Organisational mechanisms that best serve the poor

Graham Boyd (2005)

(42 pages - 284Kb pdf file)
(As an IIED power tool)

This paper seeks to sharpen understanding on how poor and marginalised groups can address the forces that restrain their self-development through the creation of their own democratic economic organisations.

Critical factors blocking pro-poor development are examined such as elite power, modes of living and other dependent-dominant relationships which inhibit the poor from pursuing organised actions to change their life situation. In seeking ways of overcoming these factors the paper analyses the need to provide some form of catalytic support to stimulate the poor to create informal and formal organisations under their ownership and control.

An examination of ‘official’ development policy that both explicitly and implicitly seeks to promote investor-controlled enterprise as the dominant business ownership model suggests that this approach is unlikely to bring lasting changes which will directly benefit the poor. “Because well functioning markets are designed to bypass such people.” (Sachs, 2005)

Market interventions by pro-poor development partners need to become more balanced. In particular they need to promote and support on an equal basis appropriate forms of member-controlled enterprise. It is through this self-organising approach that the poor obtain significant power to control their asset-base, promote economic democracy and retain economic surpluses.

The paper details a range of different forms – association, trust, partnership, company and cooperative - which can be used to achieve these objectives. Two charts provide details of key features such as legal incorporation, governing instruments, ownership, regulation, asset and financial controls, meetings, management structures and winding-up. Guidance is provided as to which legal forms, if any, would be most appropriate to ensure that self-organised enterprises remain controlled by the poor and therefore best serve their interests.