January lazy linking

Excuse me for being a bit slow….but I cannot shrug off the holiday feeling yet.  So to make up I provide you with links to some interesting articles in other blogs that I have read in the last few days:

Urbanisation,complexity and poverty – or why aid agencies should be reading Jane Jacobs

This is an excellent article about the famous Jane Jacobs and how she described cities as living ecosystems. The author describes several insights that development agencies should learn from Jane Jacobs and other complex systems authors.

The author of the “Aid on the edge of chaos“, Ben Ramalingam, is also the lead author of a fantastic paper  of a 2008 Overseas Development Institute working paper ‘Exploring the Science of Complexity: Ideas and Implications for International Development and Humanitarian Efforts’.  This is a publication worth reading!

By the way, you will see me post more on the topic of complexity, as my December reading list finally convinced me that traditional economics cannot provide the answers to the complex and adaptive economic system that we are part of.

Finance now SA’s biggest sector

In a new report by the SA Institute for Race Relations (SAIRR), it is reported that the financial sectors contribution to the country’s GDP in 2008 was 22%, the manufacturing sector 19%, while government itself added 15%. Mining is at 9.5% and agriculture at 3.3%. The report confirms statistics from Statistics South Africa that shows that Gauteng now contributes 34% to the national GDP, with KZN at 17% and the Western Cape with 14.5%

Traditionally the manufacturing sector is the largest contributor but over the last decade this contribution is declining, while the business and financial services sector grows. If you think of it, South Africa has a really advanced knowledge intensive business sector, and strangely this sector is not recognised as a strategic asset by the government. This business and finance sector is closely related to manufacturing, as well as other financial services. Aside from this 1st class service sector, there is a whole consulting and NGO sector that has emerged to supply state-subsidised services to small enterprises. Unfortunately, the services of these service providers, nor the customers that they serve, are competitive.  And because these services are often driven by templates and recipes, they are not knowledge-intensive. For small enterprises to take markets from larger competitors, or for local firms to excel in the region and globally, they need knowledge intensive services. Something that is expensive, but valuable. OK, I got a bit side tracked there!

The point is that the knowledge intensive inputs into manufacturing is increasing. This implies that South Africa is shifting from simple manufacturing (where few intermediary services are required) towards integrated or advanced manufacturing, where a lot of business service (or intermediary) inputs are required. My research earlier this year showed that some manufacturing enterprises in the electronics and metals sector are depending on more than 50 of their product value from contributions from specialised service providers. Wow!

So if you are working with manufacturing enterprises, wean them from wanting to use free or subsidised services and get them to engage with specialists. There is no other way to compete!

Shifting towards innovation and technology application

Have you also noticed that increasingly local economic development is captured by the public sector, often from a governance perspective, while the role of the private sector and its own development gets reduced to a consultative stakeholder? I find this amusing, as the private sector is the acknowledged driver of growth and increased wealth. I have already shifted my attention to the stimulation of technology use and innovation in the private sector, as I cannot imagine a more strategic way to create a new future for our region.

But strangely, the private sector, at least at an organised level, has only in a few places in Southern Africa taken the lead in its own development. While the media and government complains about job losses, firm closures and the increased uncompetitive performance of the industries, industry itself seems to be waiting for government to bail them out!

At the moment I see only a few ways out of the hole that our industries are in. Firstly a more pro-active approach towards the use of technology and innovation is required. Government is not going to donate the machines, and nobody will give a firm the research. Firms need to invest in new technology. Secondly, at a collective level, industry bodies need to move from advocacy towards a more proactive approach of building value chains and industrial networks. Many famous developmental fads like value chains, incubators, clusters etc have their origins in the private sector, even if these instruments are often widely used and abused by the public sector. Why are we seeing so little investment in these instruments by the private sector for the benefit of a specific industry? Thirdly, industry needs to realise that both increased competition and increased globalisation have changed the rules. Just as governments have to deal with immigration and passport issues, business should become a bit more obsessed with shaping the economic, education and science policies of their countries.  If industry does not as a collective become more vocal about education standards, research missions or industrial support then we are in for a tough 20 years!!

