My Beauty Best Teacher

In Africa, non-tariff trade barriers raise transaction costs and limit the movement of goods, services, people and capital across borders. To further development, African governments must embrace regional integration, break down these barriers and help Africans trade with each other.

image courtesy of Business Edge

Entrepreneurship and business are rarely accorded a serious place in discussions around drivers of economic development. A cursory look at the numbers makes this seem very surprising. China has pulled approximately 600 million people out of absolute poverty since Deng Xiaoping unleashed market reforms in the late 1970s. Never in human history have so many people been pulled out of grinding poverty is such a short span of time.

Similarly, South Korea has gone from a per-capita income of $291 in 1970 to $20,000 today. Even reform laggards like India have managed to pull a couple of hundred million people out of grinding poverty since economic reforms were initiated. Across the world, we find countries that created an entrepreneurship and business friendly environment were successful in reducing poverty drastically.

Despite the evidence, there are strong lobbies in emerging markets that make the claim that business friendly policies are anti-poor. Personally, I am in favor of redistribution, like these lobbies claim to be. However, what do you redistribute? One cannot, after all, redistribute poverty. One can only redistribute wealth, and to redistribute it, you have to create the wealth first...[continue reading]

We are paying the price for half measures and a victim ­ideology that drives consumption instead of production...A black upper class is now in place which, despite its size, is significant and established, he says. There has been a badly needed – though at best partial – redistribution of wealth in favour of blacks, not least through the tax system and government expenditure, but also through initiatives such as Black Economic Empowerment, a want-to-be equitable wealth plan closely associated with his older brother Thabo Mbeki, who led the country from 1999 until he was abruptly ousted from office by his own party, the ANC, in 2008.

Such piecemeal efforts do not amount to transformative justice, however, "which in South Africa should be about raising the earning power of the worker. We have a capitalist system and therefore by definition, the productive assets are owned by small groups, for whom large groups work. If their earning power was enhanced, it would have a knock-on effect on so much else, not least our education and health systems. That would have been real transformative justice."

But it didn't happen that way. Instead, the wrong measures were put in place, in his view. "The ANC adopted the Washington Consensus and other policies that began to shrink rather than grow the economy. Today it's stagnated, if not regressing. Look at the manufacturing system, once the main employer. Now it's shrinking and that's critical because it employs the semi-skilled and unskilled who are the bulk of the South African labour force.

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Perhaps the most strikingly visible way in which formal businesses make use of System D is in the mobile phone industry. Along every road in many African and Asian countries – on median strips, on the side streets and main drags, in the middle of highways, at almost every intersection – you can find small plastic tables with umbrellas overhead.They’re called umbrella stands and they are the phone booths of the developing world. In the sparse shade offered by those umbrellas, the formal economy meets System D in an extremely direct way.

Nigeria provides a perfect case study. It’s the largest country in Africa, with a mobile phone market that seems to have nothing but upside, and a variety of telecom firms are battling for market share.
MTN, a massive multinational based in South Africa and active in twenty one countries through Africa and the Middle East, had spent years looking for a way to gain a share of the Nigerian market. With a population of close to a hundred and sixty million, Nigeria is Africa’s most populous country, and one in six Africans is a Nigerian

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They started off from nothing in the Fifties and became amongst the richest in their homeland, Togo. They're the Nana Benz, the women who sell traditional African fabrics. Particularly the sought-after “wax” which is printed in Holland. They've made a fortune, they've travelled the world over, becoming a reference point for the fabric trade in Western and Central Africa. They were the first to purchase what, at the time, was a real status symbol: the Mercedes Benz. Hence their name. Today their fame has waned a little. And the economic crisis has affected them too. Turnover has dropped, but they're still here, together with their daughters – the Nanette, - to whom they've entrusted their work. You can find them in the Grand Marché in Lomé or in the boutiques around the city. Keeping always an eye on their businesses.

...tells us about life in the informal economy, what French culture classifies as System D. 1.8 billion people on the planet subsist through economic transactions that happen outside legal spheres and, by 2020, two thirds of our planet will be doing business in this domain. The future is the free market vs. the flea market.

The shops are stacked six feet high with goods, the streets outside are jammed with customers and salespeople are sweating profusely under the onslaught. But this is not a high street during the Christmas-shopping season in the rich world. It is the Onitsha market in southern Nigeria, every day of the year. Many call it the world’s biggest. Up to 3m people go there daily to buy rice and soap, computers and construction equipment. It is a hub for traders from the Gulf of Guinea, a region blighted by corruption, piracy, poverty and disease but also home to millions of highly motivated entrepreneurs and increasingly prosperous consumers.
Over the past decade six of the world’s ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia...[continue reading]

Private citizens were the first to connect Wenzhou to neighboring regions by building roads, bridges, and highways, as well as the city’s airports and substantial portions of the dock. Even today the city is scattered with infrastructure investment firms through which groups of businessmen pool money to build the transport routes they all need to get their goods from factory to the point of sale. The result is not pretty. Aside from the confusion faced even by residents driving into the city, it is not uncommon to see sidewalks torn up to insert piping, with seemingly no intention of replacing the concrete. Nevertheless, the system is crudely efficient, merchants can all easily access factories, and the factories in this geographically isolated city now have sales networks that span the globe. ...

