Why Foreign Aid Doesn’t Work… and What Does

The following video does a great job of quickly summarizing the typical problems with foreign aid…

So… if that doesn’t work, what does? For-profit capitalism. That may sound backwards, but it truly does work, when implemented correctly.

I’ve seen this first-hand, as this is what I do as my main job. I find overlooked entrepreneurs in Africa whose work alleviates hunger and poverty. I train these entrepreneurs. I invest in the growth of their companies.

I do this through Fledge, Africa Eats, The Land Accelerator, and TerraFund.

The Africa Eats companies (on map to the right) work with over 100,000 smallholder farmers. They’ve grown the incomes of these farmers by 50%-500%.

Most of these farmers’ incomes have grown from subsistence levels to middle class. Not by charity. By buying the outputs the farmers are growing. And once in a business relationship where they know their outputs have a market, only then training them on how to increase yields and increase quality of the food.

There is little use of the millions in foreign aid that just teaches better farming methods if it doesn’t also come with more millions in investment capital to move that food to retailers, or processors, or exporters.

In the video, it took over $10,000 to bring each family out of poverty. That $10,000 being spent and gone in that effort. Put the same $10,000 to work as an investment into one of the companies I work with and that will not only pull dozens of families out of poverty, but that $10,000 will then either be repaid as debt (with interest) or be worth even more as equity in a larger business.

That is ultimately how the United States and Europe pulled its subsistence farmers out of poverty in the 18th, 19th and early 20th Centuries, and it is the only way the same will happen here in the 21st Century for the subsistence farmers remaining in China, India, LatAm, SEAsia, plus the nearly billion farmers and children of farmers in Africa.

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