Innovative Entrepreneurs Bring Prosperity to the Poor

(p. A17) As the economist Joseph Schumpeter observed: “The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.”

For Schumpeter, entrepreneurs and the companies they found are the engines of wealth creation. This is what distinguishes capitalism from all previous forms of economic society and turned Marxism on its head, the parasitic capitalist becoming the innovative and beneficent entrepreneur. Since the 2008 crash, Schumpeter’s lessons have been overshadowed by Keynesian macroeconomics, in which the entrepreneurial function is reduced to a ghostly presence. As Schumpeter commented on John Maynard Keynes’s “General Theory” (1936), change–the outstanding feature of capitalism–was, in Keynes’s analysis, “assumed away.”

Progressive, ameliorative change is what poor people in poor countries need most of all. In “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty,” Harvard Business School’s Clayton Christensen and co-authors Efosa Ojomo and Karen Dillon return the entrepreneur and innovation to the center stage of economic development and prosperity. The authors overturn the current foreign-aid development paradigm of externally imposed, predominantly government funded capital- and institution-building programs and replace it with a model of entrepreneur-led innovation. “It may sound counterintuitive,” the authors write, but “enduring prosperity for many countries will not come from fixing poverty. It will come from investing in innovations that create new markets within these countries.” This is the paradox of the book’s title.

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“Profit Feeds Impact at Scale”

(p. 1) Eric Reynolds will tell you that he is on the verge of freeing much of humanity from the deadly scourge of the cooking fire. He can halt the toxic smoke wafting through African homes, protect what is left of the continent’s forest cover and help rescue the planet from the wrath of climate change.
He is happy to explain, at considerable length, how he will systematically achieve all this while constructing a business that can amass billions in profit from an unlikely group of customers: the poorest people on earth.
He will confess that some people doubt his hold on reality.
“A lot of people think it’s too good to be true,” says Mr. Reynolds, a California-born entrepreneur living in Rwanda. “Most people think I am pretty out there.”
The company he is building across Rwanda, Inyenyeri, aims to replace Africa’s overwhelming dependence on charcoal and firewood with clean-burning stoves powered by wood pellets. The business has just a tad more than 5,000 customers and needs perhaps 100,000 to break even. Even its chief operating officer, Claude Mansell, a veteran of the global consulting company Capgemini, wonders how the story will end.
“Do we know that it’s going to work?” he asks. “I don’t know. It’s never been done before.”
Inyenyeri presents a real-world test of an idea gaining traction among those focused on economic development — that profit-making businesses may be best positioned to deliver critically needed services to the world’s poorest communities.
Governments in impoverished countries lack the finance to attack threats to public health, and many are riddled with corruption (though, by reputation, not Rwanda’s). Philanthropists and international aid organizations play key roles in areas such as immunizing children. But turning plans for basic services into mass-market realities may require the potent incentives of capitalism. It is a notion that has provoked the creation of many businesses, most of them failures.
“Profit feeds impact at scale,” says Mr. Reynolds, now in the midst of a global tour (p. 8) as he courts investment on top of the roughly $12 million he has already raised. “Unless somebody gets rich, it can’t grow.”
More than four decades have passed since Mr. Reynolds embarked on what he portrays as an accidental life as an entrepreneur, an outgrowth of his fascination with mountaineering. He dropped out of college to start Marmot, the outdoor gear company named for the burrowing rodent. There, he profited by protecting Volvo-driving, chardonnay-sipping weekend warriors against the menacing elements of Aspen. Now, he is trying to build a business centered on customers for whom turning on a light switch is a radical act of upward mobility.
. . .
To succeed, a stove had to be so convenient and clean burning that women preferred it over their existing cooking method.
Mr. Reynolds began testing stoves made in Italy, India, the United States and China. He tried making his own.
He came to realize that the magic was in the combination of stove and fuel. He experimented with making charcoal out of corncobs. (“A stupid idea,” he says.) He tried burning banana leaves. Then he discovered wood pellets, which involve compressing wood and eliminating water, the element that produces much of the smoke.
He settled on a Dutch-made stove that reduces wood down to clean-burning gases. Using pellets reduced the need for wood by 90 percent compared with charcoal. But those stoves cost more than $75.
Then came the epiphany: Inyenyeri could supply the stoves for free while collecting revenue from subscriptions for pellets. Rwanda was urbanizing rapidly, and city dwellers rely on charcoal. They would be eager to switch to pellets, which were 30 to 50 percent cheaper.
. . .
(p. 9) The business model would get more attractive as the cost of charcoal climbed, and as innovation inevitably made stoves more efficient. Inyenyeri would also stand to collect revenue from an arrangement it later entered into with the World Bank to sell credits for reducing emissions.
In 2010, Mr. Reynolds sold his house in Boulder and went all in on Inyenyeri. He unloaded his wine cellar, liquidated his retirement accounts and moved to Rwanda with no plan to leave.
. . .
“This business model will happen,” he says. “If it’s not Inyenyeri that’s the first mover, then it will be someone else who learns from our mistakes and does it better. It’s too big of an opportunity.”

