My Unexpected Quest to End Poverty Through Profitability
Review posted October 13, 2011.
Harvard Business Review Press, 2011. 191 pages.
This is an intriguing and hopeful book. Vikram Akula was working in India with a nonprofit organization that offered microfinance loans to poor people. But they quickly ran out of funds.
The woman looked me in the eye, and with great dignity, she spoke the words that would change my life, "Am I not poor, too?" she asked me. I stared at her, jarred by the question, and she went on. "Do I not deserve a chance to get my family out of poverty?
Am I not poor, too? With these words, this driven, determined woman suddenly made me see how unfair -- unjust, really -- our microfinance program was. Yes, we were helping hundreds of poor Indians take the first steps to pull themselves out of poverty. But my program had just $250,000 to spend in thirty villages -- that was all DDS had been given for the project. And once that money was disbursed, there was no money left for other poor Indians who desperately wanted a chance too.
The woman wasn't asking for a dole. She wasn't asking for a handout. She was simply asking for an opportunity. But we couldn't give it to her.
This was a defining moment for me. We had to find a way to change microfinance -- to make it available to any Indian, or any poor person anywhere in the world for that matter, who wanted to escape poverty. Microfinance was a fantastic tool, but a deeply flawed one. There simply had to be a way to scale it beyond the constraints of how it was currently being practiced.
His solution ended up being charging higher interest -- and making a profit from the work the poor people did.
It sounds atrocious, but Vikram Akula ended up convincing me it was a brilliant idea. Now his company is helping thousands of times more people -- and has people wanting to invest more money, rather than them having to ask for money.
The book goes into details of how his program works and how they make it good for the people who get the loans as well as for the company. It's a fascinating story.
I especially liked these paragraphs toward the end of the book:
I believe a commercial approach is the best way to give the most poor people access to finance. My early days at DDS taught me a crucial lesson: the poor are really no different from you or me. They're not stupid or slow, and they aren't looking for us to rescue them or teach them anything. The relationship between SKS and our members is mutually beneficial. Our members are receiving tools that have long been denied them, and using them to do things they're naturally skilled at doing. In return, SKS is building an enormous member base, establishing a brand, raising money in investments, and continuing to expand the number of poor members served. It's a perfect circle, one that benefits everyone.
The notion that it's somehow unethical to enter into a profitable business working with the poor is insulting to the poor. They are not children who need our protection. They're working women and men who are thriving under a system that allows them to take their economic lives into their own hands. Treating them as anything less is unjust.
This reminded me of Libraries.
Bear with me, as I realize I'm someone obsessed by an idea. But I've seen homeless people who go to the library every day absolutely refuse when kind people want to give them hand-outs. When my oldest son was small and my husband was a Senior Airman, we had a low enough income to participate in the WIC program, and it felt very demeaning. The government workers assumed we didn't know much about nutrition, for a start. In the end, the little bit of financial help they could offer wasn't worth the "educational" sessions we had to sit through. I had too much pride.
So how does this relate to Libraries? Libraries help the poor tremendously, but they allow them to keep their dignity because they help rich people, too. Bottom line, libraries are a big cooperative to purchase books for an entire community at a lower price. Everyone benefits, so no one has to feel that they are singled out to be "helped." Libraries help everyone, and people can be proud to use them, without feeling obligated.
It is similar with SKS. The investors are making money because of the hard work of those who take out loans. And they are able to get out of poverty, but don't have to feel indebted to those who made it possible. Those people benefit, too.
Sometimes, you help people more when you allow them the dignity of helping you. When the investors in SKS make a profit, they allow the "helping" not to be all on one side.
Vikram Akula closes his book telling the story of another woman, a woman whose whole family has been helped by SKS.
I thought back to the woman in the faded purple sari, all those years ago -- the woman who asked the question that changed my life: "Am I not poor, too?" And I couldn't help but contrast her with smiling Yellamma, proudly telling me about how SKS has helped her family.
"Am I not doing well?" she asked. Yes, she was.