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Social Enterprises take on Poverty Reduction

The below articles looks at how social entrepreneurs are modifying their approach to addressing poverty alleviation in developing countries. Although many entrepreneurs focus on one issue at a time, FXB goes beyond single service delivery to holistically lift communities out of poverty, including access to health and education facilities.

NexThought Monday: FXB, Intervening Holistically for Economic Empowerment

By Heather Esper


Ugandan families are among the recipients of FXB assistance. (All images by Alan Wicht, courtesy of FXB).

 

Whether it’s clean water, access to finance, or sustainable energy, social enterprises and foundations alike often hone in on a specific focus with the goal of reaching a wide scale of impact in the long run. One could argue that FXB takes the opposite approach by examining the big picture causes behind poverty first and tailoring a diverse set of services to help families reach economic independence.

The donor funded FXB utilizes a three-year approach to improve the lives of children by working with their families to provide comprehensive support in a customized way. Their approach focuses on economic empowerment and includes providing families with a subsidized and integrated set of services, while gradually moving families toward financial sustainability by the end of the third year. Within each “FXB-Village” their team consists of a social worker, nurse and logistician.  By focusing on economic empowerment FXB is able to leave communities after three years.

During the first year, FXB looks to strengthen the foundation of the family by improving their access to health care, housing, education and psychological health. In the second year, FXB identifies diverse income generating activities that are a good fit for the family by engaging them in both individual and group income generating activities. For example, FXB might train a family to grow beans on their own, but also link them to a labor cooperative that is raising pigs. During the second year, FXB covers 75 percent of the cost of services, with the majority related to educating the household’s children. The third year begins with families covering 50 percent of expenses and ends with the families paying for 100 percent of costs.

I spoke with FXB CEO Sean Mayberry, who joined the organization in 2011. Previously the chief operating officer of VisionSpring, Mayberry discussed FXB’s approach and direction for the future.

Heather Esper: Besides providing families with income generating activities, FXB also helps families access a number of other services including health care and education. Do you think it would be possible for FXB to intervene in communities by only introducing income generating activities, or do families’ other needs need to be met first?

Sean Mayberry: FXB has developed its FXB-Village model over 20 years of trial and error. Over that time we have learned that poverty is complicated, and families need a strong foundation upon which to integrate economic empowerment.  FXB’s experience has been that simply introducing an IGA (income generating activity) without the rest of our comprehensive approach will not result in the same success that we have seen with the FXB-Village model. Economic empowerment without the rest is like building a house on sand, it won’t last. It has become very clear to me and our team that addressing individual needs does not solve poverty. In order to make a dent in the poverty faced by the poorest of the poor it takes a comprehensive approach.

I used to work in the DR Congo and socially marketed mosquito nets around that country.  I can still see some of our customers, in rural villages, who were so pleased to purchase such a net, but these same people also wanted much more from my team—they needed jobs, they needed more comprehensive health support.  I always left those villages feeling slightly disappointed that my team was not providing the full solution.  Today, with FXB, we are providing the full solution, and I leave after visits with our beneficiaries knowing that these families are succeeding.

Heather Esper: Why did FXB decide to focus mainly on economic empowerment?

Sean Mayberry: As you know poverty is an extraordinarily complicated issue. There is no single, silver bullet solution. You can do a lot of good in many communities by providing just mosquito nets, or solar lights, or clean water, but to get to the root of the issue, to make real progress, it takes much more than that.  FXB strengthens the foundations of families in order to permanently lift parents and children up and out of poverty.  The foundation for us includes areas like strengthening the family’s health and psychosocial stability, ensuring adequate shelter, enrolling their children in local schools and ensuring a quality education, to name just a few areas.  Once the foundation is secure, typically after our first year working with them, we shift our focus to economic empowerment.

One of our best practices is that FXB’s approach to economic empowerment is customized to each family based on their unique circumstances.  For example, a rural household with eight children requires a different economic approach than a smaller household in an urban setting.   We work collaboratively with our families to evaluate potential IGAs.  We look at the options and help families to choose the best possible IGAs to meet their needs and that have the greatest chance of success.

