Social Networking Websites: A Way Out of Poverty

Social networking websites also known as, Web 2.0 – the name given to the new wave of internet businesses and websites such as YouTube and MySpace that are transforming the way people interact with the Web – has been dubbed the social web for its power to bring people together. The label has been derided as a marketing gimmick by some, but many argue there are a number of characteristics to Web 2.0 that make it something different and a valuable tool for entrepreneurs seeking ways out of poverty.

The new Web 2.0 applications offer many free software tools stored online, from accounting and business related tools, to new multimedia ways to communicate for free. Unlike Web 1.0 sites, which offered information to passive users, Web 2.0 sites allow interaction and comment. These qualities have meant Web 2.0 can be used to build communities and social and business networks. By being able to store vast quantities of information online, it becomes faster to work and reduces the painful delays brought on by slow connections.

All these new tools are making it easier and easier for entrepreneurs to work from home, in internet centres, or anywhere there is a wireless connection, and is slashing the costs of managing a business. All the applications are online so there is no need to be hidebound by one operating system or hardware capability. The number of internet centres has increased significantly all over Asia and Africa, bringing the power of Web 2.0 to millions more people.

Linking mobile phones and the internet is also remarkable. It is becoming more and more possible in Africa to send messages to weblogs via text messaging, to post photos and videos, or to stay connected with a community, advocacy or business group via messaging to its website.

“Web 2.0 is a pre-occupation of ours that can be beneficial in fighting poverty,” said Tobias Eigan, founder and co-executive director of Kabissa.org, a web portal dedicated to promoting Web 2.0 in Africa. “It is really relevant for Africa. It makes the internet a read and write function, it is more user-friendly – that dynamic is going to make a big difference. It is so much easier to upload content with Web 2.0. It will build the capacity of local institutions and society and that will improve the lives of people – it will be much easier to fight poverty with this connectivity.”

Two other champions of the Web 2.0 way out of poverty are Waleed al-Shobakky, science and technology reporter for alJazeera.net, and Jack Imsdahl, a consultant and technology commentator. While they admit subsistence farmers and the illiterate will not directly benefit, those who are students or are working in proximity to computers will definitely benefit. They point out how rapidly mobile phones have been taken up by the poor and that this is being driven by the new services they offer.

There are still profound obstacles to more rapid take-up, however. Internet connection speeds will have to get better and more will need to be invested in this area. Web 2.0 tools will also need to be adapted to local languages if they hope to get past those who speak major web languages like English.

Entrepreneurs in the global South can now easily sign up to a vast array of e-newsletters that are sent to email accounts and keep on top of trends and innovations in their field. The relative anonymity of these email lists mean subscribers are less likely to be judged on their physical circumstances.

By David South, Development Challenges, South-South Solutions

Published: March 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Fashion Closes Gap Between Catwalk and Crafts

The notion of doing right with fashion has been getting a make-over in the past few years. In the West, non-sweatshop clothing and crafts from developing countries have long been confined to a small niche in the marketplace. They were seen at best as garments for the eccentric or unconventional, and at worst as a poor substitute for clothing and accessories peddled by the major manufacturers. Organic or ethically produced products were often stigmatized as unfashionable and frumpy.

In Paris, the Ethical Fashion Show, now in its fourth year, showcases fashion that respects people and the environment while still being glamorous, luxurious and trendy. It has attracted designers from around the world, including Mongolia, Thailand, China, Peru and Bolivia. The show demands that all participants adhere to International Labour Organization conventions – including banning forced and child labour – respect the environment, create local employment and work with craftspeople to ensure skills are retained and the fashion reflects the diversity of the world’s cultures.

As an example of the high growth in ethical fashion in the past year, the UK chain of clothing and food retailers Marks and Spencer has become the world’s biggest buyer of Fairtrade cotton.

“I have only been in the business for the past 12 months, but at first it was hard to find producers,” said Tamzin Berry, owner of the British company Ethical Catwalk. “But now it has really taken off. Celebrities have helped to raise the profile. One line we carry, Red Mother, Madonna’s backing dancers wear it. I have found everybody in the business to be very approachable, genuinely caring and ethical people.”

Style is the big consideration now, said Berry. “More of the trendy labels have taken up the challenge and it seems to be going the same way as the organic food. “

“The fashion industry has one of the worst reputations of any industry,” Dr. Katie Beverley of the University of Leeds’ Nonwovens Research Group told The Guardian newspaper. “But the drive for ethical and environmental considerations in design has never been stronger.”