Hey, what do you think we can do to inspire our industries in Southern Africa to become better organised and more involved?

How can we get businesses to start investing in the latest technology?

How do we get business to not only innovate in marketing and advertising (we are good at that) but also to invent new business models, new technologies and new solutions to the problems of the world?

Any ideas or proposals are welcome!!

Two attitudinal trends about human mobility in Southern Africa

There are two attitudinal trends that emerge when you work with government officials responsible for economic development in many Southern African countries. The first, is that foreigners with skills pose a threat to locals, and that they should be kept out of the country to protect local jobs. Despite popular belief, this is not a position that is unique to Africa (ask anybody who tried to get a VISA to Germany recently!).  The second, is that rural people should be kept (by force or incentives) in the rural areas, and that jobs should go to rural areas to make sure that people do not migrate to cities.

Both these trends are disturbing as it limits our options to makes economic development reach its objectives. It is so important to attract people with skills to a developing country, as research shows that the best skills and knowledge transfer in developing countries does not take place through knowledge transfers from universities, it takes place through knowledge transfer from suppliers, customers and competitors (UNCTAD LDC report 2007 and others). When you attract foreigners with skills to your country, you basically save education costs as these individuals were trained and gained their experience at the expense of another country. Unfortunately, xenophobic propaganda that is often fuelled by insecure local politicians have succeeded in making it very difficult for foreigners with skills to feel comfortable or safe in many communities in our region. Governments also use the ‘scarce’ definition to basically make it extremely difficult to attract people with scarce skills. For instance, a UNIDO study in the SADC region found that most small enterprises lacked accounting and basic management skills that undermines their chances of surviving or thriving. Yet, accounting and business management skills is not recognised as a scarce skill in most of the SADC member states. Fortunately that may be changing soon in South Africa, but it may still take time for the government to figure out the new relaxed rules and procedures to make it easier to attract foreigners with ‘scarce’ skills.

The 2nd trend is that government officials want to fight the flight of people from the rural areas to the urban areas. The World Bank 2009 World Development report is still one of the best publications to describe the new rules of human mobility. It is a fact, people (for now) are moving to cities and towns. And it is also a fact that people are more emotional or sensitive about this topic than many other development topics. Yet, statistics show that people are engaging less in subsistence agriculture in many Southern African countries, and farm labourers that used to exchange manual labour for food and tenure on commercial farms are increasingly left without jobs due to changes in labour laws and value systems  in many countries.

In a recent interview with a father that moved his whole family from a rural area in South Africa to a squatter camp (informal settlement) explained that it was better to unemployed in the city than employed in the country side. His kids are going to a school that offered much better education than the rural school, so even if government succeeded in creating jobs in the rural country side, people like his family may still choose to take their chances in the city. Even though many people may choose to move to the city, there are still large numbers of people that are not as mobile, due to personal health, cultural or other reasons. With every skilled or capable person that decides to leave a rural area, the remaining people are increasingly marginalised as the options to create jobs for the remaining people dwindles as the average skill level in the region declines. For instance, if a person with some farm management skills leaves and area, the chances of creating jobs through effective farm management competencies goes down. Therefore, one of the most important government interventions into the rural areas should be education, as this at least makes it easier for future generations to exercise their choice of whether they want to stay or move. In any case, people with better qualifications (and experience) are more likely to succeed in an enterprise (or farm) in a rural area.

I moderated a conference in the region recently, where several participants felt that people from the rural areas SHOULD NOT BE ALLOWED into cities! I was quite shocked by how many others publicly endorsed this opinion. Basically this argument will enforce a new divide, those with shops, banks cinemas, traffic congestions, better jobs and good schools, and those without. I cannot even imagine going back with my family to the small town where I grew up.

So as development practitioners we have to embrace the new challenges of mobile human beings. We have to make our counterparts aware of ‘scarce’ skills that are missing in the system, and the benefits of attracting people into local systems that have gained expertise and qualifications elsewhere as a means to build local competencies. Furthermore, we should not fall in the trap of believing that people from rural areas and other countries are here to steal jobs.

