Can Entrepreneurship really Solve poverty?

We challenge the myth that entrepreneurship alone ends poverty and map a practical path that pairs human development with firm growth. From scarcity’s psychology to the three capitals and value chains, we offer a two-engine blueprint that turns hustle into real opportunity.

• poverty as absence of margin for error
• psychology of scarcity and self-efficacy
• three capitals: human, social, financial
• survival ventures versus growth orientation
• gazelles and job creation dynamics
• two engines: people foundations and scaling firms
• value chain linkages and fair market access
• redefining success as choice and opportunity

If this episode sparked something in you, share it with someone shaping policy, mentoring youth, or running a business that gives others a chance to grow

Watch on YouTube on: https://www.youtube.com/@mmathebezvobwo

Chapters

• 0:02 Framing Entrepreneurship And Poverty
• 0:42 The Dream And Daily Hustle
• 1:03 Poverty Traps And Missing Margin
• 3:07 Scarcity Mindset And Self‑Efficacy
• 3:56 The Three Capitals Framework
• 6:25 From Survival To Scaling
• 7:21 Two Engines Of Development
• 10:29 Value Chains And Fair Conditions
• 11:09 A Better Goal: Choice And Opportunity
• 12:58 Partnership And Closing Reflections
• 12:58 Share And Keep Igniting Africa

