Mo' Money Mo' Problems

A cement well financed by German philanthropists



These women got a grant to learn techniques for dyeing fabric.



Last year the women of Zogore formed a group to fabricate soap and sell it within the community. Soap making is a popular income generating activity among rural women because it is relatively easy to do and there is a large demand, for washing clothes and dishes as well as personal bathing. The women were lucky to find foreign financing, which bought them a cement building to work in, a week of training in the capital, and machines to cut the soap and stamp it with a logo of their choice. Yet, despite all that, so far they haven’t made or sold a single bar of soap.

Somehow in the process of obtaining and spending the grant money, no one bothered to buy the lye and oils that form actual ingredients of the soap. Now the women are idle, waiting for someone to give them more money so they can start their business.

Most development projects in poor communities use money obtained from outside sources, as villagers living a subsistence lifestyle do not have the capital necessary to buy materials and training required. However with foreign financing comes a myriad of problems and complications.The soap ladies illustrate one such problem- lack of effective money management. The women received money but not the guidance to prioritize and budget their spending so they could use the financing most effectively and begin their activity.

Another fear of many development workers is that constant flow of aid money can produce a welfare effect, that people become dependant and start to feel entitled to the aid instead of working to become self reliant. Indeed, one of the most common phrases visitors hear in West Africa is, “I want to start ‘x’ business but I lack the means.” The complaint isn’t without merit, because many people have literally no liquid assets. However if the prevailing attitude is to sit and wait for help instead of doing everything possible to build up a business little by little, it demands the question of whether a self sustaining economy can ever result. When people are given
things instead of earning them, there is less urgency to learn necessary management skills. Then if a business hits troubled times or fails what recourse is there but to wait to be bailed out again?

However, even with all the problems encountered with financed projects, outside money can and does play a large role in improving the quality of life for the world’s poor. Services like pumps serving clean water, hospitals, and schools all directly raise the standard of living for poor communities who could not afford the development and infrastructure on their own. And countless villagers, from tailors to mechanics to donut vendors, have been able to start small businesses using small grants and loans to purchase training and materials. Now they make profits and if properly managed have no further need of outside assistance.

The problem, then, is not financing itself but how it is applied. Is money given to huge, poorly conceived projects through bloated bureaucrats without local input, or is the money used toward community derived projects that aim to directly benefit the poor, aid local economies and accomplish everything in a sustainable manner so the benefits will continue long after the original money has been spent?

More and more agencies and organizations are trending toward the second model, with micro-credit lenders enjoying success worldwide offering small amounts of money to large numbers of people, frequently accompanied by training so the borrowers learn to correctly manage their money.

Development is a complicated business. Wealthy countries are trying to accelerate the growth of poorer nations to help people achieve a minimum standard of living, but no one really knows the best way to do it. Questions of grants vs. loans, aid vs. self reliance, sustainability, lack of natural resources, and a host of other factors play into any discussion. There are camps who claim we don’t give enough foreign aid and others that say the third world would be best left alone to develop at its own pace. In the face of human suffering it is hard to sit back and do nothing— we just must be sure that the help we give is of the appropriate kind, and not doing more harm than good.