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The streets around the railway station are covered in stalls selling $3 blue jeans and $5 boots. There’s a city block dedicated to baby clothes next to a street that sells plastic signs for bathroom doors. In one run-down alleyway you’ll see people repairing televisions, making blankets, and selling fruits, vegetables, and poultry (live or dead). Further outside the center, you can find small shops dedicated to aluminum rods, sheet metal, tire rims, and tires. ... Pool halls are set up wherever there’s open space that you can set a tarp over. Gambling dens are openly advertised. Taxi drivers often drive off the meter. The karaoke parlors are numerous, and almost all of them double as brothels. The poorest residents take part in one of the largest citizen recycling programs anywhere in the world. In an alley one family collects scraps of fabric to sell to the local textile mills, another hoards scraps of paper and cardboard to send to the paper mills, and in front of a lot that looks like it is being used for a garbage dump, a man has set up a secondhand goods shop.

Uncle Joe's roofing sheet fabrication facility

At first glance,there’s nothing extraordinary about the shed sitting next to Uncle Joe’s mud brick home in the coastal Ghanaian village of Atabadze.Inside there’s a certain familiarity about the clutter – tools propped up against stacks of roofing sheets and machinery – the kind of organized chaos you’d find in tool sheds and workshops anywhere in the world. But the sheer ordinariness of it of all belies the fact that this is the birthplace of a remarkable and important technology.Those roofing sheets – Uncle Joe made them,out of local river sand,using only his own ingenuity and the electric vibrating table in the corner – he made that too.
Uncle Joe is an innovator.He has brought his community something they never had before:a roofing material that is both sturdy and affordable.Before his intervention,his neighbours had a hugely unsatisfactory choice between using expensive,often imported, manufactured materials, or local unprocessed thatch, at a fraction of the price,but at the cost of durability;there was no middle ground.But Uncle Joe was not so sure this was necessarily a matter of ‘either or’; why couldn’t there be an alternative that was both manufactured and local, he wondered.
So he set about answering his own question,experimenting with local environmental inputs and different manufacturing processes.And through his efforts he developed a process to produce roofing sheets from river sand – a sturdy,high quality product The poor need opportunities to generate income and work themselves out of poverty manufactured from a sustainable local resource. To produce these sheets,Uncle Joe even had to build his own electric vibrating table,a vital piece of machinery that blends the sand with a small quantity of cement (added as fixative),enabling the mixture to set.All in all,an unlikely triumph of innovation considering the poor infrastructure and extremely limited availability of capital and manufacturing know-­‐how in his rural locality.
Uncle Joe is a prime example of the creativity and dynamism that are blossoming in Africa; one of the manyindividuals and communities championing innovative technologies that,by mobilising local resources to provide essential goods and services,and create income generation opportunities for the poor,can deliver sustainable and equitable ‘grassroots’development across the continent.And yet his story also illustrates the uphill task they face.
For all the originality of his idea and his dedication to implementing it,Uncle Joe cannot currently make ends meet manufacturing tiles – he simply cannot afford to hire the labour he needs to produce viable volumes.Without capital,his operation will not reach a level at which the technology can really impact the livesof the poor.

For the global development community (donors,NGOs,etc) Uncle Joe’s story is one of opportunity: it highlights an opportunity forthem to create the opportunities the rural poor need to work their way out of poverty.To date the governmental and multilateral institutions with the resources and clout to change the lives of those living in poverty have favoured...To make meaningful inroads into poverty reduction in Africa,the development community must foster the growth of robust local industries that mobilise the continent’s substantial environmental resources to meet local needs and create opportunities.Technologies like Uncle Joe’s manufacturing process are the foundation on which such industries are built,and donors should support their development,whether by investing in the entrepreneurs pushing innovative local solutionsor by providing the tools and training rural communities can use to unlock the developmental potential in their local environment.

In "Stealth of Nations," Robert Neuwirth offers a fascinating tour of System D, a world largely ignored by academics and government officials but a world familiar to anyone who has visited developing countries. Step outside your beachfront resort in Cancun and you can't miss it. Usually foreign visitors treat the participants in this unofficial economy with either pity or distrust: pity because they assume that System D workers are on the verge of starvation, distrust because familiar guideposts—regulations, licenses, credentials—are lacking.