Also do not fall in the trap of stereotyping all people living in informal settlements as uneducated. The father I mentioned earlier is a qualified diesel mechanic that used to work in a rural tractor dealership. Understand that job creation in rural areas are difficult because of low volumes and the fact that people with skills and experience are (for now) moving to the urban areas. But we cannot prevent people from moving as this is an important choice for families to make. Rather, our spatial planning and city development strategies must deal with the fact that in the medium term more people are coming to cities.At the same time, the urban dynamics are changing. Cities are becoming the lifeblood of our African economies, and people live and work differently in these spaces. This also has an impact on our city management and our economic development opportunities. I sometimes wonder whether the poor public transport systems in South African cities are designed on the assumption that all the commuters will soon go away to where they came from.

The age of human mobility is upon us, and this is not only a luxury of only the wealthy. The poor, the desperate and the under valued people are also mobile, and when they move, they change the economic potentials of the spaces they leave behind as well as their destinations.

From good governance to good development governance

In its latest Least Development Country Report , UNCTAD is reflecting on the impact of the financial crisis on the 49 LDCs and is stipulating a move from “good governance” to “good development governance”. The report describes the weaknesses of the current “good governance” trend that has trapped many development agencies and governments, and provides recommendations on how to improve the impact of good governance interventions through a move to good development governance.

Development governance is about the processes, policies and institutions associated with purposefully promoting national development and ensuring a socially legitimate and inclusive distribution of its costs and benefits

 

http://www.unctad.org/Templates/webflyer.asp?docid=11721&intItemID=2097&lang=1

The UNCTAD LDC reports are an annual highlight, I strongly recommend that you take a look at this document.

 

Thin solar technology commercialised in South Africa

I was delighted to read in the South African Mail and Guardian this morning that a public-private partnership between the University of Johannesburg and several other partners (Sasol, the Central Energy Fund (CEF), the National Empowerment Fund and the University of Johannesburg) are working on a plant to commercialise thin-film technology in South Africa. The new technology is known as Thin Film Solar panels, and consists of micro-thin metallic film (only 5 microns thick) that converts light into energy at a fraction of a cost of the current Photovoltaic technology. Germany is a global leader in micro-film technology due to its huge investments into alternative energy technology, and the equipment needed to make the Thin Film Solar modules will be imported from Germany to the Western Cape province to establish a production facility in Paarl.

This is great news for several reasons. Firstly, researchers at Stellenbosch university are also working hard on new solar technology, thus creating a regional technology cluster effects (click here and here for more information). But perhaps the timing of this announcement is more important, as it coincides with the announcement that Escom wants to increase its energy prices by 45% for the next three years. At the moment, solar panels are still extremely expensive in South Africa.

A Google search for “thin film solar” found several sites that explained the technology, and it seems that similiar technologies have been commercialised elsewhere. It was not possible for me to determine whether the South African design differed than the technology described on Wikipedia.

South Africa have other reasons than our electricity shortage and price increases to invest in new climate friendly technology. Not only do we have to worry about our environment, but alternative energy could assist in overcoming the costs of connecting rural households to the grid. But at the moment the costs of alternative energy in South Africa is still very high. I cannot wait for the day that I can disconnect from the mainline power grid for environmental and cost reasons! Bring on the technology!!!!

This blog post was inspired by an article in the Mail and Guardian online, the original article can be found at  http://www.mg.co.za/article/2009-10-13-sas-thinfilm-solar-tech-at-commercial-stage

Interview with Natasha Walker on facilitation

On the right hand bar of this site you will find the link to a LEDCast episode that we have just published. In this episode I interview Natasha Walker on facilitation. Natasha is a real guru on facilitation and visualisation. We discuss the essence of facilitation, and share many tips, tricks and discuss some pet hates. The second part of this episode will be published in a few days time. I would love to hear from you!