For the full story, see:
Peter S. Goodman. “‘A Low-Cost Fix for Africa’s Silent Killer.” The New York Times, SundayBusiness Section (Sunday, Dec. 6, 2018): 1 & 8-9.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 5, 2018, and has the title “Toxic Smoke Is Africa’s Quiet Killer. An Entrepreneur Says His Fix Can Make a Fortune.”)

Entrepreneur Carr’s Philanthropy Harmed Mozambique

(p. C6) It is an old, old story. A wealthy man comes to town, promising change and a brighter future. He’s the expert. He knows best. Inevitably, it doesn’t exactly work out that way.
Stephanie Hanes, an American correspondent for the Christian Science Monitor, spent three years watching one particular version of that fairy tale unfold in central Mozambique.
The wealthy man was Greg Carr. An Idahoan, Mr. Carr had made millions first by selling voice-mail systems and then by running Prodigy, an early internet service provider. At age 40, he turned to philanthropy . . .
. . .
In “White Man’s Game,” Ms. Hanes outlines, in a nonpolemical way, the long history of Western involvement in Africa’s wilderness.
. . .
Turning to the present day, Ms. Hanes takes World Wildlife Fund, Nature Conservancy and other Western groups–known as Big Green–to task for their conservation colonialism.
. . .
She . . . points out that they are a bit cynical. “The conservation industry mirrors the humanitarian assistance industry,” she writes, “with alarmist pledge drives, heart-stirring photos and admonitions to ‘act now!’–all to be repeated for the next grant cycle.”
. . .
It is clear from Ms. Hanes’s account that a complex interplay of social, political and economic matters affected Gorongosa, not just one man’s ambition. The imported elephants inevitably roamed outside the park and into nearby towns, damaging crops and perhaps killing a villager. Mr. Carr’s tree planting, a laudable goal on the surface, was seen negatively by the people there because, culturally, tree planting was a way of marking one’s territory. When visiting a prominent local leader, Mr. Carr arrived in a red helicopter, oblivious to the fact that, in Gorongosi culture, red is the color of violence. For locals, Mr. Carr was the latest in a long line of outsiders invading their land. He destabilized rather than restored.
In the West, Mr. Carr’s work catalyzed praise: a glossy piece on Gorongosa in National Geographic by the noted biologist E.O. Wilson, a profile in the New Yorker. But the reality on the ground was different. Few tourists came to Gorongosa, and a flare-up of civil-war tensions led to violence. Overall the 150,000 Mozambicans who lived in the district, according to Ms. Hanes, saw little measurable improvement in their lives. Park staff even tortured suspected poachers.
In the most powerful scene in the book Ms. Hanes observes Mr. Carr and his associates staring at a map of Mozambique and contemplating expanding the park borders to incorporate a vast swath of land so that animals could migrate again. They wanted to rewild central Mozambique. It was just another example of the “generations of white man standing around maps,” observes Ms. Hanes. They never mentioned the millions of people who lived in those lands.

For the full review, see:
James Zug. “The Do-Gooders’ Playground.” The Wall Street Journal (Saturday, Aug. 5, 2017): C6.
(Note: ellipses added.)
(Note: the online version of the review has the date Aug. 4, 2017.)

The book under review, is:
Hanes, Stephanie. White Man’s Game: Saving Animals, Rebuilding Eden, and Other Myths of Conservation in Africa. New York: Metropolitan Books, 2017.

