Nina Easton‘s latest Fortune column explores the impact of private-sector efforts to provide a more effective alternative to taxpayer-funded foreign aid.
Coca-Cola, operating mostly under the media radar over the past three years, has trained half-a-million poor women in 44 countries to become small-scale capitalists. They include owners of sari-sari convenience stores in the Philippines, farmers growing mangoes in Kenya, and dirt-poor villagers building tiny recycling operations out of discarded bottles from trash heaps in Mexico.
Along the way, the world’s largest beverage company is testing two propositions. The first: Can social good directly contribute to a global company’s bottom line? The second: By weaving that “good” into a company’s day-to-day profit-making operations—as with Coke’s supply chain—can the Fortune 500 produce a more lasting force against global poverty than traditional foreign aid?
“Government aid was about handing out money,” says Alice Korngold, consultant and author of A Better World, Inc. “This is about enabling people to achieve their dreams of building and owning companies—and that’s sustainable.”
In any event, American taxpayers have lost their appetite for foreign aid, which stands at less than 1% of the U.S. budget—and comprises just 9% of global capital flows, compared with 71% in 1960. “At no other time in history has U.S. foreign aid made up such a small share of global capital flows,” according to the Washington-based Center for Strategic and International Studies. …
… [T]he initiative—which boasts clear metrics for success—is aligned with Coke’s core business and “is not just a philanthropic program,” notes Jane Nelson, who investigated 5by20 from her post at the Harvard Kennedy School. Coke offers a mix of business skill training, financing, and peer mentoring—but only to women who are part of the company’s value chain. That means mom-and-pop shops and distributors, fruit growers, recyclers, even artisans producing crafts from leftover labels.
