The Case for Trade over Aid
An unpalatable truth for those of us who have worked in the Aid sector - over $500 billon in Aid has been spent by governments and NGOs on the African continent alone since 1970.
While this aid has helped the continent make notable progress in areas such as healthcare and education, unfortunately these gains seem disproportionately small when compared to the amount of money spent. Looking at the bigger picture, the positive impact of Aid to Africa is questionable: fuelling debilitating corruption throughout governments and creating an aid dependency, from government officials right the way down to labourers, are disincentivized to perform.
Working in a number of countries in Africa and around the world, sometimes there’s a sense of the psychology of dependency; and how it is stifling to the entrepreneurial spirit of talented artisans. Of course it is not in NGO’s interests to see the businesses they support fail – and yet this knowledge means that businesses performing poorly are propped up long after markets would have forced them to close. This is why the involvement of the private sector is so important for development in countries like Morocco. When we buy a product from craftsmen and women, they know we are buying that product for one reason only: we think it is a beautiful, high quality product. They also know that if they don’t perform on an order, we will use other suppliers. Get competitive, or lose out - it might seem harsh, but there are no blurred lines in business growth - and that clarity is what businesses need to grow.
The Concept of Patient Capital
Patient Capital works somewhere between a free market approach and a total Aid approach and tries to take the best of both - thinking of low income people not as passive recipients of charity, but as individual customers, consumers, clients who are actively involved in the decision making for their own lives.
All the artisan entrepreneurs we work with could benefit greatly from access to Patient Capitalism - the ability to invest in growing their businesses; everything from purchasing raw materials to ensuring internal infrastructure is within their business to allow their products to be shipped around the world.
The idea of Patient Capital is investment with considered return, for example, a thorough understanding of the difficulties that arise in developing communities that inherently stifle business growth. Part of what we do as TBE is to attempt to eliminate one of those difficulties - the obstacle of marketing for these small businesses and access to quality imagery to promote their products.