Stylus Line Drawing Found from 73,000 Years Past

(p. A13) Researchers say they’ve found the world’s oldest known line drawing in a seaside cave in South Africa–a red cross-hatched grid sketched on a broken grindstone by early humans 73,000 years ago.
The discovery, made public Wednesday [September 12, 2018] in Nature, offers evidence of an important addition to the artist’s tool kit, the scientists said. Experts in human origins have discovered many images of greater antiquity made by engraving or by painting, but this appears to be the oldest example of a picture made by using a stylus.
“It was definitely drawn with a pen or pencil,” said archaeologist Christopher Henshilwood at the University of Bergen in Norway, who led the team that analyzed the drawing. If so, the abstract image appears to be about 30,000 years older than other early drawings in Europe, Africa and Southeast Asia.
. . .
In the prehistory of human creativity, the invention of drawing combines a new skill and a new tool. Drawing with a stylus of some sort is a breakthrough in portability and spontaneous expression that can turn any surface into a message board. “If you can draw, you can walk across a landscape and leave a message or a symbol anywhere you want,” Dr. Henshilwood said.

For the full story, see:
Robert Lee Hotz. “Ancient Hashtag Reveals Origins of Drawing.” The Wall Street Journal (Thursday, Sept. 13, 2018): A13.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date Sept. 12, 2018, and has the title “Is This the World’s Oldest Hashtag?”)

Billions of Public Dollars “Siphoned Off” by A.N.C. Leaders in South Africa

(p. A1) VREDE, South Africa — With loudspeakers blaring, city officials drove across the black township’s dirt roads in a pickup truck, summoning residents to the town hall. The main guest was a local figure who had soared up the ranks of the governing African National Congress and come back with an enticing offer.
Over the next few hours, the visiting political boss, Mosebenzi Joseph Zwane, sold them on his latest deal: a government-backed dairy farm that they, as landless black farmers, would control. They would get an ownership stake in the business, just by signing up. They would go to India for training, all expenses paid. To hear him tell it, the dairy would bring jobs to the impoverished, help build a clinic and fix the roads.
“He said he wanted to change our lives,” said Ephraim Dhlamini, who, despite suspicions that the offer was too good to be true, signed up to become a “beneficiary” of the project. “This thing is coming from the government, free of charge. You can’t say you don’t like this thing. You must take it.”
But, sure enough, his instincts were right.
The dairy farm turned out to be a classic South African fraud, prosecutors say: Millions of dollars from state coffers, meant to uplift the poor, vanished in a web of bank accounts controlled by politically connected companies and individuals.
The money from an array of state contracts like this one helped pay for a lavish wedding that a top executive at KPMG, the international accounting firm, described as “an event of the millennium,” according to leaked emails. And Mr. Zwane, continuing his meteoric rise, soon leaped to the national stage to become South Africa’s minister of mineral resources.
Almost nothing trickled down to the township or the scores of would-be beneficiaries after that first meeting in 2012. The only local residents to get a free trip to India were members of a church choir headed by Mr. Zwane.
In the generation since apartheid ended in 1994, tens of billions of dollars in public funds — intended to develop the economy and improve the lives of black South Africans — have been siphoned off by leaders of the A.N.C., the very organization that had promised them a new, equal and just nation.

For the full story, see:
NORIMITSU ONISHI and SELAM GEBREKIDAN. “‘They Eat Money’: How Graft Enriches Mandela’s Political Heirs.” The New York Times (Monday, APRIL 16, 2018): A1 & A8-A9.
(Note: the online version of the story has the date APRIL 16 [sic], 2018, and has the title “‘They Eat Money’: How Mandela’s Political Heirs Grow Rich Off Corruption.”)

