Out of Poverty: What works when traditional approaches fail
by Paul Polak
Polak, a psychiatrist by training, shifted his full-time efforts to working on poverty over 25 years ago. He founded International Development Enterprise to focus on helping small, developing country farmers earn more income. IDE has already helped millions of very small farmers earn their way out of extreme poverty in countries including Bangladesh, Cambodia, Ethiopia, India, Myanmar, Nepal, Vietname, Zambia and Zimbabwe.
While this isn’t the best written book (the content could have been delivered in less than half the pages), the content is worth hearing. Polak recounts many stories of individual farmers, their challenges, their failures and their triumphs. The net is you’ll understand some better facts about smallholder farmers and what practical ideas will help them step out of poverty.
Getting the facts right
Here’s the tone of the book quoting from the preface: “I hate books about poverty that make you feel guilty, as well as dry, academic ones that put you to sleep. Working to alleviate poverty is a lively, exciting field capable of generating new hope and inspiration, not feelings of gloom and doom. Learning the truth about poverty generates disruptive innovations capable of enriching the lives of rich people even more than those of poor people.” Polak believes that we (in the West) are misinformed about why the rural poor stay poor and why most of our efforts don’t help them.
Polak’s Three Great Poverty Eradication Myths:
- We can donate people out of poverty. Polak provides many examples of how well meaning donors have continued to invest billions of dollars in places like Sub-Saharan African with zero net impact on poverty over the past decades. He notes, “more people are beginning to realize that making it possible for very poor people to invest their own time and money in attractive, affordable opportunities to increase their income is the only realistic path out of poverty for most of them.” Needless to say, he is not impressed with Jeff Sachs “more of the same” approach to bigger and bigger donations … especially through governments.
- National economic growth will end poverty. Most of the GDP growth in developing countries is happening in the urban environments and it is concentrated amongst a small sliver of even those urbanites. He notes that growth is a requirement, just not sufficient by itself.
- Big business will end poverty. From his experience, he disagrees with folks like C.K. Prahalad (The Fortune at the Bottom of the Pyramid), that many large businesses will end up serving the poor. Most of them just can’t adjust to the ultra high-volume, low-margin approach required to serve these customers.
Poor people are poor because they don’t have enough money
Kind of obvious … it’s what the poor tell you when you ask them … but Polak argues that the “poverty experts” have much more complicated answers which is why they are so often distracted from actually helping the poor become not poor. Poverty experts argue that the poor are poor because (a) they don’t have power; (b) they are uneducated; (c) they get sick/disease too often; (d) they need clean water; (e) they need better seeds/fertilizer (or no fertilizer); etc. etc. etc. and the granddaddy of all … they need ALL of these things before they can have any hope of moving out of poverty. Polak argues that “finding a practical solution requires a different strategy … finding the simplest single ‘lever’ capable of producing the biggest positive result.” The answer is – increasing income.
#1 Way for Small Farmers to Earn More Money
Polak believes that growing high-value vegetables, fruits and herbs as a cash crop during the dry season using drip irrigation is the #1 opportunity for small one-acre farmers (and even “landless” people) to earn upwards of $500/year which is enough to start them on the positive cycle towards getting out of < $1/day poverty. IDE has focused R&D on building a drip and sprinkler irrigation products affordable and sturdy enough for these farmers. Combining this with their affordable treadle pumps and a few other inventions to assist with water movement and storage, provides a scalable, practical solution.
Here are some additional highlights that I gleaned from this book:
- 800 million people live on developing country small farms. Vast majority of these $1/day people have one-acre farms with poor soil and no irrigation. Their main crops are rice, wheat and corn and they usually can’t produce enough to feed themselves. If they have access crops left over when they sell it in the market, these crops rarely generate more than $200/acre which isn’t sufficient to move them out of poverty. Hence, they are stuck indefinitely.
- Get on the ground with the poor. We spend so little time actually gathering first hand data from the poor. So many “solutions” are designed from behind desks often 1,000’s of miles away. Get close, observe and ask questions and you will see the simple and obvious things that are needed and can be done in a specific context.
- Affordability is #1. The poor must be able to afford to pay fair market price for the tools to enable them to earn more income. This is the ONLY solution that will scale to help millions and will keep on being available. The measurable benefits must be realized in months and ROI within a year. For products designed to serve the poor, “Affordability isn’t everything. It’s the only thing.”
- Price subsidies make things worse. He argues with examples of how subsidizing goods and services almost always ends us making poor people worse off … and this includes food.
- The green revolution will come later to small farmers. First they need to get affordable irrigation. Then they need to have enough savings/income to afford the more expensive inputs. And then they need to have enough resources to not be financially devastated if there is ten-year flood/drought. So, it will come, but later.