rolling stores, and other tales of System D

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5.7 percent

That's how many Congolese are using the country's banks, according to BusinessWeek.

Money quote: "The proportion of Congolese using the banking system almost tripled to 5.7 percent of the population last year, compared with 2 percent in 2011."

staggering statistics on Africa's food deficit

courtesy of This is Africa:

The value of agricultural exports from Thailand, which has less than 10 percent of Sub-Saharan Africa’s population, is now greater than for the whole of Sub-Saharan Africa.

No country better exemplifies Africa's agricultural decline than Nigeria. In the 1960s, before the oil bonanza, this was one of the most promising food producers in the world, beating the likes of Malaysia and Indonesia in palm oil, and the US and Argentina in groundnuts. It provided 18 percent of global cocoa production, a figure down to 8 percent today. And while it produces 65 percent of tomatoes in western central Africa, it is now the largest importer of tomato paste (from China and Italy).

In an interview with This is Africa at the World Economic Forum in Cape Town last week, the minister for agriculture, Akinwumi Adesina, reeled off these statistics with regret. "Nigeria has transited from being a self-sufficient country in food to being a net importing country, spending $11bn importing rice and fish and sugar and so on. It just makes absolutely no sense to me at all”.
While Nigeria is second in the world in citrus production and Africa’s biggest pineapple producer, its supermarkets are stocked with concentrated, imported products of both. “The only local content is water from Nigeria,” the minister complains. Multinationals testify to the challenges of agricultural import-dependence in their local operations. “We have thirteen factories in Africa that use products like soft oils, tomatoes or starch-based compounds on a daily basis, but much of this is imported, wasting foreign exchange and increasing our carbon footprint,” says Marc Engel, chief procurement officer at Unilever. The company owns the largest soap factory in Africa, but have to import palm oil from Asia to keep it running, and they import sorbitol from China for their local oral care products, when cassava would do the job.

In Glasgow, money buys legislation

Glasgow's new criminal, with her weapon

Oh no, Glasgow.

Seeking to "protect the character and integrity of the Commonwealth Games," and to "control activity" around sporting venues, the Scottish government has proposed punitive new rules banning buskers, ambush marketers, and street traders during the games, which will be held in the city next year.

Street performers and merchants who violate the rules--which will impact 17 zones around the city--will face fines of up to £20,000.

The BBC and Evening Times lay out the plans for Scotland's most dangerous criminals.

Money quote from lawyer Jamie Watt: "Sponsorship revenue is an essential part of any major modern sporting event. Events simply can't happen without this income, that's why regulations are required – to protect investment."

a bizarre addiction to structural adjustment

"African policymakers followed Structural Adjustment Programmes over the last 10 – 15 years. It worked, it delivered results. It delivered economic growth and poverty reduction. You can’t dispute that."

--Shantanayan Devarajan, Chief Economist of the World Bank's Africa division

Source: Think Africa Press

live from the banlieues...it's System D

Self-development arising from the most deprived neighborhoods of Paris is defying the odds in austerity-crushed Europe. The New York Times reports.

Raoul Sodjinou, who emigrated to Paris from the Republic of Benin and is trying to make his struggling cosmetics business a winner, confided the key to what he believes will be his ultimate success: “Those who say stop — that’s not me."

The article doesn't say if any of these entrepreneurial efforts started off-the-books. But it's the entrepreneurial spirit that is true to System D as well: “If we wait for the government to do something, people will just remain stuck,” Mourad Benamer, founder of the successful franchise Eat Sushi chain of restaurants, said. “If we want things to improve, we have to do it ourselves."

sensational stat of the day

Africa loses twice as much in illicit financial outflows as it receives in international aid.



Source: Africa Progress Report 2013

Bolivia's DIY city

The New York Times reports on El Alto -- the leftist free market bastion that, since it seceded from La Paz in 1988, has grown bigger than the capital city.

Residents describe El Alto as a nonstop city financed by immigrant dreams of a better life. Beyond the market, there are thousands of small businesses, including importers, manufacturers and garment shops that make knockoff brand-label clothing. The city seems to be in a constant state of construction, fueled by the commerce and, locals said, by money from Bolivia’s drug trade. And there are language academies that give courses in Chinese for El Alto entrepreneurs.

