John Hoffmire: Sometimes small economic development is good economic development
Louela Nalzaro was desperate. As a single mom in the Philippines — a country with roughly a 7.5 percent unemployment rate and where more than 4 million people live in poverty on less that a dollar-a-day — Nalzaro was painfully aware that her job working in an ice cream shop for 100 pesos a day (about $2.20) was not enough to make ends meet for herself and her two children. With few good options, Nalzaro decided to do what many Filipino women do — leave the country to be a domestic helper abroad.
Nalzaro's story is typical of tens of thousands of 20- and 30-something Filipino women who support their families by cleaning houses, performing in nightclubs or caring for children, the sick, or elderly in other countries. Women such as Nalzaro make up the majority of the 7 million Filipino foreign workers (10 percent of the total population, and 20 percent of the productive labor force), according to figures released in 2012 by the Filipino House of Representatives' Committee on Overseas Foreign Workers.
The workers are scattered in 181 countries, the most popular spots are in Asia — Hong Kong, Japan, Singapore, Malaysia and Taiwan — and Europe — Britain, Spain and Italy. No matter where they work, many domestic employees face common problems: long working hours with no rest periods, nonpayment of wages, verbal, physical and sexual abuse and a lack of adequate accommodation. Child and adult domestic workers lack access to education and are vulnerable to illegal recruitment, forced labor, debt bondage and human trafficking.
Not so typically, Nalzaro was fortunate to end up with a family in Singapore that paid and treated her well and required only that she help care for their two children, as they had another domestic helper to clean and manage their house. Despite these better-than-usual circumstances, Nalzaro began having nightmares. Every night, sleep was difficult to come by as she realized how difficult it was to be so far away from her own kids, caring for someone else’s children while relatives raised her own — all for the chance to earn a bit more in wages.
Finally, with the understanding of her employers, Nalzaro terminated her contract and returned to her children in the Philippines, though she had no idea how she would provide for her family, especially given the climate of unemployment to which she was returning.
It was at this point that Nalzaro’s life intersected with Elevita, a small nonprofit organization designed to help artisans in developing countries find an international market for their goods. Since Elevita has an all-volunteer management team, it is able to use 100 percent of its profits to fund meaningful projects associated with microfinance, other economic development tools and educational opportunities for its artisans, their families and communities.
Realizing that Elevita might buy products from her if she made them, Nalzaro began creating beaded jewelry from her home. Her first batch of necklaces was impressive; her second batch was even more beautiful; and before long Nalzaro’s stunning necklaces became the best-sellers on Elevita.com.
“I am so grateful to Elevita for helping me get started when no one else would. Because of Elevita.com, I see my life and my skills in a whole new way,” Nalzaro said. With the money she earned from Elevita, Nalzaro was able to open a snack stand at a local school, which increased her income even further. Also notable is that, with her most recently earned money from Elevita, she was able to purchase a laptop and printer that benefit both herself and her children, giving them all a chance to learn computer skills and saving them the long and expensive trips to the village Internet cafe.
Small nonprofit or nongovernmental organizations (NGOs) are often criticized in the economic development world for not operating at scale, for repeating what is already being done, and for neglecting to engage in effective project-monitoring and evaluation. At the same time, it is often the smaller NGOs, with more modest and nimble operations, that can have great influence on certain populations.
Elevita is just such an organization. Small in scope, Elevita encompasses more than just buying products from its artisans and selling them on the website. It supports them in such a way that brings lasting economic growth and change. It offers fair wages and prepayments so that its partners can sustain their businesses. It then collaborates with its partners to create new designs and improved quality so they can expand their markets. It provides grants so the artisans can expand their resources and businesses, gain access to new technologies, and create jobs in their communities. It also supports women who are the sole or main support for their families.
Small NGOs, like Elevita, will continue to be criticized by development economists for their lack of efficiencies and small economies of scale. But for Louela Nalzaro, Elevita had all of the right components to help break her family’s cycle of poverty by gaining the resources and skills to first create a job and, more recently, to develop a budding enterprise. Sometimes small is good.
John Hoffmire teaches at SaÏd Business School at the University of Oxford.
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