the argument that empirical studies do not indicate substantive evidence for the positive economic impact of the microcredit. At its very best, microcredit has been able to deliver social objectives like increase in self–esteem, etc. The chapter also highlights the exploitative aspect of microcredit. The author presents good logic against the premise that many of us can be treated as micro-entrepreneurs.
Chapter 3 entitled ‘Mirage at the Base of the Pyramid’ seems to be a modified version of the author’s article ‘The Mirage of Marketing to the Bottom of the Pyramid’ previously published in the California Management Review. In this chapter, the author argues that the private sector can help alleviate poverty by focusing on the poor as producers. The author vehemently argues that there is no fortune to be made by selling to the poor.
Chapter 4 entitled ‘Romanticizing the Poor’ is about relooking at understanding the poor. The issue of poverty requires deeper understanding and is arguably very complex. Behavioural angles like poverty and alcohol are brought out in this chapter. The poor as ‘value-conscious consumer’ perspective is challenged here; and arguments regarding emphasis on legal, regulatory and social mechanisms are well presented. The vulnerability of the consumers is highlighted. The author argues that the libertarian approach has grossly underemphasized the critical role and responsibility of the state. The limitations of the libertarian approach are well highlighted by the author in the following words: ‘The support for the libertarian approach is intellectually problematic; its implications are morally problematic’.
Part II of the book starts with the framework of fighting poverty. It has been well captured in a well conceptualized matrix. The matrix presents the poor as producers and consumers, and their interaction with business, government and civil society. This matrix seems to be the core of this book. The matrix is well connected with Chapters 6–8 and enhances the readability and impact of the book. This matrix presentation has a great potential to establish a connection with policy makers looking for a managerial framework.
Chapter 5 entitled ‘Selling Beneficial Goods to the Poor’, is related to the 4 Cs of marketing to the poor, namely, cell phones—beneficial for the poor and profitable, cigarettes—harmful for the poor but profitable for companies, condoms—beneficial for the poor but not profitable, and colas—harmful for the poor as well as not profitable. In order to establish these points, the author has taken help of three case studies. The selected case studies are about Essilor and vision correction, Proctor & Gamble and clean drinking water, and Grameen Danone Foods and child nutrition. Then these case studies are related with the traps which are associated with designing a business model to profitably sell to the poor. These traps are refered to as the cost of capital trap, the unmet needs trap, the affordability trap, the adaptability trap, the distribution trap and the multiple objectives trap. The chapter ends with two examples of profitable business ventures for the poor: mobile phones and Nirma, which have been well covered in the previous literature. The author has been able to integrate these two cases very well with his arguments.
In Chapter 6 entitled ‘Employment is the Solution’, arguments for three major thrusts are presented. In poor countries increasing employment requires the generation of new jobs, increasing the employment of workers and making the labour markets more efficient. This requires a broad range of public policies and private strategies. Here arguments from macro-economic data analysis are presented. The chapter has highlighted cases like Technoserve from Africa and the Employment Generation and Marketing Mission (EGMM) from India to demonstrate how social value has been created through employment generation. Technoserve is a case on rejuvenating the cashew nut industry in Mozambique, and its impact on the employment. EGMM is about the human resource development initiative by the Andhra Government keeping in mind the employability of the population.
In Chapter 7 entitled ‘Government Intervention’, the author starts with setting up the context of three types of organizations: for-profit businesses, public organizations and not-for-profit organizations. The chapter uses the economic framework and defines consumer surplus as output minus revenues, profits or producer surplus as revenues minus input costs and social value as consumer surplus plus producer surplus. Illustration of the basics is done through a diagram, wherein it is shown that in case of public organizations and not-for-profit organizations, revenue may not exceed the cost, and instead of producer surplus economic loss is generated which has to be compensated by taxes or philanthropy. But the fact that consumer surplus has been created justifies that they all are engaged in social value creation. The extent of social value is equal in all case, however, in case of public organizations and not-for-profit organizations, creation of consumer surplus is higher in comparison with for-profit business. This social value creation is the focus of the chapter. The chapter emphasizes the role of governance and cites the initiatives taken by the government of Singapore such as public libraries and public recreation facilities, and role of the government of Delhi in building Delhi Metro system. The chapter argues that by ensuring effective governance, making sensitive and proper strategic choices, bringing accountability, and organizational effectiveness, poverty reduction strategies can be made more effective wherein the integration of financial resources is required.
In Chapter 8 entitled ‘Civil Society’, it is argued how civil society organizations have been effective in various programmes. The chapter starts with a very handy matrix wherein characteristics of ‘for-profit’, ‘public’ and ‘not-for-profit’ sectors are compared on the dimensions of mechanism to ensure creation of social value, products/services allocation driver, fund provisioning, governance mechanism and ability to scale-up. The key argument is that in several ways civil society can be integrated in the poverty reduction efforts. In order to enhance governance civil society can be used for auditing various interventions like the National Rural Employment Guarantee Scheme (NREGS). The chapter highlights the role of social entrepreneurship. Arguments are well built with the help of examples like VisionSpring. Chapter 9 entitled ‘Rage Leading to Action’, comes as more of a guideline than as a chapter itself. This has clear action imperatives.
The book has come in the post-recession period and been able to well justify the role of the government in the poverty reduction. There are three key players namely business, governments and civil society whose roles are well defined in the book. Governments have to act as anchor, businesses have to be the main actor or protagonist and civil society has to play to the role of catalyst. Overall, the book has been successful in presenting the facts with sensitivity towards the vulnerable, and seemingly offers a win–win situation for all the stakeholders.