Monday, December 19, 2005

Free Enterprise as a solution to poverty


Most NGO's and organizations that fight poverty tend to be socialistic or charity programs...

This link discusses development at the small business level, as a means to alleviate poverty...

When we drove up to Mnandi’s Chicken Take-Away in Guguletu (outside Cape Town) to meet Maki Dyani. He was standing on some crates in front of the store, putting up sales posters. We chatted outside for a few minutes then moved inside to see the store and to talk. No more than 3 minutes later we were told that the crates had been stolen. That’s 50 Rand down the drain for Maki.
While this was a small incident, it’s indicative of a much larger problem facing the business people who are trying to make a living in the black township of Guguletu and in other places across South Africa. The area, Maki told us, is rife with violent crime: hijackings, armed robbery, and murder. This imposes tremendous costs on the people who live and work there, himself included.
The take-away business Maki runs is a symbol of progress in the township. The start-up and operating costs for Mnandi’s was provided by a major South African chicken distributor as a pilot project to see if it’s feasible and profitable to move into the townships. The business has been up and running for one-and-a-half years now and, by the looks of things, it’s doing well – business seems to be brisk, especially in the afternoon hours. Maki just completed a franchise agreement with the chicken company and will open a replica take-away in near-by Khayelitsha.
But there have been real problems during these 18 months. The store has been robbed, at gun point, three different times, even though it fronts a major road. Maki refuses to be physically present at the store at certain times, because he’s more likely to be accosted by someone with a gun demanding his keys to the store’s safe. Now, he goes to the store at irregular intervals so would-be robbers have more difficulty tracking his movements. The police, he told us, are under-resourced and can’t really help so he’s hired private security.

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