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David Bussau: The economics of enough

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[First published in Anthill Magazine, November 2004]

He’s been accused of imposing capitalism on the poor, but David Bussau says entrepreneurs are the key to overcoming poverty. And he has the record to prove it. By Paul D. Ryan.

David Bussau is all too familiar with the concepts of under-privilege, survival and dignity. He spent much of his childhood in a New Zealand boys’ home, an experience that taught him the value of lateral thinking and risk-taking as a means of survival. But unlike many people born into a position of disadvantage, Bussau has been able to turn the tables, achieving the lofty status of self-made multi-millionaire by the age of 35 and changing the lives of countless individuals, families and communities in the process.

“By enabling entrepreneurs, you create more jobs. If you want to transform communities, you have to economically empower them. There’s just no other way. You can be there for years giving out free food, housing and education, but if people are not economically empowered, they don’t take responsibility for themselves.”

This is the view of David Bussau, the founding force behind Opportunity International (OI), an organisation that offers small loans to budding entrepreneurs in developing countries. The organisation has created or sustained more than 2.5 million jobs since 2000. In 2003 alone, OI distributed over $200 million to 700,000 loan recipients, creating or sustaining over 922,000 jobs.

“The entrepreneur is the key,” says Bussau. “If you want to economically empower the poor, then you need to provide capital and training to entrepreneurs so they can grow a business, increase their market share and create jobs for the community.”

It is this sort of thinking that lead The Bulletin magazine to name Bussau one of Australia’s 10 most creative minds in 2000. He was awarded an Order of Australia in 2001, and in 2003 he was named the Ernst & Young Australian Entrepreneur of the Year and became the first social entrepreneur to be inducted into the World Entrepreneur of the Year Academy in Monte Carlo.

However, despite recent accolades, life hasn’t always been easy for this ‘social entrepreneur’.

Bussau spent much of his childhood in a New Zealand boys’ home and left school at the age of 15. He started his own entrepreneurial career buying into a hotdog stand at the local football ground. Over the next 20 years, he bought, built and sold over a dozen businesses. By the age of 35 he owned several construction companies and was a self-made multi-millionaire.

“The Darwinian environment in the boys’ home forced me to work my way around problems, because no one else was going to work them out for me. You thought laterally and came up with different ways to approach different situations,” says Bussau.

Like so many other early challenges, he saw growing up without parents, not as a misfortune, but as an opportunity.

“I didn’t have the constraints of family holding me back. I didn’t have sibling rivalry or relatives intruding on my space and time. I wasn’t shaped by parents determining who I should be, how I should react and how I should imprint myself on the world. In fact, I changed my name by deed-poll and determined, by myself, who I was going to be, what goals I was going to achieve and the time-frames I was going to achieve them in.”

The extent to which Bussau’s austere childhood encouraged his philanthropic tendencies is subject to speculation. However, there is a rich symmetry to his life – abandoned child turned entrepreneur turned patron.

“After a while, I developed a sense that the challenge had gone out of making money. It didn’t seem to be that difficult. I reached the ‘economics of enough’ – the point where I had enough resources to live on for the rest of my life without having to go through the stress of building bigger and bigger businesses all the time,” says Bussau.

Around the same time, he had a seminal encounter with one of Australia’s richest and most powerful men. It helped change Bussau’s life and possibly the lives of millions.

“One of my businesses was a joinery factory. We were making cocktail cabinets and gun cases for Kerry Packer. He phoned me one night saying that he was having a cocktail party and the catch on his cocktail cabinet wouldn’t shut,” recalls Bussau. “He demanded that I get over there straight away and fix it. I was pretty indignant about that – that somebody had power over me to decide what I should be doing with my life and determining the amount of time I could give to my family. There has to be more to life than making wealthy people happy.”

When Cyclone Tracey hit Darwin on Christmas Eve, 1974, Bussau gathered a team of tradesmen together and headed north to help with the relief and rebuilding effort, scarcely aware of the new direction his life was taking. Then, in 1976, he moved his young family to Bali to help with an earthquake relief campaign. During his stay, he gave a local man a small loan to buy a sewing machine. The impoverished tradesman repaid him within six months.

“I sold my businesses and started the Maranatha Trust from which I would establish Opportunity International,” says Bussau.

The trust now operates in 27 developing countries, financing entrepreneurs, promoting education and working with scavengers, prostitutes and bonded slaves.

“Basically, the trust comes up with a market-based solution for a social problem,” says Bussau. “I don’t believe in the redistribution theory. I think that assumes that the resources are limited. You need to create more resources so there is more to share around. The only way to do that is to move to the capitalistic approach of enabling people to be more productive.”

According to the World Bank, 1.8 billion people have to survive on less than $2 dollars a day. Many families in developing societies are forced to borrow money just to survive. It leads to the dissolution of family bonds and creates a cycle of poverty where new businesses can never take root. OI’s philosophy is to give people the means to break that cycle.

The ¡¥grass roots’ economic model championed by Bussau is called ¡¥micro enterprise development’ (MED) and is being reproduced by other not-for-profit organisations across the world.

“MED has become a mega global industry. The World Bank and most governments are now funding some form of enterprise development. 2005 is the United Nations Year of Microcredit. MED is recognised as giving integrity to people. It allows them to take that journey out of poverty themselves,” says Bussau

Despite OI’s successes, Bussau says the organisation still faces obstacles. Traditional not-for-profits generally lack entrepreneurial flair, but they exploit emotive marketing that OI simply cannot replicate.

“We appeal more to the corporate arena, the more discerning foundations and philanthropists who have created wealth themselves,” he says.

“We’re probably the only product on the market that is self-financing. The revenue generated from the interest on loans covers operational costs. Once we put equity into one of our partners, they can then leverage that equity in an open marketplace,” explains Bussau. “They can go to formal financial institutions and borrow four or five times more than their own level of equity, which means they can help four to five times more people. Many of our programs are quite heavily leveraged. It’s not a concept that most not-for-profits like. They operate out of a real safety zone.”

For Bussau, the rewards are palpable. A Manchester University study has shown that for each job created, on average six people are permanently taken out of poverty and 13 people in the community benefit. Based on these figures, over five million people were potentially helped by OI in 2003 alone.

While all altruism is equal, it seems that some methods are more effective than others.

UPDATE: In 2008, David Bussau was named Senior Australian of the year.

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