WIR 2026: Income and Wealth Inequality in India, Pakistan and the World

The top 1% of Indians own 40.1% of the nation's wealth, higher than the 37% global average. This makes India one of the world's most unequal countries, according to the World Inequality Report. By contrast, the top 1% own 24% of the country's wealth in Pakistan, and 23.9% in Bangladesh. Tiny groups of wealthy elites (top 1%) are using their money to buy mass media to manipulate public opinion for their own benefit. They are paying politicians for highly favorable laws and policies to further consolidate their power. It is a phenomenon known as "elite capture". 

Wealth Inequality. Source: World Inequality Report 2026

"Extreme wealth inequality is persistent and increasing" in all parts of the world, says the report published by World Inequality Lab of the Paris School of Economics. This has serious economic, political and social implications. It is undermining democracies and empowering billionaires at the expense of the common people, including the middle class (middle 40%) and the poor (bottom 50%). 

Income Inequality. Source: World Inequality Report 2026

Income inequality is trending in the same way as wealth inequality. The income of the top 1% of Indians  stands at 22.6% of the national income. The income of the top 1% of Pakistanis is 16.2% of the country's income, significantly lower than the 20% global average. The income and wealth distribution in Bangladesh is similar to Pakistan's. 

Widening Income Gap in India. Source: WIR2026

Persistent Income Gap in Pakistan. Source: WIR2026

The global average monthly income is 1200 Euros but there are huge differences among various regions of the world. The South and South East Asia region remains among the poorest, but its average monthly income of 600 Euros is twice that of sub-Saharan Africa. North America's monthly income of 3,800 Euros is the highest while sub-Saharan Africa's 300 Euros is the lowest in the world. 

Regional Income Disparities. Source: WIR2026 

Global Inequality Change From 1980 to 2025. Source: Bloomberg

The report documents how the global financial system reinforces inequality. Wealthy economies continue to benefit from an “exorbitant privilege”: each year, around 1% of global GDP (approximately three times as much as development aid) flows from poorer to richer nations through net foreign income transfers associated with persistent excess yields and lower interest payments on rich-country liabilities. Reversing this dynamic is central to any credible strategy for global equity.

Related Links:

Haq's Musings

South Asia Investor Review

India Muslims: The Poorest Group in Modi's Hindu Rashtra

Elite Capture in South Asia

Food in Pakistan 2nd Cheapest in the World

India in Crisis: Unemployment and Hunger Persist After COVID

IMF Questions Modi's GDP Data

Record Number of Indians Seeking Asylum in US

Ambani Wedding, Indian Billionaires and Bollywood

Incomes of Poorest Pakistanis Growing Faster Than Their Richest Counterparts

Pakistanis Consuming More Calories, Fruits & Vegetables Per Capita 

How Grim is Pakistan's Social Sector Progress?

Pakistan Fares Marginally Better Than India On Disease Burdens

COVID Lockdown Decimates India's Middle Class

Pakistan Child Health Indicators

Pakistan's Balance of Payments Crisis

How Has India Built Large Forex Reserves Despite Perennial Trade Deficits

Riaz Haq's Youtube Channel

PakAlumni Social Network

Rising Share of Income of Poorest 20% Pakistani Households

The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990 , according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region.

Income Share Change in Asia's Poorest Quintile: 

The countries where people in the poorest income quintile have increased their share of total income include Kyrgyzstan (from 2.5 per cent to 7.7), the Russian Federation (4.4 per cent to 6.5), Kazakhstan (7.5 per cent to 9.5) and Pakistan (8.1 per cent to 9.6).  India's bottom income quintile has seen its share of income drop from 9% to 7.8%.

Bottom Quintile Income Share Change. Source: UNESCAP Statistical Yearbook

Although more people in China have lifted themselves out of poverty than any other country in the world, the poorest quintile in that country now accounts for a lower percentage of total income (4.7 per cent) than in the early 1990s (8.0 per cent). The same unfortunate trend is observed for a number of other countries, including in Indonesia (from 9.4 per cent to 7.6) and in the Lao People’s Democratic Republic (from 9.3 per cent to 7.6).

