CARE’s new wave
Development group puts its money on the middle class
BY Wendy Glauser
Illustration by Joshua Leipciger
For decades, development work has focused on those hit hardest by poverty, HIV/AIDS, famine and the like. But CARE Canada, the Canadian branch of the international development giant, is spearheading a new project that aims to help with the creation of a middle class in developing countries. In 2005, CARE Enterprise Partners (CEP) began offering loans and financial know-how to midsized businesses in places such as Peru, Senegal and Kenya. The hope is that the businesses CARE invests in will be able to expand further, offering more jobs that lift individuals, and their families, out of poverty.
“If you look at India or China or Taiwan, you realize that a strong middle class really drives economic opportunity for the broad population,” explains Masood Shariff, vice-president of CEP. CARE Canada’s belief in this theory has led it to term private-sector investment as the “third wave” of development, following the charity-driven development work that began in the ’50s and ’60s and the civil-society-building exercises that took off in the ’70s and ’80s.
CEP is currently active in about a dozen countries, providing loans ranging from $20,000 to $500,000 to companies that have presented a strong business plan, solid market potential and the promise of social development. Last fall, for example, CARE kick-started a three-year loan to Serviagro, a company in Peru that pools the artichoke harvests of 50 small farmers for sale in local markets. Eventually, the plan is to give them access to export markets they wouldn’t have individually. “How do you access a supermarket if you only have 10 kilograms of vegetables and they want to buy 100 kilograms?” Shariff asks.
Still, Shariff is adamant that the business sector alone cannot reverse the poverty cycle if it doesn’t partner with those in the development field. “They might not understand how to work with small communities, how to communicate in a culturally sensitive way,” Shariff says. Also, the profit drive could lead business people to ignore issues like environmental sustainability or pull out of a community if an investment doesn’t turn a profit quickly enough. “If their ideas don’t catch on in a year, they’ll bail, because they don’t have the patience development workers have,” Shariff says.
Over the past few years, however, more businesses have begun partnering with organizations working in development, according to Canadian Business for Social Responsibility, a non-profit consultancy organization. If the “third wave” pans out, Shariff says, business people both in the developed and developing worlds could become a powerful lobby against the unfair trade laws and corruption that plague economic growth. “In Canada, small- and medium-sized businesses create huge amounts of employment. We need to ask why this isn’t happening in the third world,” Shariff explains.
