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Jan 2019 | January Issue

THE PROSPERITY PARADOX: How Innovation Can Lift Nations Out of Poverty



Governments have a critical role to play in ensuring countries remain prosperous over time. Over the past two centuries, however, the responsibilities placed upon governments have grown significantly. Today, governments not only are tasked with ensuring law and order in society—a tall order by itself for many poor countries—but also must see to it that citizens have access to quality education and health care, roads, rails, and other public infrastructures, and a plethora of social programs. In fact, governments are now tasked with doing it all, and many poor-country governments are trying to do it all. But few governments have the financial, technical, and managerial resources to provide the myriad of services they are now responsible for. As such, year after year, governments find it harder to both meet their budgets and provide these services.

By studying the responsibilities placed on many governments across the world, we have learned that there is often a gap between what many low- and middle-income country governments are expected to do and what they are able to do. So with this section we seek to offer hope to the many governments that are trying. Once a government understands the progress the people it serves are trying to make, governments can become more effective at performing their responsibilities. By providing several case studies from different countries—from the Philippines to Rwanda—we will highlight the ways in which governments are supporting innovative programs with the limited resources they have. We hope you find these helpful and inspiring.


Philippines—The Business of Water


Water may be life, but unfortunately water is not free. In fact, far from being free, safe water is quite expensive and often subsidized in prosperous countries. With a GDP per capita less than $3,000, however, the Philippines is not a prosperous country, and as many as ten million citizens did not have access to safe water in 1995. In the eastern region of Manila, the world’s most densely populated city, barely a quarter of people living there had access to safe and potable water. The situation got so bad that the government was compelled to enact a National Water Crisis Act, paving the way for innovators to work with the government to solve this problem. Through this crisis, Manila Water, a public-private partnership between the Metropolitan Water Works and Sewerage System and the Philippines’ oldest conglomerate, Ayala Corporation, was born. When Manila Water was formed, the organization didn’t simply look to serve only its existing customers more profitably. Instead, their mission was to sustainably and profitably get water to as many people as possible. Fundamentally, they understood what consumers wanted: easy and convenient access to water at an affordable price. In order to accomplish this, the organization focused on developing its workforce and reshuffling the existing organization structure. The organization was able to increase access to safe water from around a quarter of the residents to 99 percent of residents. In 2016, Manila Water served more than 6.5 million customers. In doing all this, they built the necessary infrastructure to support their work, increased efficiency, and tripled the volume of water delivered from 440 million liters a day to more than 1.3 billion liters a day.

The interesting facts about water and Manila are that the water has always been there, the people have always been there, the technology has always been available, and the need for water has always been there. But the partnership between the government and the private sector hadn’t been there. If residents and the government in Manila had still seen the provision of water as exclusively a public- sector function, there would be no Manila Water today. Thankfully, they didn’t. And as a result, Manila Water has transformed the lives of millions of people in the Philippines.

When governments make decisions that are targeted at providing solutions for the people they serve by supporting organizations that are technically, financially, and managerially more capable to provide the services, lives and economies are transformed.


Excerpted with permission from Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty by Clayton M Christensen, Efosa Ojomo and Karen Dillon, published by HarperBusiness.