Ultimately, to lift families out of poverty permanently they need the long term ability to create their own revenue streams. That is exactly what economic empowerment does. FXB participants receive grants to start micro-enterprises; they learn how to sell their goods, how to budget and plan their expenses, and how to save funds – things we in the western world take for granted. Economic empowerment is the capstone of what FXB does, because without income families would remain locked in the cycle of poverty.

Esper: FXB’s approach seems similar to Jeffery Sach’s belief that a one-time infusion of assistance can make a large difference in an individual’s life.  Or in other words that ‘poverty traps’ exist as Abhijit Banerjee and Esther Duflo refer to them in their book Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. In the book Banerjee and Duflo suggest that whether poverty traps exist or not takes a case by case basis, therefore I was curious how FXB decides which villages to work in?

Mayberry: FXB’s mission of lifting people up and out of poverty is accomplished through our selecting the poorest of the poor communities where we work, from Colombia to Uganda to India.  We actively work with local government officials and local leaders or elders to really identify those most in need.  This is very much a collaborative approach, where we spend much time speaking with the entire community, so that everyone in a community ultimately understands and supports those families selected to participate in our FXB-Village program.  This “buy in” from the local community ensures we target those most in need, and it also helps to avoid any feelings of rivalry between those we serve and those who are in better economic condition.  It is really quite amazing, when you look at our results and see that for a total cost of less than $500 per person over three years, these “poorest of the poor” radically improve their lives, and their economic condition.  These families take very significant steps up and out of poverty, and our research shows that this improvement continues for years after our FXB-Villages end.  We at FXB are excited to be publishing next month in April the results of a new study that tracked the progress of families we worked with in Uganda and Rwanda eight years ago, and the findings indicate very strongly that our customers continued to prosper during this interval after our FXB-Villages ended.  While we at FXB cannot and should not take complete credit for these positive findings, we are heartened to find the ongoing success of our beneficiaries, and we are excited to share this story, and our learnings, within the anti-poverty sphere.

Esper: What are some of the most important changes you see in families’ well-being, especially children, as a result of their parents becoming empowered economically?

Mayberry: Each time I meet a family participating in FXB’s programs I ask them how they see their future after the FXB program ends.   I am always struck that the huge majority of families have a positive outlook on the future, are confident that they will succeed, and feel that they can weather any adversity. The really remarkable thing here is that FXB’s beneficiaries have developed confidence – they know they have the tools and skills to live a better life, and they know that they can rely on themselves.

Esper: Do you think we need more BoP enterprises with a focus on economic empowerment as opposed to enterprises focusing mainly on social empowerment? If so, how can more enterprises do so?

Mayberry: I strongly believe you need both approaches combined in one, holistic model in order to be effective.

It is easier for organizations to focus on fewer issues, such as clean water or reproductive health.  But the results of those interventions are constrained when the bigger picture is ignored.  I think there are many opportunities for BoP enterprises to integrate economic empowerment into their work, and the first step in doing so is to be mindful of identifying the business opportunities in the communities where we all work.  For example, the India FXB program is now starting large scale production of sanitary pads for women, using our beneficiaries as employees, because we recognized the need for women to have access to this important health product.  A social empowerment approach may have resulted in giving out these products for free; but an economic empowerment approach is to produce the product locally and sell them at an affordable price for the BoP population.

Esper: How do you see FXB’s approach evolving over time?

Mayberry: We are continuously learning, refining our model and looking for new services to include. At the moment we are adding an early child development component to our FXB-Villages because we have found it successfully strengthens families. Additionally, we are searching for partners who can help us accomplish our goals more efficiently and reduce our costs. We are also focused on exploring related projects that will generate income for FXB so that we can rely less on external funding.

In the long run our goal is to convince local governments to adopt our holistic model. It is much easier to ‘sell’ programs to governments when they work and you can prove it. I think governments will be drawn to the FXB-Village program because of its proven success, which is being increasingly verified by independent research. Ultimately, governments can scale our model effectively and lift millions out of poverty.

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