Credit Suisse Wealth Report 2017:

Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976
Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

World Bank Update on Pakistan: 

A November 2016 World Bank report says that Pakistan has successfully translated economic growth into the well-being of its poorest citizens. It says "Pakistan’s recent growth has been accompanied by a staggering fall in poverty".

Rising incomes of the poorest 20% in Pakistan since 2002 have enabled them to enhance their living standards by improving their diets and acquiring television sets, refrigerators, motorcycles, flush toilets, and better housing.

Another recent report titled "From Wealth to Well Being" by Boston Consulting Group (BCG) also found that Pakistan does better than India and China in translating GDP growth to citizens' well-being.

One particular metric BCG report uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75.

Big Poverty Decline Since 2002:

Using the old national poverty line of $1.90 (ICP 2011 PPP) , set in 2001, the percentage of people living in poverty fell from 34.7 percent in FY02 to 9.3 percent in FY14—a fall of more than 75 percent. Much of the socioeconomic progress reported by the World Bank since 2000 has occurred during President Musharraf's years in office from 2000-2007. It has dramatically slowed or stagnated since 2010.

Source: World Bank Report Nov 2016

Using the new 2016 poverty line of $3.50 (ICP 2011 PPP),  29.5 percent of Pakistanis as poor (using the latest available data from FY14). By back casting this line, the poverty rate in FY02 would have been about 64.3 percent.

Pakistan's new poverty line sets a minimum consumption threshold of Rs. 3,030 or $105 (ICP 2011 PPP) per person per month or $3.50 (ICP 2011 PPP) per person per day. This translates to between Rs. 18,000 and Rs. 21,000 per month for a household at the poverty line, allowing nearly 30% of the population or close to 60 million people to be targeted for pro-poor and inclusive development policies—thus setting a much higher bar for inclusive development.

Multi-dimensional Poverty Decline:

A UNDP report released in June 2016 said Pakistan’s MPI (Multi-dimensional poverty index) showed a strong decline, with national poverty rates falling from 55% to 39% from 2004 to 2015. MPI goes beyond just income poverty.

The Multidimensional Poverty Index uses a broader concept of poverty than income and wealth alone. It reflects the deprivations people experience with respect to health, education and standard of living, and is thus a more detailed way of understanding and alleviating poverty. Since its development by OPHI and UNDP in 2010, many countries, including Pakistan, have adopted this methodology as an official poverty estimate, complementing consumption or income-based poverty figures.

Rising Living Standards of the Poorest 20% in Pakistan:

According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.

First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.

Housing quality in the bottom quintile also showed an improvement. The number of homes constructed with bricks or blocks increased while mud (katcha) homes decreased. Homes with a flush toilet almost doubled in the bottom quintile, from about 24 percent in FY02 to 49 percent in FY14.

Dietary Improvements for the Poorest 20% in Pakistan:

Decline in poverty led to an increase in dietary diversity for all income groups.

For the poorest, the share of expenditure devoted to milk and milk products, chicken, eggs and fish rose, as did the share devoted to vegetables and fruits.

In contrast, the share of cereals and pulses, which provide the cheapest calories, declined steadily between FY02 and FY14. Because foods like chicken, eggs, vegetables, fruits, and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption also increased the amount that people spent per calorie over time.

For the poorest quintile, expenditure per calorie increased by over 18 percent between FY02 and FY14. Overall, this analysis confirms that the decline in poverty exhibited by the 2001 poverty line is quite credible, and that Pakistan has done remarkably well overall in reducing monetary poverty based on the metric it set some 15 years ago, says the World Bank.