Transcript

SPEAKER_00: 0:02

Welcome to the Ignition Zone, the space where we explore ideas that ignite growth and purpose across Africa. I'm Mateh Bez Robo, and today we're talking about something that touches almost every community on our continent. Entrepreneurship and poverty. We often hear that entrepreneurship is the solution to poverty. And in many ways it can be. But as we'll explore today, it's not that simple. Because entrepreneurship isn't just about starting a business, it's about having the freedom, the confidence, and the environment to take a chance and grow. So let's start with the dream. Entrepreneurship inspires people because it's about taking control of your destiny. Across Africa, millions wake up each day and find creative ways to earn a living: selling food, repairing phones, making clothes, and running a spaza shop. But two Nobel Prize-winning economists, Esther Dufflow and Abegit Banej, found something striking in their book, Poor Economics. Most poor people are already entrepreneurs, just not the way we imagine, you know, the Mark Zuckerbergs of this world to be. They're running tiny businesses, these entrepreneurs, often out of necessity. They're working hard, they're resourceful and resilient. Yet, despite all of that effort, they really have different results from the Mark Zuckerbergs of this world. Very few of these entrepreneurs that are living in poverty ever get to escape poverty. Why is this the case? Because poverty is not just the absence of money, it is the absence of margin of error. Please give me a moment to explain this. A single illness, a single drought, or a broken tool can erase months of hard work. This is the absence of margin of error. So the system keeps people surviving and not advancing. Dufflow and Bonner G describe a loop they call a poverty trap. Low income leads to poor nutrition and education, which leads to low productivity and low income again. And this continues as a cycle. So when you're stuck in that loop, every decision is about the short term. What to eat today, how to pay school fees next week, there's no space to dream big or take business risks. And entrepreneurship is a risky activity. That's why many, many, many microbusinesses stay small and their failures are they're not failures, rather, they are a reflection of a system where risk is unaffordable. So let's understand the psychology of scarcity because this is what poverty comes with. Scarcity doesn't just limit money, it limits mind space. When survival is all-consuming, it's hard to plan, innovate, or experiment. Psychologist Albert Bandura calls this self-efficacy. The belief that I can influence my future. When that belief is damaged, people become cautious and defensive. So entrepreneurship programs can't just provide finance or training. They must also rebuild confidence and hope through mentoring, community, and success stories that show what's possible. Now, entrepreneurship flourishes when the three forms of capital come together. This is what we call the three capitals framework in entrepreneurship. Human capital. This is essentially the education, the skills, the health, and the human resources required to make sure that entrepreneurship thrives. What poverty does instead is that poor schools and healthcare create an environment where human capital just does not thrive or is accessible to entrepreneurs. Social capital, which is the second form of capital entrepreneurship is based on, is what we call the networks we need to advance our businesses, the ability to be trusted in society, and relevant mentors. What entrepreneurship does to undermine the social capital for poor entrepreneurs is that they are often found in isolation and they've got low exposure or have limited connections that could really advance their businesses. Financial capital, which is the most popular one that most people talk about, is really about access to the relevant capital for the right stages of your business. And that's important. This may include savings, credit insurance, credit, or insurance. What poverty does is that there's no safety net in taking risk. So in other words, they're not enough savings for entrepreneurs in poor areas to be able to start meaningful businesses and take risk with that capital or even take on credit. So these capitals reinforce one another. When they're missing, people often start small survival ventures, repeating what already exists instead of creating something new. So it's not that people in poor areas do not have the creativity necessarily to start meaningful businesses. It's because when these three capitals are missing, what ends up happening is a loop to start these businesses. That's not because poor people lack ambition, it's because the environment limits their options. Scholar Michael Morris calls this the liability of poorness. When systems fail, entrepreneurship becomes a survival strategy rather than a path to growth. So maybe the question isn't why don't the poor start bigger businesses? Maybe it's why haven't we built conditions where people can safely grow? It's really about the conditions where people can safely grow. The goal isn't to stop entrepreneurship, it's to make sure it is a choice and not the only option. And I think this is where most programs get it wrong. Anybody who is in a poor area and cannot access employment is expected to start a business without the context of understanding that entrepreneurship thrives in the right environment and when the conditions are correct. Now let's zoom out a little bit to the nature of high-growth entrepreneurship and jobs. This is an area I'm very passionate about because my research in entrepreneurship, especially for my masters, was really about this topic. That a small number of high-growth firms, sometimes called gazelles, create the majority of new jobs. These firms have what we call strong entrepreneurial orientation, EO for short. They innovate, they act proactively and take calculated risks. They are not just surviving, they are scaling. So a balanced development model needs both. We need support for basic human needs and support for high-growth enterprises that can hire, train, and inspire people at scale. And so this is where I would actually want to provoke the way and propose a different way of doing or thinking about entrepreneurship and supporting entrepreneurship in our different countries from an African perspective. We need to think of it, we need to think of development as having two engines that work together. The first engine focuses on people. So it focuses on the fundamentals, having good schools and early education, having accessible health care, having safety nets and insurance, and skills development and confidence building. This first engine is less about making sure that everybody starts a business, but is more about making sure the conditions that are necessary for human beings to thrive are met. The second engine, which is engine B, is what I would like to propose. It focuses on scaling businesses or scaling enterprises. This one focuses on firms, financing and incubation for growth stage businesses or growth-oriented businesses, high-growth-oriented businesses. Here, public and private partnerships become critical in opening markets, making sure that there are value chain linkages that connect small suppliers that are founded by entrepreneurial and found entrepreneurial founders and founders that are able to take risks, and ensuring that these founders are able to scale their businesses such that they partner with larger companies from a value chain perspective. The challenge we have now is we're expecting entrepreneurs in different areas, or especially from poor backgrounds, to be able to skip the loop from having good quality education, access to fundamental healthcare, which is important for them to stay healthy, access to skills, confidence building, and we expect them to jump right through to Engine B, which is focused on scaling enterprises and making sure that they're able to meet the demands of large corporates. Economist Reggie calls this the value chain approach, especially the linkages from a corporate perspective, calls this the value chain approach. But it's very, very important that these enterprises are founded not in the wrong conditions, where people would rather much have access to employment and income such that they're able to change their circumstances. It's important that the basis, the basics are provided. These founders are able then to think about how they are able to scale their businesses and ensure that they're able to leverage the value chains of large corporates. So entrepreneurship can fight poverty, but only when fairness, education, and opportunity surround it. We shouldn't see the poor as failed entrepreneurs, we should see them as potential creators, waiting for the right conditions to thrive. The ultimate goal is not for everyone to start a business. It is to build societies where anyone can and where good jobs, creativity, and security coexist. Starting a business must be an option, not a means to survive because the economy cannot provide for you or that you don't have access to the right living conditions. Here's the heart of it. Poverty isn't a lack of effort, it's a lack of opportunity. When we invest in human potential, strengthen institutions, and nurture high-growth enterprises, entrepreneurship becomes a bridge, not a burden. So maybe the next time we talk about entrepreneurship, we can talk about partnership too, between people, businesses, and governments. Building ladders, not expecting anyone to climb alone. Once again, I thought I should share this because this for me has been an epiphany and it has confirmed what I believe we should be doing as society to be solving problems in poverty, but actually how we start to link entrepreneurship to that solution. Entrepreneurship is not a panacea, entrepreneurship is a vehicle for creativity, but we need to get the conditions right. Thank you for joining me on the Ignition Zone. I know I have been MIA for a bit, but thank you so much. If this episode sparked something in you, share it with someone shaping policy, mentoring youth, or running a business that gives others a chance to grow. Until next time, keep learning, keep building, and keep igniting Africa's future.