Giving the Poor a Means to Work

Paul Polak and his company, International Development Enterprises, have helped 17 million people lift themselves out of poverty

by Jessie Scanlon

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Most books about poverty are downright depressing. The figures—1 billion people live on less than $1 a day, according to the U.N. Development Program—are depressing. The complexity of the problem—poverty is connected to poor health is connected to lack of clean drinking water is connected to lack of education—is daunting. And spend any time at, say, the Web site of the World Bank, the organization that's "Working for a World Free of Poverty," according to its tagline, and you start to sense a disconnect between the experts' fancy "comprehensive development frameworks" and poverty-mapping techniques, and the daily needs of the poorest poor.

But one new book on the subject, Out of Poverty: What Works When Traditional Approaches Fail by Paul Polak, offers optimism. Optimism not just for those fighting poverty and those fighting to get out of it, but for any company interested in a basically untapped 1 billion-person market. That optimism is based on the author's real-world experience as the founder of International Development Enterprises (IDE), a nonprofit organization that develops and/or markets products such as treadle pumps and drip irrigation systems that have already helped 17 million people lift themselves out of poverty.

Founded by Polak in 1981, IDE is based on the belief that there are simple solutions to the seemingly complex problem of poverty, and that those solutions are based on enabling the entrepreneurial spirit of the poor. The logic of IDE's approach is so simple it seems ridiculously obvious: Poor people are poor because they don't have enough money; 800 million of the world's poorest earn their living from one-acre farms; those people could earn more if they knew how to grow high-value crops; to do that, the poor need access to very cheap tools—seeds, fertilizer, irrigation—and to markets where they can sell their goods.

Only Products That Pay for Themselves

Given this, IDE's focused mission has been to develop radically low-cost tools that will help subsistence farmers become small-scale commercial farmers. For instance, IDE's $25 treadle pump (a foot-powered suction pump) enables a family working two to six hours a day to irrigate a half-acre of vegetables during the dry season and earn an average of at least $100 a year after expenses. Other products include a $40 water storage tank and a drip irrigation system that costs roughly $200 an acre, four-fifths the cost of a conventional system.

Borrowing from the famous football coach Vince Lombardi, Polak writes, "Affordability isn't everything. It's the only thing." And so IDE only develops products that will pay for themselves in the first year through the buyer's increased productivity.

But IDE does more than design cheap products. It nurtures the private-sector supply chains essential for economic development. When IDE began promoting treadle pumps in Bangladesh in the 1980s, for instance, the organization recruited four manufacturers to produce the pumps by offering them marketing assistance. IDE also offered programs to train well-drillers to install the pumps and to educate farmers interested in using irrigation to grow high-value crops. There are now 75 small-scale manufacturers, 2,000 village dealers, and 3,000 well-diggers earning a living making, selling, and installing treadle pumps, according to Out of Poverty.

Taking the Focus Off Charity

If this focus on the market seems obvious, it hasn't been. As Polak writes, "Development leaders were outraged by my notion that you can and should sell things to poor people at a fair market price instead of giving things to them for nothing." But the case that Polak has made over the years, and that he makes in this book, is persuasive: The only sustainable, scalable approach to fighting poverty is to give poor people a way of increasing their income; to treat the poor as potential entrepreneurs, rather than as recipients of charity.