Often neither prejudice is correct. Mr. Neuwirth introduces us to a woman named Jandira who for a decade has peddled coffee and homemade cakes to the unlicensed vendors at São Paulo's early-morning wholesale market for pirated movies. Her street-corner business, she proudly tells him, has enabled her to buy two cars and a house and to pay her children's fees at private school. Another of Mr. Neuwirth's sources, Chinese handbag designer Ethan Zhang, prefers to stay illegal. For him it's a matter of costs and benefits: "If I want to get a license, then I will need a bank account and an office in an office building." These are not people who lack the skills to survive through legal employment; they just see no good reason to join the legal economy...[continue reading]

Here, in the squatter community of Makoko, one of the waterside shantytowns of Lagos, Nigeria, Ogun Dairo smokes fish. Without a license, on land that she doesn’t own, she has created her economic future. The fish is imported from afar, caught in the North Sea, frozen and shipped to the cacophonous port city on the Nigerian coast.

After several hours in the concentrated smoke of her scorched sawdust --- the strong fumes have stained her wax-print dress, dulling the extravagant colors -- she packs the fish in boxes, readying them to be retailed for a tiny profit on the roadsides of this West African megacity.Economic development in Africa can be found all over, hidden in plain sight. It evades our gaze because our notions of growth and development are conditioned by Western rules. We expect development to be highly organized and regulated, to involve government, and to be anchored by big corporations. In Makoko, as in most of the developing world, the great engine of economic progress is different. It is unstructured, unofficial and, to most people, unfathomable.Academics call this sub-rosa sphere the informal economy, an attempt at objectivity that unfortunately links unlicensed markets with drug dealers and gun runners. But Ogun Dairo and the billions of other unlicensed businesspeople around the world are not criminals. So I propose a new name.Sculpted From French

In French, people who are particularly effective and self- motivated are known as “debrouillards.” Former French colonies have sculpted this word to their economic reality. People doing business on their own, without registering or paying taxes, are part of “l’economie de la debrouillardise” -- or, sweetened for street use, System D.

The Arizmendi Association of Cooperatives' development effort began in the 1990s and has started five new bakery cooperatives creating around 100 new democratic jobs. The businesses have generally been successful financially after a short startup period and two of them are now over ten years old, with very low worker turnover, high quality reputation, and close community connections. The development method emphasizes attaining a baseline of business success as a foundation from which other social goals may be pursued. Inspirations for the model came from two sources: the Mondragon cooperatives, which gained financial security from their networked business development and continued technical assistance, and the American franchise system, which benefits from a wide market presence and shared administrative support. Because the workers in the stores govern the central administration, the analogy of an "upside-down franchise" has sometimes been used.

There is little common ground between the realities faced by the population of Burkina Faso and international requirements and the shortfall in grain production and worsening of hunger in the past years can largely be attributed to this fact. It is not that farmers are unable to produce a sufficient quantity of food, it is that they find themselves in a political system that will not allow them to fulfill their potential. Not consulted in policy debates and uninvited to discussions, they feel excluded from the system when in reality they are key actors. What is more, farmers do not always understand how policy demands play out in these domains. Yet these are the people who suffer the effects of policy choices. In my view, the problem really lies here at the level of policy.

What was the inspiration behind the Tony Elumelu Foundation?

After retiring from UBA Mr Elumelu wanted to give back something to the next generation of entrepreneurs and business leaders in Africa. Tony’s story is the kind you don’t often hear. He was born and raised here in Nigeria, where he did all his education and has spent all his career, and he has still been able to be very successful and build a pan-African business that’s worth several billion. His vision is that if you can remove the obstacles that are preventing other African businesses from emerging, then a lot more companies like UBA can be built in Africa, become pan-African and help transform the continent.
The Foundation is quite unique in that although there are a growing number of foundations in Africa founded by Africans, we are African-founded, African-funded, in Africa and pan-African focused. I don’t actually know of any other like that. And part of what we want to do is set the policy so that if people set up foundations like this they get some kind of tax benefit.

One Hen empowers kids to become social entrepreneurs who make a difference for themselves and the world. We do this by equipping educators with educational resources to inspire kids to four values: financial responsibility, personal initiative, global awareness and giving back-website

Desperate efforts by governments to widen the socio-economic factors in Africa are likely to become a fiasco if adequate attention is not given to creative successful entrepreneurs. Building the future of Africa is a multi-book project being implemented in 53 countries in Africa. Contributing to education of young entrepreneurs through vision shapers sharing experiences and expectations in building a bright future is one of the challenges Africa is facing for its development.
Entrepreneurs in Africa are facing the challenge of leveraging necessary connections and accessing quality education to implement their ideas and projects. Building a unique and powerful ecosystem for sharing connections, ideas and motivating a new generation of entrepreneurs in Africa is what the project seeks to achieve. Bringing to light inspirational stories, adventures, success stories, bright minded entrepreneurs made in Africa could help create the necessary tribe working with joining hands to challenge the world.

According to Kufuor, encouraging the private sector has been key to fighting poverty in Ghana. "We fight poverty with wealth creation, otherwise it's charity, and that's not what we came into government for," he said.