Poverty is still one of humanity’s biggest challenges, so it’s no wonder that the search for creative and effective solutions hasn’t stopped for a minute. After all, as Albert Einstein said: “We can’t solve problems by using the same kind of thinking we used when we created them.” Yet, I’m doubt if Einstein would imagine that it would go as far as recognizing lipstick as a powerful weapon in the fight against poverty.
He’d probably be surprised by the findings of Professor Linda Scott and Dr. Catherine Dolan of the Saïd Business School, University of Oxford, on poor women in South Africa that have become “Avon Ladies.” According to their research, entitled ‘Enterprise and Inequality: A Study of Avon in South Africa’, becoming an Avon cosmetics sales representative provided “an emancipatory avenue for poor women in South Africa, enabling some to lift themselves out of poverty and inspiring many with self-confidence and hope.” Moreover, direct sales, argues Prof. Scott can be even more beneficial than microfinance.
The team conducted the research over a three-year period (2007-2010), looking at 300 black women working in South Africa as Avon salespersons. The main interest of the researchers was to find out whether entrepreneurship empowers women. They focused on Avon’s system, which offers salespersons capitalization, training, mentoring and networking. The answer they received was a resounding yes.
In terms of income the results were quite impressive. Of the women surveyed, those who had worked with Avon for at least 16 months (and also relied on Avon for their primary income), earned about $170 a month, which puts them “within the reach of the middle quintile of the whole South African population.” If you look only at black population, it puts the earners in the third quintile. To give some perspective, the researchers note that this amount is roughly what one a black household of four spends every month on purchasing food, clothing, health care and other basic needs.
And it’s not just the compensation. Nearly 75 percent of the women surveyed stated that Avon had given them financial autonomy and almost 90 percent said that the job training provided by Avon could be used to get another employment. In addition, 92 percent had their own bank account, while only 38 percent of black South African women have any bank account at all. Last but not least, the researchers report that “in interviews, woman after woman said their Avon work transformed them into “a role model” for their children and allowed them to “fulfill their dreams” of self-sufficiency.”
This is of course not the first project that involves women and entrepreneurship. The idea, as Prof. Scott writes, is that assisting women in starting their own businesses can not only establish a new income stream for poor households, but also help elevate households from poverty as “women with money and the freedom to spend it as they saw fit, statistics showed, were more likely to use any incremental wealth to improve the diet, health care, and education of their children.” But still, one might wonder, is selling cosmetic products to poor women who might be struggling to buy basic goods the best way to eradicate poverty? And in what way is it better than microfinance?
To the first question Prof. Scott replies that “the concept of “need” in relation to consumer products is not clear cut at all. In practice, limiting saleswomen and their customers to items that Western observers might want can be perceived as having negative ramifications. It raises daunting questions about global power. Who decides what the poor may or may not buy? Many moral judgments about products – not just cosmetics, but food, drink, and clothing – have religious roots. Whose ethic should prevail as the standard by which to make such decisions?”
The second question is no less complicated. While microfinance has a good reputation for fighting poverty, not everyone agree it’s such an effective tool. For example, Annie Duflo, the Executive Director of Innovations for Poverty Action, told Businessweek that their studies found that microfinance loans can have positive effects for individual borrowers but are not powerful enough to alleviate broad poverty. “That’s partly because the people who take microloans “are more entrepreneurial to start with and might have had great things happen, anyway,” she said.
Avon’s system is not based on microfinance. Rather, after the women pay $12 as an initial registration fee, Avon provides working capital on the basis of inventory, liquidates the credit each month, and doesn’t charge interest. The researchers believe this is not the only difference between Avon’s system and microfinance – they see the former as providing broader benefits comparing to the latter, assisting the women not just to establish credit and increase their income, but also to build networks, establish self-esteem and develop other job skills.
While Avon’s system clearly provides poor women in South Africa with an opportunity to earn a decent living and inspire many with self-confidence and hope, it is still remained to be seen if it can be replicated to other sectors. If it will, we’ll have to credit Avon and its lipstick for becoming both a weapon and inspiration in the fight against poverty.
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the New School, teaching courses in green business and new product development.