Lehigh University
Lehigh University


"Each of us can do something"

Cambodian women receive microcredit reimbursement in a branch office of Chamroeun Microfinance Ltd. Patricia Werhane, an ethics scholar at DePaul University, said here last week that loans of less than $100 made to small business owners have done much to improve living standards in developing countries.

In the early 2000s, two students, one from the United States and one from India, were assigned adjacent seats in a business class at the University of Virginia.

The long-term consequences of this chance arrangement have proven fortuitous, ethics scholar Patricia Werhane said here last week, for thousands of rural residents in Eastern India.

The Indian student, an engineer named Manoj Sinha, told his American classmate that as many as 480 million people in India live without electricity. He shared an idea that he and another Indian engineer had come up with—building small generators that would supply electricity to Indian villagers by gasifying rice husks, a waste product left when rice is milled.

The American student, Chip Ransler, did some research and calculated that the generators could not only be financially viable but could also be replicated in hundreds of villages.

The two students joined forces with the other engineer, Gyanesh Pandey, and formed a startup called Husk Power Systems that now provides electricity to several hundred thousand residents of the Indian state of Bihar.

Werhane, who is managing director of the Institute for Business and Professional Ethics at DePaul University, recounted the story at the end of an address titled “Globalization and Partnerships for Poverty Alleviation.”

Werhane visited Lehigh as part of the Speakers Series on Ethics, which is supported by the Endowed Fund for the Teaching of Ethical Decision-Making. The series, which brings three speakers to campus each academic year, was established in 2009 by the Class of 1961.

Start with something simple

The distribution of wealth among nations, Werhane said, can be likened to an economic pyramid. The developed nations of Europe, North America, Australia and East Asia occupy the top tier. The so-called BRIC (Brazil, Russia, India and China) nations and other countries with expanding economies make up the middle tier, while the “Bottom Billion”—a nickname given to the world’s poorest residents—live in nations where average per capita income amounts to the equivalent of $1.25 per day. Many of these nations, said Werhane, are landlocked, lack natural resources, and have corrupt governments and aggressive neighbors.

Global poverty has decreased by about 1 percent a year in the 21st century, said Werhane. International corporations are beginning to aspire to the ideals set forth by Microsoft founder Bill Gates, who has described corporate responsibility in the developing world as “making profits but also improving the lives of those who do not fully benefit from today’s market forces.” As an example, Werhane cited the efforts of Exxon-Mobil to develop the oil resources in the African nation and build a pipeline through neighboring Cameroon.

The success of Husk Power Systems, said Werhane, carries lessons for people who live in wealthy nations and wish to help improve the lives of those living in the poor nations.

“Each one of us can do something,” said Werhane, who is also the Ruffin Professor Emerita at the University of Virginia. “And it can be something very, very simple.”

More often than not, she said, small, sustainable grassroots solutions improve living standards in developing nations more effectively and reliably than large foreign aid projects costing millions or billions of dollars.

Since 1950, said Werhane, the world’s developed nations have spent $15 trillion on efforts to eliminate or alleviate poverty. The results have been mixed.

“We’ve done good in some countries, such as China and India, to a point,” she said. “But in Bangladesh and much of Africa, we get an F. Very little of the aid has trickled down, and in some countries, nothing has trickled down.”

Werhane contrasted these results with those achieved by Muhammad Yunus, a Bangladeshi entrepreneur who shared the 2006 Nobel Peace Prize with Grameen, the bank he founded, for creating and championing the concepts of microcredit and microfinance.

Grameen, said Werhane, has achieved a 98-percent return rate on loans of $20 to $100 that it makes to poor people living in rural areas of Asia, Africa and South America. Most of the loan recipients are women who have no banking or credit history. They use the money to start small businesses, usually in their homes, making products or raising animals for sale.

“Grameen Bank has taken six million people out of poverty in Bangladesh, one of the poorest countries in the world,” said Werhane. “They have done this by giving people money and asking them to do something with the money.

“The loan recipients grow chickens and silkworms. They make saris and sandals—and they earn a living wage.”

Story by Kurt Pfitzer

Posted on Wednesday, April 16, 2014

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