Understanding Poverty & Social Enterprises

May 31, 2021|1No Poverty

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Even in the 21st century, eliminating poverty remains one of the most significant challenges facing humanity. In the last few decades, we have improved life for many people, with the number of people living in extreme poverty dropping by more than half between 1990 and 2015. However, too many people are still struggling for the most basic human needs. 

Poverty is more, much more than just not having enough money to buy things. The World Bank Organization describes poverty as:

"Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, it is fear for the future, living one day at a time." 


What Are Basic Human Needs? 

The basic human needs cover the essential things we need to survive; these include food (including water), shelter, and clothing. More recent studies also include sanitation, education, and healthcare access as part of the basic human needs. 

These basic human needs and the ability of a country to cover these needs for its citizens are considered when measuring absolute poverty levels in developing countries. 


Measuring Poverty 

There are different ways to tell if a country is rich or poor. One is by evaluating the levels of basic human needs covered, as explained above. Another is by calculating the Gross Domestic Product (GDP) of a country or calculating the Human Development Index or HDI. 

Gross Domestic Product (GDP) is the money made from trade from inside the country. In other words, it is the total goods produced by a country in a specific period minus imports. 

A common equation for GDP is:

GDP = consumption + investment + exports - imports

However, GDP doesn't measure the sustainability of growth. A country may achieve a temporarily high GDP by over-exploiting natural resources, but this high level will not be sustainable for a long time. Because of this, many economists don't believe GPD is a reliable measurement, and it should be looked at in conjunction with other factors in determining poverty levels. 

The Human Development Index (HDI) is determined by considering the nation's life expectancy - how long people live - and adult literacy rates. Places in Africa like Guinea-Bissau, Sierra Leone and Mali are the poorest, with Sierra Leone having the lowest HDI ranking in the world.


According to the United Nations (2015)

About 736 million people still lived on less than US$1.90 a day; many lack food, clean drinking water and sanitation. 

Rapid growth in countries such as China and India has lifted millions out of poverty, but progress has been uneven. Women are more likely to be poor than men because they have less paid work, education, and own less property.

Half of all people living in poverty are under 18 years old.

10 per cent of the world's population live in extreme poverty, down from 36 per cent in 1990.


World Summit for Social Development 

In 1995, after the cold war had ended, globalization became a top topic. It was clear that the way forward for all economies would rely on collaboration and trade. However, more than a billion people were still living in extreme poverty. Millions of people were unemployed, and a growing number of societies were breaking along racial, ethnic or social fault lines.

It is then, in 1995, when the World Summit for Social Development (WSSD) is born, with its first convention taking place in Copenhagen, Denmark. Representatives of 186 countries—including 117 heads of State or Government —agreed to make social progress a priority issue at the international level. The mission: to "eradicate absolute poverty by a target date specified by each country in its national context." 

In the United States, the equivalent measures are called self-sufficiency standards or living income standards.

The United Nations General Assembly met again in a special session in Geneva in June-July 2000 to assess the achievements made at the Social Summit of Copenhagen and discuss new initiatives. An agreement was reached on a wide array of initiatives to reduce poverty and spur job growth globally. 


Social Enterprises: Growing from Within 

Social enterprises are businesses that trade to intentionally tackle social problems, improve communities, provide people access to employment and training, or help the environment. You would think all companies should be social enterprises based on that, but in reality, not all businesses focus on social responsibility and care but on profit growth. 

Social enterprises commit to reinvesting a majority of profits/surpluses into achieving their social/environmental objectives. This is a fundamental difference between social enterprises and traditional businesses. 


Benefits of social enterprises: 

  • They aim to create a stable level of employment
  • They implement social change
  • They look to create inspiring and innovative solutions
  • They want to help members of society

However, it is not all good. Social Entrepreneurship also has some disadvantages, such as: 

  • Lack of support and funding
  • Need hard work to get success
  • Social factors will affect to achieve
  • Hard to gain trust from others

Social enterprises can have a massive positive impact in reducing poverty, especially in rural areas where small interventions make a huge impact. For example, Easy Solar, a social enterprise in Sierra Leone, provides pay-as-you-go solar-powered lighting and charging systems to people with no electricity access. 


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Thinking Cap On:

Create a social enterprise to tackle a social or environmental issue in your community. First, determine what problem you want to solve, for example, lack of access to educational programs for a disadvantaged area or a food bank programs for kids/families. Then draft a plan of action. What kind of business can you open that can help the community by re-funding profits? How would you call your business, and how would you make sure everyone knows about it? Share with us! We would love to hear your social enterprise ideas!