Africans Vote with Their Feet for Spanish Tolerance and Prosperity

(p. A1) CEUTA, Spain — For most migrants from Africa, the last stage of their trip to Europe involves some sort of perilous sea crossing. At the border in Ceuta, there is just a fence.
Ceuta (pronounced say-YOU-tah) is one of the two Spanish communities on the north coast of what otherwise would be Morocco, the only places where Europe has land borders with Africa. The other enclave is Melilla, farther east along the same coast.
Here, all that separates Europe from migrants is a double fence, 20 feet high and topped with barbed wire, stretching the four miles across the peninsula and dividing tiny Ceuta from Morocco — plus 1,100 Spanish federal police and Guardia Civil officers, a paramilitary police force.
They patrol a crossing point that has come under growing pressure.
. . .
(p. A6) On any given day, young migrant men can be seen prowling on the Moroccan side, looking for an opportunity.
Some swim around the fences where they go down into the sea. Others take short, illicit boat trips to Ceuta from Morocco. But mostly they run and climb the fence, or use bolt-cutters to cut holes in it, and they are quickly spotted by motion detectors and guards in observation towers and usually beaten back by policemen using sticks and fists.
Salif, 20, from Cameroon, said he tried 10 times to cross the fence in the past year, until he finally made it over on his 11th effort.
. . .
Morocco has long demanded custody of Ceuta and Melilla, but Spain has refused, saying they were part of Spain for centuries before Morocco was even a state.
“We are in Europe, not in Africa,” said Jacob Hachuel, the spokesman for the city. “But we have a border that has the biggest socio-economic differences between the two sides of any border in the world.”
Despite the violence used to prevent efforts to cross the border, once inside Ceuta migrants find an easygoing climate. Some 40 to 50 percent of the 84,000 residents are Muslims of Moroccan origin; most of the rest are Spanish Christians. There are also minorities of Jews and Hindus in the seven-square-mile area.
The Jewish community is the oldest one in Spain, having escaped the 1492 expulsion of Jews from the rest of the country. “It’s a mix of cultures, and we are used to having the other in our midst,” said Mr. Hachuel, who is Jewish.
Anna Villaban, a government employee, said Ceuta’s residents were proud of their city, which recently was host to three festivals, commemorating Ramadan for Muslims, Holi for Hindus and a local saint, San Antonio, for Christians.
“Where else would you see that?” she asked.

For the full story, see:
Rod Nordland. “‘All of Africa Is Here’: Hopes of Climbing to Spain.” The New York Times (Monday, Aug. 20, 2018): A1 & A6.
(Note: ellipses added.)
(Note: the online version of the story has the date Aug. 19, 2018, and has the title “‘All of Africa Is Here’: Where Europe’s Southern Border Is Just a Fence.”)

Resilient Wichita Zoo Flamingo Flies Free in Texas

FlamingoFreeTexas208-08-02.jpgFlamingo stands free and tall in Texas, nearly 13 years after escaping Wichita zoo. Source of photo: online version of the NYT article quoted and cited below.

(p. A13) That can’t be right.

A flamingo? In South Texas?
Ben Shepard, in the first week of his summer internship with the Texas Parks and Wildlife Department, thought it must have been something else.
. . .
Mr. Shepard had the rare pleasure of spotting No. 492, an African flamingo that, for more than a decade, has shown you can still survive when no one gets around to clipping your wings.
. . .
In June 2005, on a very windy day in Wichita, a guest reported seeing two flamingos out of their enclosure. No. 492 and No. 347 had flown out; the staff had missed the signs that their feathers needed to be clipped again.
Each attempt to approach the flamingos spooked them. Soon they flew away to a drainage canal on the western side of Wichita, where they remained under observation of park officials for a week, Mr. Newland said.
They couldn’t get closer than 50 yards away from the birds, and were stumped on how to get them back. Perhaps they could try in the cover of night, using a spotlight to disorient them.
They never got the chance. July 3 brought a terrible thunderstorm. And on July 4 — Independence Day, . . . — the birds were gone.
. . .
But great fortune was ahead for No. 492. Soon after it arrived in Texas, it found an unlikely companion: a Caribbean flamingo that, Mr. Newland speculates, may have been blown into the Gulf during a tropical storm. They were seen together as early as 2006 and as recently as 2013.
“Even though they’re two different species, they are enough alike that they would have been more than happy to see each other,” he said. “They’re two lonely birds in kind of a foreign habitat. They’re not supposed to be there, so they have stayed together because there’s a bond.”
Though they’re often referred to as mates, no one knows the sex of either bird. And Mr. Newland said the fact that they’re roughly the same height suggests they’re likely to be the same sex.
. . .
“It’s less about animals escaping from a zoo than how resilient the animals on our planet are,” he said.

For the full story, see:
Daniel Victor. “Flamingo, After Cinematic Escape and Years on the Run, Is Spotted in Texas.” The New York Times (Thursday, June 28, 2018): A13.
(Note: ellipses added.)
(Note: the online version of the story has the date June 27, 2018, and has the title “A Flamingo? In Texas? A Zoo Fugitive Since 2005 Is Still Surviving in the Wild.” Where the wording differs between versions, the quotes above follow the somewhat more detailed online version.)