In his famous TED talk “Plutocrats, Pitchforks are coming”, the venture capitalist Nick Hanauer says “Capitalism rewards problem solvers. That’s why the system works.” Developing nations must take a similar approach to improve their economies.
The challenges developing nations face are not different from challenges more developed economies once faced in the past. Much of the services we now enjoy in advanced economies originate from problem solvers who saw an opportunity for change and made it happen. When Alexander Graham Bell founded the Bell Telephone Company in 1877, I don’t imagine him having the faintest idea of the impact the company would have on American society and the rest of the world. Based on Walter Issacson’s ‘Innovators’, the company (then AT&T) went on to start Bell Labs division, which has developed technologies that revolutionized American society, its economy, and started a world-wide digital revolution.
Foreign aid cannot develop countries. Often it has just the opposite effect. Aid can cripple local productions and keep poor countries dependent on developed nations rather than striving for self-reliance. On the other hand, creative entrepreneurship can help resolve many of the issues facing third world countries. And these solutions will be self-sustaining.
Entrepreneurs learn to adapt
It would be inaccurate to say businesses in poor developing nations are without challenges. The founder of Irokotv in Nigeria, Jason Njoku, who was born and raised in England, said after starting the company he quickly realized that he had to adjust his approach in order to be successful. Now the company dubbed “Netflix of Africa” could soon go public on the London Stock Exchange (LSE). An entrepreneur has to be creative enough to adapt to the challenges posed by lack of infrastructure in challenged economies.
Time to reframe the narrative
Based on a report released by the World Bank’s Multilateral Investment Guarantee Agency (MIGA), the average rate of return on foreign direct investment in developing nations can be as high as 14.5%. That is more than twice the global average of 6.2%. According to the founder of iRokutv, original investors five years later, saw a whopping 3000% return on their investments.
When I left Haiti in the early 2000s, to make an international call, one had to go to what we then called a Teleko (a government-owned communication center) nearby and waited in line for hours. But now people call their loved ones living overseas, from their farms in different corners of the country. Technology is developing and changing our cultures at rates we can barely keep up with. The world has gotten much smaller and more connected than ever before. Development of the challenged economies is just a mindset-change away.
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