Africapitalism, Creating Shared Value, Community-Based Economy

1. In 2013 the US President Barak Obama visiting Africa announced a US $ 2.5 billion Programme Power Africa Initiative, which renewed the interest for the Continent.
A year later, Mr.Elumelu – a Nigerian tycoon and banker – in an interview (2014) spelled out his vision on what to do and promote African entrepreneurial spirit: “There are some areas — flood disasters, for instance — where you must give charity. But I think the charity approach to solving other issues must be reassessed”. It’s catalytic philanthropy”. For more: https://www.devex.com/news/tony-elumelu-s-new-africapitalism-82590.
In 2011 M. Porter and M. Kramer have proposed the concept of Creating Shared Value – CSV (already anticipated: Harvard Business School) and have criticized capitalism as a major cause of social, environmental, and economic problems: http://hbr.org/2011/01/the-big-idea-https://www.bing.com/creating-shared-value/

We have found interesting parallelisms between Africapitalism and Creating Shared Value, the former focusing on sustainability factor, the latter criticizing capitalism: “Companies are widely thought to be prospering at the expense of their communities
Moreover, M. Harper assessed Grameen Bank (Bangladesh) and Self Help Group systems and, among other things, concluded, “there is little direct evidence as to whether SHG or Grameen system is more effective at reaching the poorest people”; currently this statement can be sustained with more facts and figures.

We are in support to above approaches and since 2011 have proposed a demarcation line among food aid, income generating activities and enterprise development (A. Graziosi Suggestions for designing new credit models, Microfinance Gateway, 06/2011 – Rated among the first five most read documents in 2011), in view of designing a sustainable credit model, http://www.microfinancegateway.org/p/site/m/template.rc/1.9.51017/; recently we have dealt with the topic “Methodological approach and ground work for achieving SDGs https://www.linkedin.com/pulse/methodological-approach-ground-work-achieving-sggs-ascanio-graziosi?trk=hp-feed-article-title-publish.

2. We have elaborated on the recent documents released by the international financial establishment (WB, CGAP and UN Agenda for SDGs) and concluded that financial inclusion without economic inclusion could be a disillusion for the lender, an illusion for the client and a likely financial implosion for the community, which is well synthetized in the sub-title of the iBook “FINANCIAL INCLUSION, Give people a job not a loan”, thus re-designing the entire architecture of the approach in favor of poor people and small business as well, https://itunes.apple.com/us/book/id1116912686.

Although any MFI is social oriented the degree of achieving a social mission could be quite different whether the MFI is in the segment of Enterprise Development (ED, accumulation), Income Generating Activities (IGA, increase family income) or Food Aid-Security (FAS, distribution of basic food to very poor people). The ED segment, being capable to finance small business, can create durable jobs and mitigate the poverty; the IGA segment, while addressing the households’ budget, can help families with basic needs and start small business. The FAS segment comprises people in absolutely poverty and in need for water, food aid, food security, anti-Aids or charity: this is neither micro credit nor microfinance, but micro grant and should be de-linked from credit matters.

We don’t say that there should be a restoration of the Keynesian theory, we do say that the role of finance in the economy has been dominant at macro and micro level to detriment of the real economy, on the wrong assumption that poverty is a lender task instead of a government duty.

As we have extensively discussed in our iBook, the main message we detected from above sources is to move from CREDIT-BASED ECONOMY to COMMUNITY-BASED ECONOMY.

The financial leverage to business is important and even vital, of course, and its sustainable use creates jobs and opportunities, government providing an enable environment and related services. With a salary people may or may not apply for a loan and buy a smart mobile phone; in so doing the meaning of credit – confidence – will be reinstated; regards to the digitalization of the financial services the real question isn’t to provide people with a WhatsApp, but to have them eligible for its use.

The operational implications of above are of great importance and we will deal with the matter.

Author: graziosiascanio

I am doctor in Economics. I am based in London (+44 7943286549) and Rome (+39 3273211887). I do have a banking background and specialization in Microfinance, Project Management-Monitoring-Evaluation, Risk Fund. I have accumulated more than 30 years of experience in 28 Countries and collaborated with the major international development organizations such as World Bank Group, Ministry of Foreign Affairs-Italian Co-operation, European Union, Danish Cooperation, FAO, UNDP and Others in East Europe, Caribbean, Central Asia and Africa.
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