Posts Tagged ‘system D’

The Informal Economy Symposium, Barcelona on October 12th 2012

Our aim with this symposium is to explore the global scope, innovations and potential futures of the informal economy.

Opening Keynote will be John Keith Hart, who coined the term “informal economy” and the day long symposium on the 12th of October will be closed by John Thackara.  There will be three panel discussions, as follows:

PANEL 1: SCOPE, MEANING AND TENSIONS IN THE INFORMAL ECONOMY

This panel will explore the scope, tensions and influences of the informal economy. It will set the stage, provide case studies, and present new themes that make clear why the informal economy is a key topic for business and society today. It will address critical questions for the symposium: What are historical foundations, contemporary developments, conception and misconceptions of the informal economy? What parts are institutionalised or marginalised and which are not?  What does regulation look like?  How is the informal economy similar or different in emerging vs. developed markets?  What kinds of goods and services does it include?  Are there good and bad informal economies? How are the informal and formal linked? How do labor, goods and services move within and between them? Why does contemporary business need to understand the informal economy?

PANEL 2: THE FUTURE OF MONEY AND THE INFORMAL ECONOMY

This panel will explore the use of money and other exchanges in the informal economy. This panel builds on the previous, starting with the premise that the informal economy is a place to create new value for business and society. It will discuss the relationship between regulated finance and informal exchanges, focusing on, among other things, mobile money. Some key questions to be addressed include: How is the use, exchange and idea of money similar or different in formal vs. informal economies? How do digital technologies encourage and expand informal practices and exchanges?  What are the ways to establish financial links and other bridges between formal businesses and informal practices? What are specific financial needs in various informal economies? What are the challenges faced by companies operating in financial services and other businesses when addressing the context and practices of the informal economy?
panelists: Ben Lyon, Ignacio Mas, Niti Bhan  moderator: Rich Radka

PANEL 3: INNOVATION AND OPPORTUNITIES IN THE INFORMAL ECONOMY

This panel will look at innovation within the informal economy. Rather than approach informal economic practices as make-do strategies of people in the margins, panelists explore the potential for the lean and agile practices of the informal economy to adapt to contemporary global shifts. Some key questions to be addressed include: Can informal economic practices be indicators of future economic activity? What can these practices teach us about our own innovation efforts and modes of doing business?  What does the persistence of informal economies mean for the future of business? What challenges does it present? What are some ways companies can act on opportunities?

You can register for the symposium here, or follow the blog and twitter hashtag #informaleconomy.

The ingenuity economy: grassroots social enterprises abound

Since I’d recently completed my review of Robert Neuwirth’s book, Stealth of Nations – The rise of the global informal economy, it struck me that what best characterizes this economic activity is captured by him here:

The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise.” Or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.

Do those words not capture the spirit of innovation we so often discuss here?  The ingenuity economy seems to capture that essence somehow, though I doubt it would ever make it into general parlance. In any case, here are such two stories from Kenya – one regarding household solar power and one on potable drinking water – traditionally the purview of design students and social entrepreneurs everywhere.

Charles Otieno Ogwel is a school dropout who makes custom inverters for household consumption drawing energy from solar power. From yesterday’s Daily Nation article:

Mr Otieno is now lighting up rural homes where Kenya Power has not yet reached to provide electricity. At a cost of Sh12,000, a homestead will get electricity as his inverter converts solar energy into high voltage alternating current. One needs a solar panel, an accumulator, and the specifications of the domestic appliances to be used. Mr Otieno then determines, through calculations, the type of inverter, in terms of capacity, suitable for that home. He then makes an inverter that suits his clients’ need.
[…]
The father-of-three says he has spent more than Sh250,000 on research to come up with the modified gadgets and has sold close to 10,000 customised inverters.

Why aren’t all the solar power enterprises snapping up fundis like Mr Otieno? And from a slightly older article from the Business Daily  comes the story of these enterprising women from Kirinyaga who brought an organic, affordable and natural solution for water purification back from the Sudan. Here’s a snippet:

Victoria Kamwenja is one of the women now working to spread the word on the water purification in training sessions.

“When added to water, the crushed seeds attract particles of dirt that are floating in the water, including certain disease organisms. The dirt attaches to the seeds and they fall together to the bottom of the jar. Then you pour off the good water to drink,” said Victoria.

“The dirtier the water the more seeds you will need”.

Together the women are now selling the seeds to other households in other areas after offering training at a fee. Susan Kinya and Anastacia Nyawira are selling the seeds in four districts surrounding Kirinyaga where the Moringa tree doesn’t grow. They package the seeds in quantities sold for Sh10, Sh20, Sh50 and Sh100. In a single day in one district, the two women manage to sell seeds worth Sh5,000 on top of the Sh2,000 that they charge for the training. They hold their demonstrations at rivers, such as the River Chania in Thika District.

“It’s a good enterprise that has been keeping me busy since I retired as a school teacher. I am now planning to be the sole trainer of cheaper ways of purifying water in the whole province,” said Susan Kinya.