In Mozambique, catwalk fashions are helping poor people and saving fast-depleting forests. A project by the International Trade Centre (a joint initiative between UNCTAD and the WTO (www.intracen.org)) in the forests of Sofala Province – stretching from Angola to southern Tanzania, Mozambique, and northern South Africa – targets this home of rare hardwoods. Local craftspeople in the town of Dondo were producing crafts for a tourist market that didn’t exist and a local market that couldn’t afford them. But by bringing on board the social entrepreneur Allan Schwarz – an expert in working with forest communities and an Ashoka fellow (www.ashoka.org) – they were able to create bracelets of high enough quality to sell in fashion magazines and be a hit at the Ethical Fashion Show in Paris. On average, workers wages have increased 14 times topping at US $300/month in a country where average income per year is US $250.

By David South, Development Challenges, South-South Solutions

Published: March 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Dynamic Growth in African ICT is Unlocking Secrets of SME Treasure Trove

A newly released survey of 14 African countries in 2006 has documented the impact of Information and Communication Technology (ICT) on private sector development and how it is contributing to developing a vibrant Small Medium Enterprise (SME) sector in Africa. It discovered how dynamic the SME sector is, how it has rapidly adopted mobile phone technology (96 percent have it), and how if used properly in concert with this new technology, extraordinary economic growth is possible.

The survey – Towards An African e-Index: SME e-Access and Usage in 14 African Countries – covered only businesses employing fewer than 50 people and took in the vast informal sector in the countries. It investigated if they had access to ICTs, how they are using them and if it was making them more productive. SMEs were especially interesting because they do not waste money (most people are just trying to survive) and they only use what is really useful to them to increase income. In the informal sector this has become the mobile phone.

The countries surveyed included Botswana, Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. With most of the continent’s poor working in the SME sector, little was actually known about the impact of ICT and its link to profitability and labour productivity. And surveying only formal businesses would be telling half the story since about two-thirds of non-resource driven GDP generation is derived from SMEs, and a large share of that from informal ones.

“This is a sector that has no access to formal finance,” said Dr. Christopher Stork, a senior researcher at the Witwatersrand University in South Africa. “The mobile phones present an opportunity to tap into this market and offer finance, banking services, cash transfers – we see this already in Kenya – without the risks of other services. These informal businesses can build up a history, learn how to better control their businesses, and receive loans. Where the financial system is dysfunctional or overpriced, airtime credits can be the new cash form.”

Africa has a high proportion of entrepreneurs because people have next to no social supports to fall back on and need to do business to survive. Most fall into the informal sector where they can avoid paying tax, pay low wages, and keep overheads down. According to Stork, if governments are serious about dealing with poverty, then the best approach is to acknowledge this sector, and rather than crush it, draw it in to become more sophisticated and efficient. He sees the mobile phones as key to this strategy.

“Innovative technology can help these entrepreneurs to acquire the tools they need to do business better. There is a lack of skills in all areas, a lack of accounting skills, a lack of basic financial management. This is where ICT can overcome this. SMEs can get a monthly statement with all their business transactions, making it easier to manage things. This would be a great way to distribute micro-finance. Savings clubs could store cash on the phones.”

The e-Index also noted the trend for mobile phone providers to consolidate and offer common regional services. This could fuel an explosion in cross-border trade as it becomes cheaper and easier to communicate via mobile phone for business. The e-Index also found the ever-growing importance of internet cafes remains. They continue to evolve into multi-purpose business centres offering a wide range of services, from post to word processing. At present they still remain the main means of accessing the internet. And with broadband still minimal and very expensive, it falls on mobile phones to offer internet access, though this will remain mainly in the continent’s capitals.

The survey’s sponsor, Research ICT Africa! (RIA!) network, seeks to build an African knowledge base in support of ICT policy and regulatory design. The network emerged out of a growing need for hard data and analysis to help the continent join the information age. Throughout 2007 it is conducting household surveys on e-access and e-usage and will present the findings in 2008.