Summary:

Pakistan is among the most economically egalitarian nations in the world.  In spite of the country's many challenges on multiple fronts, it has successfully translated its GDP growth into the well-being of its poorest citizens. The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990, according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region. "Pakistan’s recent growth has been accompanied by a staggering fall in poverty", says a November 2016 World Bank report.  An earlier report by Boston Consulting Group reached a similar conclusion.

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2017

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor

ADB Raises Pakistan GDP Growth Forecast

Sharifs' Folly Hurts Punjab's Poor

The Punjab government led by PML's Shahbaz Sharif spurned 20 billion rupees ($232.55 million) in US aid slated for welfare projects in Pakistan's most populous province in the next three years, according to a report in Dawn newspaper. The popular move was motivated by politics to capitalize on a wave of anti-American anger following the US raid that killed Osama Bin Laden in Abbottabad, Pakistan.



While the amount of aid rejected is relatively small, the decision's outsized impact on the poor is now coming to light. Here are some of the projects most impacted:

1. U.S. aid could have transformed Punjab Government's Lady Willingdon Hospital in Lahore, where rats run through the halls, patients sleep three to a bed, women who require C-sections aren't getting them because only one operating room is functioning, and premature babies risk death because of a shortage of incubators, according to the Associated Press.

The hospital struggles to provide even basic care. Built by the British in the 1930s before Pakistan's independence, it was meant for 80 patients. The country's population has since exploded, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings. Patients are forced to share beds, and sometimes women who are close to giving birth have to sit on the floor for lack of space. It has only one functioning operating room, leaving women lined up to receive cesarean sections.

The hospital has only three working infant incubators, which were donated by NGOs. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease. The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities.

2. Another $100 million of US aid was to be used to rebuild schools in southern Punjab province that were destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.

3. The loss of aid for Shamaspura, a poor neighborhood in Lahore, means that its 15,000 residents will not get their only road paved, nor will they get a new sewer system.

Batool Akhtar, a poor but feisty woman quoted by the AP story, summed it up well when she said: "This is rich people denying aid meant for the poor. The government should have taken the money."

As Pakistan's ruling elite and its ghairat brigade, led by PML's Sharif brothers, engage in loud empty rhetoric about infringement of their national sovereignty by the United States, here is something to ponder:

Pakistan runs chronic budget deficits of around 5% of its GDP, and its government collects less than 10% of GDP in tax revenue which is among the lowest in the world. A big share of these deficits is funded by foreign aid and loans, making Pakistanis beholden to the interests and whims of major foreign donors and lenders.

Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin. The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs.

Given the unwillingness of Pakistan's ruling elite to pay more in taxes, I agree with the decision of the other three provincial governments to continue to accept US economic aid. As the Punjab examples above show, refusing such aid clearly hurts the poor the most.

Pakistan would be well advised to not seek confrontation with Washington. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).

All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.

Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.

Here are some of my recommendations for Pakistanis to move toward greater self-reliance:

1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.

2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.

3. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.

4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.

No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.

Related Links:

Haq's Musings

Can Pakistan Tell US to Take its Aid and Shove it?

Tax Evasion Fosters Foreign Aid Dependence

Aid, Trade, Investments and Remittances

Can Chinese Yuan Replace US Dollar?

Vito Corleone: Godfather Metaphor for Uncle Sam

Can US Aid Remake Pakistan?

South Asia Slipping in Human Development

Pakistan to Terminate IMF Bailout Early

Pakistani Military and Industrialization

Aid, Trade, Investments and Remittances in Asia and Africa

Relief organizations have calculated that as much as 75% of foreign aid by industrialized nations is directly tied to promoting exports of goods and services that support jobs in donor nations, achieving greater trade access in receiving countries or other economic and political strategies. Some of the aid comes with so many strings attached, including preferential tendering on contracts and the hiring of expensive consultants, that only 30-40% of dollar value is ever realized for the intended recipients. Then the rampant official corruption in the developing world further eats away at a big chunk of what is left. To make matters worse, the increasing percentages of budgets and GDP claimed by debt repayments take away money needed for basic human development needs, such as education and healthcare, in the developing world.



