Poverty reduction vs. wealth creation

“Haute empowers entrepreneurs in Africa to grow their businesses and create jobs by providing them with management training and consulting services.”

Haute’s mission statement might sound a little strange to you.  Most charities operating in Africa focus on well-recognized activities like digging wells or providing people with mosquito nets.  So why doesn’t Haute engage in these “standard” activities?  It’s because Haute focuses on wealth creation rather than poverty reduction.  And - unfortunately for Africa – poverty reduction programs abound, while wealth creation programs are scarce.

Poverty reduction programs are aimed at treating the symptoms of poverty (see my post “Symptoms vs. causes”), and usually involve hand-outs of physical objects such as money, goats, wells, food, clothing, etc.  These well-intentioned hand-outs do a great job of reducing suffering in the short term but do not build the capacity of their recipients.  For this reason, when the hand-outs stop, the benefits of the programs stop. 

Wealth creation initiatives, on the other hand, address the root cause of poverty by building peoples’ capacity to start, lead or participate in viable businesses (again, see my post “Symptoms vs. causes”).  These initiatives empower people to take control of their own lives in a dignified manner.  They reduce unemployment and under-employment, and increase tax revenues.  Wealth creation is the only sustainable solution to ending poverty.  Think about it… do you know anyone that has become independent and successful by receiving hand-outs from charity?

Andre Mwenda, a Ugandan journalist, does a great job of highlighting the differences between wealth creation and poverty reduction in this 2007 TED Talk.

[From the TED website] In this provocative talk, journalist Andrew Mwenda asks us to reframe the "African question" -- to look beyond the media's stories of poverty, civil war and helplessness and see the opportunities for creating wealth and happiness throughout the continent. Andrew has spent his career fighting for free speech and economic empowerment throughout Africa. He argues that aid makes objects of the poor -- they become passive recipients of charity rather than active participants in their own economic betterment.