How do the urban poor make ends meet? They sell home-made snacks, repair cars in their back yard, and wash and mend clothes while babysitting. A recent study by Hebe Verrest in the Caribbean cities of Paramaribo (Suriname) and Port of Spain (Trinidad and Tobago) shows the importance of these so-called ‘home-based economic activities’ (HBEAs). They bring in indispensable money for 40% of households in the neighbourhoods studied. Most of these home-based entrepreneurs are women.
This was a comparative study in two economically and politically different countries – Suriname, which is slowly recovering from a crisis, and Trinidad and Tobago, whose economy is buoyant. Moreover, Trinidad and Tobago has in place a large range of programmes, including microfinance, to encourage entrepreneurship, whereas Suriname has only a few. Interestingly, however, this study found only small differences between the two countries.
Conclusion one of this comparative study: national economic growth has very little positive impact on the poorest urban households. Conclusion two: for the majority of home-based entrepreneurs, policies to encourage entrepreneurship through microfinance facilities are largely irrelevant. Why is this so?
Only a small number of home-based entrepreneurs can be regarded as ‘classical entrepreneurs’ who innovate, take risks and aim at growth and profit. Instead, the majority simply aim at lifting their families from survival to security. They avoid risks and try to diversify their incomes as much as possible. Taking out loans and building businesses demand so much focused dedication that they would frustrate the crucial strategy of being a ‘jack-of-all-trades’. Verrest, who defended her PhD thesis on 30 November at the Universiteit van Amsterdam, recommends that poverty reduction policies shift need to away from their current focus on classical entrepreneurs. Programmes that focus on improving skills, knowledge and access to the labour market are better suited to the needs of the urban poor, particularly women.
Hebe Verrest is continuing her research at the Royal Netherlands Institute of Southeast Asian and Caribbean Studies in Leiden.
References
H. Verrest (2007) Home-based Economic Activities and Caribbean Urban Livelihoods: Vulnerability, Ambition and Impact in Paramaribo and Port of Spain. Amsterdam University Press.