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Our Insights 26 Apr 2011

Thievery Corporation: When It’s Right to Profit from the Poor

By Lindsay Clinton

Photo: Flickr user Meena Kadri

A week ago, as I waited at a traffic light in Mumbai, I witnessed an incident of grand theft auto—well, perhaps it was not grand, but something was stolen, and it involved an automobile. Here’s what happened: A barefoot woman in a grubby green sari scurried into the street, carrying a big empty water jug under her arm. Without shame, she went straight to the back of a brightly painted water tanker truck which was waiting for the red light to change. On the back of the water tanker was a large faucet, and when the woman turned the valve, water spurted everywhere, soaking her sari and filling her jug within seconds. The woman’s children and husband watched by the side of the road as she stole the water. When the signal turned green, the tanker driver drove off, with a slightly lighter load.

As my cab started moving, taking me away from the scene of the crime, I felt mixed emotions. Was she a thief? Or the victim of a broken system? Should she be punished? Or should we try to understand what led her to steal?

While many of us know what rural poverty looks like, the lives of the urban poor—in flux and subject to constant change—are less clear. Sometimes we characterize the urban poor as bootstrapped, entrepreneurial dreamers in search of new opportunities; from other angles, their poverty seems desperate, unhealthy, and inhumane. At last week’s convening in Mumbai, The Future of the Urban Poor, we discussed these viewpoints as well as current interventions and approaches.

One perspective I kept returning to focused on making a profit from providing products/services to the poor. A conference attendee suggested that “for any solution to poverty to work and be sustainable, someone in the value chain must be making money.”

While many of the researchers at the convening disagreed with this viewpoint, it deserves closer consideration. While society often frowns on making money while helping the poor, we must acknowledge that it happens all the time—under the table.

The state, as the de facto provider of essential services to its citizens, suffers from much inefficiency. Often, this inefficiency manifests in corrupt players and processes.

The woman who took water from the tanker symbolizes that broken system. Upon arriving in the city, she looks for shelter, food, and water. Affordable housing in megacities like Mumbai is hard to come by. Living on the pavement or in a slum, means access to water is a daily challenge.

There are three or so options for getting water. One, she waits for the government to fulfill the need. Two, she relies on the black market, or “water mafia.” Three, she steals.

The first option leads to death by dehydration. In wealthy countries, governments successfully deliver potable water to their citizens. India has not always been able to do so. Funds for public services are often consumed by bribery and corruption.

The second option is dealing with the water mafia, private operators who charge the poor rates that often exceed what the middle and upper class residents pay. In reality, the mafia is doing nothing differently from corrupt government officials—stealing a public good and making a profit.

Her third option is to steal. She can either skim from public sources – train stations or toilet blocks, or from the private sector – a tanker in this case.

All three options involve theft, but isn’t there a fourth option? What if a fourth option existed?

In fact, it does – private companies that sell bottled water or water purifiers, or redistribute supply via private water tankers. For example, Tata Swach is a water filter made by the Tata Group that costs about $21. Sure, Tata is driven by profit, but the product is produced and delivered in a transparent manner that does not involve stealing a public good. Tiash Water Supply operates in Dhaka, Bangladesh and sells bottled water in bulk to homes and businesses. While it is not quite affordable for the poor, the product is cheaper than traditional bottled mineral water. Healthpoint Services in Punjab, India has created a model involving local health stations that provide inexpensive ($1.50/household/month) filtered water as well as health diagnostics. The social enterprise currently targets rural areas. Could this model be modified for urban settlements as well?

We should not be at war with profits, but those that steal the public good. In an ideal world, all governments would provide basic services, including clean, drinkable water, to all citizens. But, corruption and lack of transparency are major hurdles to attain this goal. Tata and Tiash compete for the same profits that corrupt officials and the water mafia are after. But they do so openly. Private, for-profit companies make the water market more competitive, pulling the profits from the thieves, and squeezing inefficiencies out of the system.

So often, we find ourselves pitted against making profit from working with the poor. We say, wait, the government should do its job. Indeed, it should. But, citizens thirst for answers and services today. If for-profit companies can provide needed services openly, effectively and sustainably, we should applaud them for their ingenuity and for providing much-needed transparency.

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