In the United States for example, most of the food aid, including the additional $770m food aid last year, for the poor countries requires the aid recipients to purchase food from the US agribusiness. These funds do not help the farmers in the poor nations grow food for the countries to become less dependent on foreign help. The US farm lobby continues to flex its muscle and enrich itself, without regard for the severity of the hunger crisis in the poor nations resulting from sharp increase in food prices. Three years ago, farmers and their allies in Congress effectively destroyed an effort by the Bush administration to begin the switch to untied food aid. The current composition of US Congress is no different, as far as the overwhelming power of the farm lobby is concerned.

European governments switched to giving all-cash donations for food in the mid-1990s, arguing that cash allows more flexibility in responding to crises and that the U.S. uses its food aid as a form of farm subsidy. But the Europeans also continue to erect various barriers to food imports from poor nations that could improve the viability of agriculture in many Asian and African countries.

Private donations abroad by Americans, including pledges to charities and churches and disbursements from corporate foundations, now are three times as large as America's official development assistance of $20 billion, and there is every indication this trend will continue. Washington's contribution looks even more miserly when the ODA data are broken down. Here are some basic facts about US foreign assistance:

1. Less than half of aid from the United States goes to the poorest countries.

2. The largest recipients are strategic allies such as Egypt, Israel, Russia, Pakistan, Afghanistan and Iraq.

3. Israel is the richest country to receive the highest per capita U.S. assistance ($77 per Israeli compared to $3 per person in poor countries).

4. Even after the planned tripling of the US aid to $1.5 billion a year to Pakistan, it still amounts to about $8 per Pakistani.

According to Asia Times, last year only five of the 22 countries considered industrialized - Norway, Denmark, the Netherlands, Luxembourg and Sweden - achieved the donor benchmark of allocating 0.7% of GNP to ODA. The benchmark was adopted at the Earth Summit in Rio de Janeiro in 1992 under the UN Agenda 21 program for eradicating poverty through development assistance. No other countries have even come close to meeting the target.

France managed 0.41% of GNP last year, the United Kingdom 0.34%, Germany 0.28%, Canada 0.26%, Spain 0.25% and Australia 0.25%. Japan, the only Asian participant, came in a lowly 19th with a paltry 0.2%, maintaining a reduced ODA commitment that dates back to 2001.

Dambisa Moyo, a former economist at Goldman Sachs, and the author of "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.", recently argued in a Wall Street Journal OpEd that "money from rich countries has trapped many African nations in a cycle of corruption, slower economic growth and poverty. Cutting off the flow would be far more beneficial."

She goes on to say, "Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year.

Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster."

Last year, remittances to developing nations grew by 8.8% to $305 billion, more than three times the official development aid, according to World Bank.



Official development assistance received by Pakistan has not been particularly effective, according to media reports attributed to UN findings. A United Nations report titled "U.N. reforms and civil society engagements" in 2008 claimed that Pakistan has received 58 billion dollars in foreign aid from 1950 to 1999, however it systematically underperformed on most of the social and political indicators. The report further added, "If Pakistan had invested all the ODA (official development assistance) during this period at a real rate of six percent, it would have a stock of assets equal to 239 billion dollars in 1998, many times the current external debt."



At the end of calender year 2008 in Pakistan, remittances topped 7 billion dollars, an increase of 17 per cent year over year, led by higher remittances from oil-rich GCC countries, which grew by 30 per cent year on year. Similarly, FDI inflows jumped 100 per cent year over year to 708 million dollars in December, 2008, as the telecom, oil and gas, and financial-services sectors continued to attract foreign inventors, according a report in the Nation newspaper. Annual cash remittances from overseas Pakistanis and foreign direct investments (FDI) in Pakistan earlier this decade have been far larger and much more significant in its rapid growth than all of the foreign aid put together.