By David South, Development Challenges, South-South Solutions

Published: February 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Grassroots Entrepreneurs Now Have Many Ways to Fund their Enterprises

In the past, African entrepreneurs were extremely limited in the options for funding their plans. They had to rely on often ineffective national banks or local networks based on political, tribal or family connections to secure funding for enterprises. That has now changed, and there is an explosion in new thinking on business start-ups and how best to help grassroots entrepreneurs.

Concepts such as socially responsible investing, social enterprises and fair trade have opened up new frontiers for business development. All focus on the so-called triple bottom line: people, planet, profit. Economist Milton Friedman’s refrain that the only social responsibility of business was to increase profits, is being proven wrong. Some even go as far as to say social enterprise is the model for the 21st century.

“There’s lots of money to be made here,” said James Baderman of What If, an innovation company in the UK that employs 300 people and devotes 10 percent of its profits to helping social enterprises develop and grow. “There are huge opportunities; just look at the double-digit growth in fair trade and organic goods over the past decade. Consumers are increasingly making choices based on the ethical nature of products.”

Many in the social enterprise movement believe breaking the cycle of poverty and economic stagnation requires more than charity; it requires the creation of sustainable businesses that will pay local taxes and employ local people. They have also adopted and adapted the techniques used by multinational companies to improve the desirability of their products. A key part of these new socially responsible businesses is branding and marketing.

In Kenya, the UK’s Traidcraft (www.traidcraft.co.uk) – an organization that fights poverty through a wide range of trade-related activities combining a development charity with a trading company – is working with the Kenya Organic Agriculture Network to develop markets for Kenyan herbs, spices and related products in local and international markets. These include gums, resins (e.g. frankincense), herbs such as coriander, oregano, garlic and lemon grass; spices such as paprika, chillies, rosemary, lemon balm, and essential oils such as pepper tree oil, sinoni oil, and megalocapus oil – all grown in marginalised, arid areas.In another development focused on Kenya – but applicable across Africa – is being led by the UK-based Mark Leonard Trust (http://markleonard.net/). Called the Mainstreaming African Crafts project, it seeks to boost demand for Kenyan craft products in the UK market. It will build demand by focusing on growth areas (such as baskets, jewellery, leather), emphasizing the distinctiveness of African craft products and support product development in line with identified market trends. The aim is to launch a branded Kenyan product range at an international trade fair in 2008.

Along with improving the branding and marketing of social enterprises and fair trade businesses, funding options are becoming more varied. One new source of funding for budding social entrepreneurs is the William James Foundation’s 4th Annual Socially Responsible Business Plan Competition. It awards winners who develop business plans that blend people, planet and profit together with over US $40,000 in cash and expert advice to make sure it is spent well. Past winners have included business ventures as varied as an Afghan company that sends SMS text messages on security alerts, to others making hand-made organic clothing and portable vaccine packs for remote areas.

“We’re at a tipping point wherein the entrepreneur who builds in long-term values of sustainability is the one who will be successful,” said Ian Fisk, executive director of the William James Foundation and a long-time sustainable business activist through Net Impact (http://www.netimpact.org/index.cfm). “Most of what people think of as environmental and social activism in business is simply long-term thinking about energy costs and human resources. There are thousands of good ideas out there. The foundation wants to find those that are attached to solid business plans and help them succeed.”

The success of this approach has also attracted the attention of multinational companies like the oil company Shell. At the Shell Foundation (www.shellfoundation.org), they look at all the enterprises they support from a hardnosed, business perspective. Rather than seeing a producer who needs to produce, they look first at the market and the consumer, and then work backwards to get the producer to make the appropriate products that will sell. “No micro-enterprise is sustainable unless there is a viable route to market,” said Sharna Jarvis, Programme Manager for the Shell Foundation. “The problem with the standard model for micro-finance is that it begins with the producer, not the consumer. It is all about what someone wants to make – there is not enough emphasis on whether anyone will buy it.”

A new internet search engine has also been launched that is seeking a new way to create a steady flow of funds to nonprofit enterprises working to reduce poverty. Called GoodSearch (www.GoodSearch.com), it plows 50 percent of its advertising revenue (about a penny a search) back into nonprofits selected by its users. Powered by the well-known portal Yahoo!, if for example 1,000 supporters just searched twice a day, it would raise US $7,300 a year for an organization.

