Serving the poor can improve living standards

 Eshan is 15 and lives with his family in a village. He has never attended school because his family needs his physical support to keep the farm running. Eshan’s family is fairly poor and often struggle with basic necessities. He has three other siblings, all younger than him. Unfortunately, his youngest sister Sangeeta is ill and requires regular check-ups. His village is very small and the nearest medical center is two towns away, which worries his family. They have no form of transportation and it is hard for them to leave the farm during certain seasons, such as planting or harvesting. Medical staff hardly ever come to the village, as they are understaffed and there are too many villages that rely on them. So they have to attend to people from a central location.

Do the poor demand goods and services?

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It is natural to believe the poor in developing nations cannot afford to purchase and therefore do not want goods and services. However, there is demand for affordable goods and services. According to C.K Prahalad and Allen Hammond, ‘latent demand for low-priced, high-quality goods is enormous’. People living in developing nations may not require luxury goods, but they will always demand basic necessities, such as food, shelter, clothing, education, and healthcare.

Eshan knows that if he wants to live a better life, he has to change his environment and educate himself. He wants his family to buy better food and clothes, and for his siblings to receive a proper education. Eshan is a smart boy but because his family is poor, he does not have the money or time to learn new skills. Some of his friends go to school, but the village school is not great anyway. Neither of his parents are educated, so they are not able to advise him or teach him basics such as reading, writing and arithmetic.

 

What kind of goods and services do the poor need?

Federico Mayor explains that ‘it is often argued that if we attempt to provide food, shelter, clothing, and basic medical facilities all the problems of poor people can be solved’. Yet, what the poor really need is better access to education, healthcare and other value added services. UNESCO stated in their 2013 EFA report that “education not only helps individuals escape poverty by developing the skills they need to improve their livelihoods, but also generates productivity gains that boost economic growth substantially. For growth to reduce poverty, however, it needs to overcome inequality by improving the lives of the poorest and marginalized the most.” Considering the poor’s need to work often exceeds the desire for education, reducing unequal access to education will be challenging.

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Governments should encourage platforms within the private sector where low-skilled workers are able to enhance their skills. In addition, programmes to help people develop skills in managing their personal finances and using the Internet could hasten the poor’s access to jobs, communications, healthcare, insurance, etc. The technology needs to be customised though. Susan Davies argues that ‘the trick is making sure everyone shares in the coming abundance – or at least has a fair shot at doing so. To do that, it’s vital that technology be suitable and relevant to the lives of its users. That’s easier said than done in a world where most product innovations are geared toward the rich.”

A few years passed and Eshan was still living with his parents on the farm. Unfortunately, Sangeeta died that summer. Eshan blames the government for not providing enough medical facilities in his village. Eshan renewed his efforts to find a new life for himself. Some cheap smartphones were coming onto the market. His family had purchased one, and every night Eshan would learn its functions. As India mostly skipped the land line stage of telecommunications, everything was done on mobile. Using his family’s plan, he was able to access the Internet for a limited time each month.

 

Does providing goods and services to the poor improve their lives?

Companies that provide goods and services invariably bring job opportunities with them. While sales may rack up, the goods have to be produced and the services have to be provided through labour. In developing countries, it makes sense for that labour to be sourced locally. The government needs to ensure human rights are not abused and labour laws are adhered to in the rush to produce goods and services cheaply. And companies should try to understand a local presence does not necessarily mean creating one huge factory or call centre to which labour can flock, especially if the infrastructure in that location would not be able to handle an influx of all the new workers.

Companies also have to understand the nature of the poor’s demands. While individual incomes may be low, the aggregated purchasing power of poor communities can be substantial. Whereas the West is starting to develop new business models for a sharing economy, this may be the model most suited to developing countries where individuals cannot purchase an item on their own. The sharing economy is becoming more pervasive as people are less able to afford capital goods which are expensive. For instance, if a farmer cannot afford to purchase his own tractor, sharing a tractor between a number of farmers may be more affordable. In another example, healthcare insurance may be more affordable if paid into by whole villages rather than individual families. The profit motive may allow the private sector to produce innovative solutions where governments have failed.

With access to new products and services, the poor can help themselves by creating new ways to work, educate themselves, communicate, keep themselves healthy and ensure better financial security.

Using the Internet, Eshan found some low-skilled jobs were offered in a nearby town. He decided to go to the city to apply with his family’s blessings and hopes. He got the job and sent money back to his family. With this money he bought a second hand computer for his siblings, which gave them access to the Internet from which they could learn new things and explore the world from their village home. The technology has given them added hope of a better future.

Our production facility is located in Tirupur, India and we provide jobs to the poor. Our vision is to see a world in which labour is valued as much as capital, and is paid fairly so people can afford to live in a world where inequality does not result in poverty growing. The way we want to achieve this is to be at the forefront in engaging technology to increase trade in ethically produced goods. Visit our website www.chanzez.com and find out more about us and what we do.

 

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About the Author

Valentina is passionate in expressing her voice through her writing, which she hopes will have a social impact. She grew up as a third culture kid that always fought for what is right and achieved a BA Hons. in International Business in order to understand the business world more clearly and leave a possible mark on society. Currently she is working for an ethical start-up company called Chanzez. Chanzez has been set up to provide people with chances whether they are people who design clothes, people who work to make clothes or people who want to be able to buy ethically produced clothes.

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