Randall Kempner: Embrace Emerging Market Entrepreneurship to Fight Poverty

By Randall Kempner, Executive Director, Aspen Network of Development Entrepreneurs (ANDE) Aspen Institute

Twice a year, the Aspen Network of Development Entrepreneurs (ANDE)convenes our Executive Committee—a group of fifteen international development leaders that guide ANDE’s strategy and provide operational oversight.

At the most recent meeting, we opened with a “pop quiz” — What are the three biggest challenges facing small and growing businesses in emerging markets over the next three years?

What follows are the top three issues that our Executive Committee believes the small and growing business (SGB) sector must address in the coming years:

Attracting and developing talent

In the U.S. and Europe, small business is hot. Recent grads are “swarming startups” and not just tech startups in California and Boston — many are looking for a career with impact and are seeking out opportunities at social enterprises. This trend is true for both entry-level positions as well as more experiencedMBA-level graduates. This flow of talent, towards entrepreneurial ventures and away from traditional jobs in finance or consulting, is critical for the development of those businesses.

But in places like India, Kenya, and Mexico, students are much less likely to choose a higher-risk job at a small business. Top talent is more likely to head to more stable opportunities in government or at large corporations.

For small and growing businesses to thrive in emerging markets, they need to be supported by a culture where startups are employers of choice for entry-level employees and more experienced candidates. ANDE and our members need to create greater interest in, and more linkages to, job opportunities at emerging market SGBs.

Inspiring Collective Action

ANDE was built on the idea that when our members collaborate they will more effectively help small business entrepreneurs to thrive. But the sector needs to move beyond simple bilateral collaboration to comprehensive collective action.

We believe success will occur when a group of players who care about emerging market entrepreneurship come together in one city or metropolitan region, define the major gaps and barriers facing entrepreneurs in that location, and co-develop strategies for strengthening the entire system that supports small business growth.

Rather than working in silos, practitioners should take a systems-level view in supporting entrepreneurs. This broader perspective recognizes that the finance challenge is connected to the talent challenge, which is connected to policy challenges, which are tied to market access issues. The sector is now mature enough to support these kinds of partnerships — and ANDE should facilitate them.

Increasing Donor Interest

With a growing emphasis on sustainable development solutions that show a clear path to financial self-sufficiency, we believe that funders should embrace small and growing businesses as a primary mechanism to fight poverty.

Yet, today too few donors turn to small business as a means to solve development challenges. Indeed, according to our analysis of the OECD database of official Overseas Development Assistance, less than one third of one percent of the $125 billion in annual aid goes to support entrepreneurship programs.

SGBs can provide access to healthcare, serve smallholder farmers with income opportunities, and connect off-grid communities to new energy sources. While it may take longer for these organizations to reach scale, once they do, the likelihood of long-term sustainability is higher than traditional grant-funded programs. Small businesses are a long-term mechanism for social change — with great potential for ongoing financial sustainability.

The international development community needs to advocate more vociferously for their support. For a number of years, ANDE has been marshalling evidence about the positive impact of SGBs on local economies.

In 2015 and beyond, we will become increasingly active in promoting small and growing businesses as a tool for building prosperity in developing countries. With solid data and compelling stories, we plan to influence thought leaders and funders all over the world.

But we will need your help.

ANDE is actively working to address the talent, collective action, and donor interest challenges with our members. Together with our Executive Committee, and more than 220 member organizations globally, we plan to focus on addressing talent issues faced by small and growing businesses in East Africa.

We are also working with key partners to select local geographies most ripe for systemic transformation around entrepreneurship. Lastly, we are building a knowledge base to share what leading organizations are doing to incorporate entrepreneurship in their poverty alleviation strategies.

Join us as we build thriving entrepreneurial ecosystems in emerging markets that provide sustainable solutions to development challenges. To find out more about what corporations, foundations, and multi-lateral donor institutions are doing to support small businesses in emerging markets, visitwww.smallandgrowingbusinesses.org.

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