Last year, remittances to various other Asian countries were as follows: $8.9 billion for Bangladesh, $27 billion for China, $30 billion for India, $6.5 billion for Indonesia, $2.2 billion for Nepal, $1.8 billion for Malaysia, $16.4 billion for the Philippines, $2.7 billion for Sri Lanka, $5.5 billion for Vietnam and $1.8 billion for Thailand, according to International Labour Organization estimates.

While recognizing that there is no one silver bullet to alleviate poverty, microfinancing, along with social entrepreneurship, is becoming an essential component of non-government efforts in Pakistan and other developing nations to empower ordinary people toward self-reliance by lifting them out of poverty and teaching them the right skills to help themselves. “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” This proverb has guided the efforts of late Dr. Akhtar Hameed Khan, acclaimed Pakistani social scientist and founder of Orangi Pilot Project. Supported by private foundations working in Pakistan, all efforts at alleviating poverty should be guided by this proverb that captures the essence of self-reliance.

While government and multilateral financial institutional programs do help to some extent, it is the privatization of aid, trade, remittances and investments for the poor through various investors and donors, such as private corporation, foundations and the immigrants working in the rich countries, that provides the best hope to ensure that the funds and the practical benefits reach the intended recipients. Such a strategy minimizes the role of the politicians and the corrupt officials in both the donor and the recipient nations.

Related Links:

Microfinance in Pakistan

PIDE Report on FDI in Pakistan

Foreign Remittances Help Developing World
Foreign Aid Continues to Pour in Resurgent India
US Food Aid and the Farm Lobby

Dambisa Moyo: Aid to Africa

Rampant Corruption in Construction Industry

Obama's Farm Subsidy Cuts Meet Stiff Resistance

Global Slowdown Hits Foreign Workers

Social Entrepreneurs Target Pakistan and India

Understanding the need to design for extreme affordability is giving birth to a new generation of entrepreneurs. These are entrepreneurs with a social conscience who are motivated by the desire to do good and do well at the same time. They are finding new ways to empower the poor by satisfying their basic needs for safe water and electricity in emerging markets.

According to Wikipedia definition, a social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change. Unlike a business entrepreneur who typically measures performance in profit and return, a social entrepreneur assesses success in terms of the impact s/he has on society. While social entrepreneurs often work through nonprofits and citizen groups, many work in the private and governmental sectors.

The main aim of a social entrepreneurship as well as social enterprise is to further social and environmental goals. This need not be incompatible with making a profit, but social entrepreneurs are often non-profits. Social enterprises are for ‘more-than-profit’.

In addition to their inner desire to help others while also helping themselves, what has encouraged such entrepreneurs is the successful penetration of the mobile phones among the poor in India and Pakistan, many of whom subsist on less than a dollar a day. The rapid growth of cell phones among the rural poor in South Asia has shown that even the poorest of the poor are willing to offer several months' earnings for the benefit of connectivity. By doing so, they have demonstrated their potential as consumers of affordable products that offer them real benefits, such as a glass of safe drinking water and a bright source of light at night.

Safe, Clean Water for the Masses

Saafwater, Inc. is a startup helping people in Karachi, Pakistan with access to safe drinking water. The company founders, Sarah Bird, Saira Khwaja and Khalid Saiduddin, emerged as finalists in Massachusetts Institute of Technology’s 100k Entrepreneurship Competition in 2007, and received $10,000 to put the concept of SaafWater into practice.

The company's first product is SaafWater Daily Capsule - a simple capsule of chlorine solution that can treat one family’s daily supply of drinking water. SaafWater’s mission is to provide affordable clean water to low-income communities in urban areas. Their goal is to create a profitable distribution network that can supply billions of people with clean water.

The company has worked closely with the US Centers for Disease Control’s Safe Water System which has been responsible for pioneering this technology and reaching an estimated 16 million users worldwide. With their help the company has learned from their experiences and to ensure that it meets all the relevant World Health Organization Guidelines for Drinking Water Quality.

