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In: Economics

How can government and businesses come together to solve the problems of income inequality and poverty?

How can government and businesses come together to solve the problems of income inequality and poverty?

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Expert Solution


Ambitious commitments at government and company level need to be made in order for us to solve Income inequality and poverty together; ensuring that the clearly-stated drive and the right mechanisms are in place to finance the transition to a net-zero economy in a way that reduces inequality and lifts millions out of poverty.
We know this is both possible and necessary, but Addis, however ambitious, isn't the end goal. Our efforts can inspire leadership well beyond 2015 and unlock a virtuous cycle of a better, more inclusive kind of growth.
Progressive businesses support bold government ambition. They see themselves as partners in fostering development and tackling climate change, with a particular ability to unlock growth, create jobs, and innovate to meet societal needs. And they recognize that partnership is in their interests too.
They know that by tackling the related issues of climate and poverty together -- and by building in accountability to policy-making -- we can create a more sustainable and profitable world for all.
It will be a world in which everyone's fundamental rights are met, where growth takes place within planetary boundaries, and benefits are delivered to all.
Together we can be major drivers towards an end to poverty in all its forms.

Poverty is a major challenge for the world, and the world is not making enough progress on poverty. So what should we do about it? The central argument in my book is that business and government need to play appropriate roles in fighting poverty. Neither one will solve the problem alone. They must each play a role.

You believe job creation is the antidote to poverty and that governments should provide only the legal framework, climate, and infrastructure to make it happen. Why might that approach make sense?

The central issue in reducing poverty is creating jobs. If you ask a poor person, what do you wish for? They say, get me a job. So all our efforts have to focus on creating jobs. The primary engine of job creation is business. There is no magic answer to create jobs, but the starting point is to focus on doing that. Government must create an environment that allows business to thrive—by not having onerous regulation, providing the right infrastructure, the right procedures for getting permits, et cetera. In many countries, government stifles business rather than fosters it.

In my book, I describe ways to foster job creation. In particular, government must support small- and medium-size businesses. If you look at the United States or Europe, the bulk of job creation is in small and midsize companies—that’s about 60 percent. In poor countries, that’s not the case. This is the so-called missing middle. For example, in Africa, you can borrow $100 or $1 million. But if you want to borrow $10,000, it’s not so easy. So government needs to foster the small- and medium-size businesses.

The second emphasis in my book is on job creation that focuses on youth. Unemployment among young people is typically the highest among any age bracket. But if you don’t put a young man on the path to employment at age 20, with the right experiences, he may never get a job.

The third point is that government needs to provide basic public services to the poor: public health, education, drinking water, sanitation, security, lack of gender discrimination—things we take for granted. We need a renewed emphasis on providing these basic services.

ways to reduce poverty

create indirect jobs.

let cash flow locally.

sell at a profit, but meet social needs.

lobby for improvements

invest in a young starting SME that can be your competitor, buyer or supplier

Finally, as a matter of last resort, donate.

Partner on water and sanitation projects:

Without water nothing else is possible, so I mention a few inspiring projects to highlight World Water Month. In emerging economies, the old days of digging a well or building a public latrine are over. More companies are partnering with non-profits to arrive at market-driven solutions to tackle the programs of water scarcity and unsafe sanitation. Beverage companies and breweries find themselves at the forefront of projects that tackle microfinance, tap into water mains and the build safe and clean private toilets. SABMiller works with WWF to build groundwater recharge structures giving farmers a more reliable source of irrigation water. PepsiCo and Water.org collaborate to provide microloans so citizens can pay for rainwater harvesting systems and gain access to municipal water supplies.

Training, water and women’s empowerment are just a few of the low-hanging pieces of fruit a company can take on to join the quest to find more poverty solutions.


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