And there doesn’t seem to be any external agency involved, this is a homegrown women’s enterprise. One wonders whether they and the many others like them, particularly the makers and inventors, will ever come to the notice of investors wishing to make an impact among the communities?

Book Review – Stealth of Nations: The global rise of the informal economy

The first best thing that I can say, on Robert Neuwirth’s Stealth of Nations, is that I’m grateful to the author for writing the book. I’ve just finished reading it, after purchasing it at a premium from Kinokuniya in downtown Singapore. At least twice while reading I found myself wanting to bake cookies for the author, even as I realized at other points of his sweeping overview of the entrepreneurial spirit – the economy of ingenuity, as he so aptly terms it – that his perspective was a bit naive, or rather, that of an outsider, the natural outcome from a detached observer traveling through all the locales and situations.

His extremely easy to read and engrossing writing style rapidly took me through the stories of the enterprising individuals he met in Paraguay, China and Nigeria as well as covering the reflections of experts such as John Keith Hart, Roberto Unger and Martha Alter Chen. The urge to bake cookies emerged from the way he intertwined snippets from John Adams’ classic Wealth of Nations in and out of his narrative in order to give context to the economic thinking and theory of current day policy and systems.

What he has done with the publication and the subsequent publicity of this book is to shine a bright light on the economic engine that employs billions of people around the world, who aspire to make their dreams come true and create a better life for themselves and their children, in the most challenging circumstances and uncertain environments.

The topic has been covered extensively in such eminent locations as Foreign Policy, the Wall Street Journal and NPR.org – no small feat for a subject matter traditionally overlooked or considered a blight on the development economics landscape.  Neuwirth covers this aspect in the early chapters of the book and quotes Hart viz.,

Even Keith Hart has come to recognize the shortcomings of the phrase he coined. “The label ‘informal’ may be popular because it is negative,” he wrote in the paper delivered at a conference in 2004. “It says what people are not doing – not wearing conventional dress, not being regulated by the state – but it does not point to any active principles they may have for doing it. It is a passive and conservative concept that acknowledges a world outside the bureaucracy, but endows it with no positive identity.”

He goes on to propose a rebranding – system D – but acknowledges that is a cosmetic change. Words as labels tend to be constricting for this amorphous yet creative liminal space that is such a gray area between structure and chaos –  my own use of the label the prepaid economy has only captured the most popular business model of pay as you within this space but not the inherent potential and value that this activity provides among those conventionally known as the Base or Bottom of the Pyramid.

It is the fact that his book exists – firmly positioned in the context of economics, that too global economics, in this time of transition and upheaval when so called structured systems are themselves suspect of being the perpetrators of the problems facing the financial industry – that offers the greatest value to that which he calls System D. This, to me is the greatest value that his book will bring, if it is able to retain its prominence in the public sphere once the flurry of reviews and coverage is over.

It provides the layman – even economists are laymen, when it comes to the details of the daily grind for the lower income demographic across the developing world – with a glimpse of the why a System D must needs exist – particularly where there is systemic mistrust due to inadequate infrastructure, lack of a safety net and where systems don’t work at all, much less as imagined or  planned.

Neuwirth highlights a key point – this economy provides employment for anyone, with the lowest barriers to entry. Any market woman with enough shillings or rupees to buy one day’s inventory is automatically in business – compare this to a highly structured formal economy like Finland’s, where a recent culinary school graduate manning a coffee and cake kiosk at Katajanokkapuisto tells me that she is unable to offer more than a quesadilla, though there was demand for a wider variety of foodstuffs, simply because of the extensive barriers of rules, regulations and requirements by the city’s authorities.

If it makes the powers-that-be that set policy or make pronouncements on what is the one right way to economic development stop and consider whether a little loosening up might not benefit their own tightly corseted economies a little, then this book, with all its naivete and idealism would have done the job I want for it to do.

So, where do I feel Neuwirth is lacking? An example would be the throwaway line saying that something like a Maker Faire Africa could be done at regional and even global levels, making a difference for the inventors and makers emerging from their environments of scarcity. Oh yes, Mr Neuwirth, we want that to happen so badly, but as those of us who have tried to make this happen elsewhere have found, few organizations want to fund it or see the value in such activities.

Even while seeing the value and potential of this introduction to size, scale and scope – not to mention the sheer motive power – of this economic activity, it has been in these areas – the suggestions for what can be done, where Mr Neuwirth has revealed his lack of experience with the way the world and its decision makers view those at the BoP. A touch more work on the people themselves, their lives and the role that System D plays – with context of their socioeconomic strata, existing opportunities and the challenges posed by well meaning impact investments and NGO foundations would have given the book a grounding it currently lacks.

For these are all factors that influence each other – economic theory and development practice, BoP marketing and poverty alleviation, microfinance and the so called chaos of the bazaar. Still, if the Stealth of Nations paints this economy of ingenuity in a positive light and gives it credibility, it may perhaps begin to change the way these activities are viewed leading to efforts to bridge the deeper and not so digital divide between the developing and the developed world.