By David South, Development Challenges, South-South Solutions

Published: February 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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African Tourism Leads the World and Brings New Opportunities

Tourism around the world is growing rapidly again after the setbacks caused by the September 11, 2001 terrorist attacks. Tourism is also finally acknowledging Africa – home to 888 million people (2005, UN) – and where 46 percent of sub-Saharan Africa’s people live on less than US$1 a day. Led by Kenya and South Africa, the continent has come out on top in world tourism growth according to the United Nations World Tourism Organisation (UNWTO) (http://www.unwto.org/). While global tourism is forecast to grow by four percent in 2007, Africa as a whole enjoyed growth of 10.6 percent in 2006.

Tourism, because it is a labour intensive industry, is seen as a great way to both reduce poverty and meet all the Millennium Development Goals. It favours small scale businesses, it is decentralized and can diversify regional economies, it is relatively non-polluting and can contribute to the conservation and promotion of natural and cultural heritage, and most importantly it can act as a catalyst for kick-starting other sectors of the economy.

Tourism is now generally recognized to be one of the largest industries-if not the largest-in the world. It has grown rapidly and almost continuously over the past 20 years, and is now one of the world’s most significant sources of employment and of Gross Domestic Product (GDP). Tourism particularly benefits the economies of developing countries, where most of the sector’s new tourism jobs and businesses are being created. This rapid growth has encouraged many developing nations to view tourism as key to promoting economic growth, and global development assistance agencies see it as having real potential to help achieve many of their own development goals.

Tourism provides opportunities for diversifying local economies and promoting formation of micro and small enterprises, many of them women-owned. These enterprises promote better lives for poor entrepreneurs, especially in rural areas where there may be few other livelihood options. Tourism is generally labor-intensive and it tends to employ relatively higher proportions of women and young people than most other sectors. Tourism introduces technology and basic infrastructure, and strengthens linkages with the outside world. Well-planned and -implemented tourism projects can improve local governance, natural resources management, biodiversity conservation and other important development goals.

Within Africa, sub-Saharan Africa led the way with 12.6 percent growth. The countries benefiting the most included Kenya, South Africa, Mozambique, Swaziland and the Seychelles. Kenya received almost a million tourists in 2006, and earned US $857 million in revenue.

Kenya’s success rests on the fact it set aside 10 percent of the country for wildlife and biodiversity conservation. The majority of its tourists come to see the ‘big five’ – elephant, rhino, lion, buffalo, and leopard. Tourism currently employs 11 percent of the country’s workforce.

In October 2004 the World Tourism Organization released the Washington Declaration on Tourism as a Sustainable Development Strategy. Governments, international aid agencies, and the world’s leading universities agreed to make sustainable tourism development a top priority in their strategies to reduce poverty and meet other MDGs.

Aid agencies like USAID have targeted women for micro-funding for tourism projects. They have been able to help women start businesses making crafts in Tanzania and Botswana. The UK’s DfID helped Toni Shina from the Cape Town-based The Backpack to become a fair trade business. “Fair Trade Tourism South Africa recognises our commitment to uplifting our staff and community, and our utilisation of local service providers,” she said. “As a business we also have a strong and positive attitude to working with and supporting staff who are affected by HIV and Aids and we abide strongly with required labour and legal standards.”

And the fair trade concept is getting greater recognition. In a recent survey of the local tourism industry in South Africa, half recognised the Fair Trade in Tourism South Africa brand.

On the other hand, the scale of missed opportunities is illuminated in Rwanda. A consultant on a tourism management plan for the Volcano National Park, Edwin Sabuhoro, is urging communities living nearby to embrace eco-tourism and cash in on the tourists visiting nearby gorillas.

“According to our research,” he told Kigali’s The New Times, “some tourists say they carry their money back to their countries because they can’t find what to spend on.” And he pointed out the fate of the gorillas were directly linked to the poverty of the community: poachers would not be stopped if the community remained poor and had no other source of income.

How popular Africa has become is exemplified by Ethiopia’s rise into the top ten travel destinations for 2007, according to travel guide specialist Frommer’s. According to the guide, “Ethiopia has finally emerged out of the shadows caused by years of political strife, economic hardship and famine. The improved infrastructure has made travelling in Ethiopia increasingly popular, especially among independent-minded travellers and those seeking adventure.”

Another country, Tanzania, is targeting tourism as a key growth area. The country is trumpeting its peaceful and stable status and low-crime to attract tourists.

By David South, Development Challenges, South-South Solutions

Published: February 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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