The most prominent feature of El Alto is its vast open-air market, which fills mile upon mile of city streets every Sunday and Thursday. Here vendors by the thousands offer a huge array of goods: piles of used T-shirts and other clothing that arrive in bales from the United States; cars, new or used (and sometimes stolen); neatly arranged arms, legs and heads from broken Barbie dolls; electric guitars; mummified baby llamas; pickax handles; and myriad other items. Each week, millions of dollars pour through the market, which operates in an almost total vacuum of government intervention, taxes or regulations.

"El Alto can be Hong Kong in the middle of the altiplano, or it can be a slum," a local activist told the paper. "You’re in the exact point where you need to establish the foundations for the city’s development."

So will the System D city go formal? And, if so, what will that do to it's entrepreneurial spirit?

where the informal economy beats the formal

Here's an amazing stat:

A hardy street vendor in Asuncion selling tereré -- the cold infusion of yerba mate with mint or lemongrass that's Paraguay's national drink -- can pocket double the nation's minimum wage. A street currency trader whose office is a wooden stool set up on a busy corner can bring in the monthly minimum in a little more than a week.

La Prensa has details.

Jaron Lanier on System D

In an interview on Salon, Jaron Lanier, the computer scientist, musician and artist who's now worried about our increasingly wired world, offers a bracing take on informality.

Lanier, who has written a new book called Who Owns The Future?, bashes the informal economy for being outside the social contract and ushering in a winner-take-all society, in which a few people (Mark Zuckerberg, Sergey Brin, etc.) get really rich and everyone else slaves.To Lanier, the growth of casual labor and permanent freelance jobs and unpaid interns who are doing work that used to be done by full-time employees undermines development and democracy. Some excerpts from his comments in the interview:

This is getting back to the informal economy where you’re living in the slum or something, so you’re desperate to get out so you impress the boss man with your music skills or your basketball skills. And the idea of doing that for the whole of society is not progress. It should be the reverse. What we should be doing is bringing all the people who are in that into the formal economy. That’s what’s called development. But this is the opposite of that. It’s taking all the people from the developed world and putting them into a cycle of the developing world of the informal economy
...
If you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you’re a person in the West, in the developed world. And then meanwhile this loss, or this shift in the line from what’s formal to what’s informal, doesn’t mean that we’re abandoning what’s formal. I mean, if it was uniform, and we were all entering a socialist utopia or something, that would be one thing, but the formal benefits are accruing at this fantastic rate, at this global record rate to the people who own the biggest computer that’s connecting all the people.
...
The whole idea of a job is entirely social construct. The United States was built on slave labor. Those people didn’t have jobs, they were just slaves. The idea of a job is that you can participate in a formal economy even if you’re not a baron. That there can be, that everybody can participate in the formal economy and the benefit of having everybody participate in the formal economy, there are annoyances with the formal economy because capitalism is really annoying sometimes. But the benefits are really huge, which is you get a middle-class distribution of wealth and clout so the mass of people can outspend the top, and if you don’t have that you can’t really have democracy. Democracy is destabilized if there isn’t a broad distribution of wealth.

The thing is that the value of the informal economy around the world -- conservatively estimated at $10 trillion -- is seven times the value of the luxury economy. At the same time, if we look globally, there isn't really a broad distribution of wealth. Indeed, if you have assets of $2,138 (this doesn't have to be cash in hand, but could be the value of your Vespa or VW, your iPad or Prada bags, or any of your other analog or digital doohickeys) you are a member of a super-elite group--the wealthiest 50 percent of people on the planet.

Lanier makes some interesting observations--but he's looking at System D from the outside. What has happened in the world is not that System D businesses and entrepreneurs have broken the social contract and undermined democracy, but that the formal world has. Walmart -- the world's largest retailer -- doesn't offer health insurance to many of its employees. In this, it's no different from the owners of a roadside kiosk in Kinshasa. Yet the big corporation is lauded while the sidewalk entrepreneur is derided as exploitative. In Nigeria, UAC -- a venerable formal firm whose shares are publicly traded -- has made a determination to sell its Gala sausage roll exclusively through a massive labor force of street hawkers. The government makes no effort to rein in UAC but instead criminalizes street peddling. All around the world, big businesses are protected, while the small fry are persecuted. Global inequality has been created by the formal economy. So what use should people on the bottom have of formality?

Lanier's right: who gets to own the future is indeed a relevant question. But, today, more than half the workers of the world are united in earning their money off-the-books--and the response of the dominant, formal system is to banish these people as illegal and criminal.

I'd say that any system that turns half the workers of the world into criminals is by definition not serving the people. System D has the potential to serve as a mechanism for broadening economic agency and reducing inequality. But we all have to be willing to think outside the box to make it happen.