Going door-to-door, SaafWater representatives sell daily chlorine capsules, which can be immersed in a family’s water container rendering the supply free of contaminants in 30 minutes. Sales representatives offer a week’s supply for about 30 rupees, the rough equivalent of U.S. 40 cents. SaafWater also plans to launch independent programs with existing NGOs to help create self-sustaining water purification programs throughout Pakistan.

Saafwater's vision is to build and extend this network to include many other life-saving and life-enhancing products such as clean-burning fuels, sanitation, renewable electricity, refrigeration, eye-glasses, multi-vitamins for mothers and children, and construction materials to name but a few.

Bright Light for Night

D.light, founded by two Stanford graduates, marries next-generation light-emitting diodes (LEDs), proprietary power-management tools, and increasingly cheap solar panels. The founders, Nedjip Tozun and Sam Goldman, attended Professor Jim Patell's Stanford Business School class called Entrepreneurial Design for Extreme Affordability, highlighted recently by Fortune Magazine.

As a result, D.light is able to offer poor communities an affordable alternative to kerosene, which is ubiquitous but hazardous. The quality of the kerosene lamp light isn't good, it emits pollutants, and it's just plain dangerous. "You travel around these villages, and everyone has a story of a child being burned or a house destroyed by fire," says Tozun, speaking to Fortune by phone from his office in Shenzhen, China. "And yet in some places we found that people were spending 15% to 20% of their income on light." The world's poor spend about $38 billion a year on kerosene for lighting, according to the International Finance Corp.

According to Fortune magazine, the D.light lamps sell for about $25, steep for someone earning $1 per day, but the D.light team quickly found that the quality of light was so good that people with the D.light lamps were able to do more work at night and increase their income. Two families in New Keringa, a village of 47 families in southern India, took the plunge on D.light lamps. Says Tozun: "All of a sudden the two families were able to work at night," mostly weaving banana leaves into plates. "Their average monthly income increased from $12 to $18, and they could save the time spent traveling to buy more kerosene." Within a few days the entire village had sprung for the lights. "These people are great customers if you give them a clear value proposition," Tozun says.

In November, D.light raised $6 million in venture capital funding from Draper Fisher Jurvetson and Garage Technology Ventures, among other venture capital firms, to ramp up production and get its lamps into markets, initially in India and Africa.

Empowering would-be customers is one of the mantras of Patell's class at Stanford. Each year some students, like Goldman and Tozun, take their ideas and try to build businesses. Patell doesn't expect every student to start a company, but he does demand that every product in the class offer poor consumers tools for their own microenterprises. "We want to design things so that a farmer can decide to leave his farm and support his family selling water pumps or drip-irrigation tubing," Patell says. "We want things to be sold at a price that covers the cost of manufacturing and distribution."


The need and the opportunity for social entrepreneurs have never been greater. Both SaafWater and D.light are examples of what the institutions of higher learning can do to encourage such entrepreneurship catering to the needs of the billions of poor people in Africa, Latin America and South Asia who can potentially become a huge new lucrative market. What is needed is for the budding entrepreneurs to recognize such opportunities to offer highly useful and essential products at extremely affordable prices. Educational institutions in Pakistan and India can and should play a leading role to encourage and prepare them to do good and do well, and investors should open their minds to see the great opportunities that lie ahead for them to make good returns on such investments.

Here is a Skoll Foundation video on social entrepreneurship:



Related Links:

Supporting Youth Entrepreneurship

iGenius Goes Big in Pakistan

India's Innovative Social Entrepreneurs

Youth Engagement Services (YES) Network in Pakistan

Water Shortage in Pakistan

United Nations World Water Development Report

Water Resource Management in Pakistan

Water Supply and Sanitation in Pakistan

Light a Candle, Do Not Curse Darkness

China Profile

Safe Drinking water and Hygiene Promotion in Pakistan

UN Millennium Development Goals in Pakistani Village

Orangi Pilot Project

Three Cups of Tea

Volunteerism in America

Dr. Akhtar Hamid Khan's Vision