Participants exploring a topic visually
Participants exploring a topic visually
Natasha in action
Natasha in action

Human capital development for growth

Very often in training relating to the improvement of regional and local economies we stumble onto the topic of the importance of human capital for productivity and economic growth. This results in three arguments emerging between participants. Firstly, some participants are upset about human capital development, as this often implies a higher level of learning that involves the application of technology or other advanced topics. This is seen as benefiting too few people, especially in Africa where countries are generally suffering from high unemployment and large numbers of under-educated people that are mostly trained into low-technology low-skill (and low wage) jobs. The second argument is about the role of technology in economic growth. Again, people tend to shy away from technological development that is capital (or technology) intensive towards creating jobs for large numbers of people. The third argument is that productivity improvement is not important for growth, as it only benefits the owners of firms and it is according to some people counter-productive for employment creation, as it leads to job losses.

During these arguments it is important to remain calm and clear headed, and to not fall into ideological debates. I will not try to address all three these arguments now except to say that the importance of human capital development is increasingly been promoted by organisations like the Worldbank, the OECD and others (for a great recent report on this click here). This after the topic of tertiary education has received very little attention in global programmes like the Millennium Development Goals and other programmes, with more basic education programmes like universal primary school access receiving more attention. I am relieved that the big guns are now more supportive of tertiary education and its role in human capital development. While I agree that we have to increase employment for large numbers of low-skilled people, we should not behave as if we have endless resources and management capacity available in many developing countries. This means that while we have to create jobs, we also have to be mindfull to constantly work at increasing productivity in order to carefully maximise (or allocate) the resources of the society. I am always amazed at how our politicians in South Africa want to create hundreds of thousands of jobs when we are short managers at almost every level of our society. This means that we may have to settle for less jobs (because we cant manage all these people), and that we better make sure that all the people are in sustainable and productive jobs, within competitive firms in competitive industries. We can not disconnect these different things. In fact, I think we should be calling for far more technology intensive jobs in order to optimise the skills and our resources at our disposal, while not neglecting trying to find ways to get more people with lower skills into the job market.

The times have changed, and being loyal to a country or being comfortable in a society is no longer sticky enough to hold back the increasingly mobile creative talent people of the world. People with talent (or developed human capital) can now work almost anywhere in the world, and then be paid handsomly for the sacrifices of moving. These people do not always leave countries because they are negative about the challenges facing developing countries, although this certainly makes it easier to go and live between a different and often strange cultural group (no offence intended).

I propose that we raise the importance of tertiary education, human capital development and use technological advancement to achieve progress in our developing countries. This will lay important foundations for future economic growth and for the necessary increases in productivity to optimise the resources available to societies.

What do you make of this?

An interesting quote

Here is an interesting quote from Adrian Rogers that I think should be considered by the governments of the world as they try to figure out how to help the poor, especially during these tougher times

“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it”

Of course governments have an important role to play in the fair distribution of resources, but when the creators of wealth feel exploited it might lead to the situation where the rich increasingly find innovative ways to hide their wealth from the governments.

In the press and development circles there is now increasingly discussions about addressing market failures (cases where markets do not allocate goods in socially optimal ways), but what is not discussed are cases where government failures lead to the poor getting poorer, or staying poor. A simple example is the topic of good quality public education. In todays connected economies government failures in education disproportionately affects the poor, resulting in the poor being trapped. At some point the wealthy may react by saying that they should not be held accountable to continued failures (ignorance or denial) by the public sector, leading to a diversion of profits.

Hey, what do you think about this issue?

Screaming silence

Some of the readers of this blog may wonder why I have been so silent in the last month. Those that know me personally were probably aware of the sudden death of my friend and business partner, Jorg Meyer-Stamer. To see how much Jorg mattered in the development community, take a look at the orbituary site that we created.

I am still in shock that Jorg is no longer around. He was such an important force of motivation and inspiration in my world. It all started a few years ago when I was still employed in a GTZ programme in South Africa. Jorg was our leading service provider. At first I found arguing with Jorg exhausting, but over time I started to look forward to the mental challenges that he would pose to me. For a long time I had a feeling that he did not like many of my ideas, like my passion for business services or market failure. Over time our relationship evolved and become more of a mentor relationship, with Jorg constantly challenging me to think my ideas through, or to try harder to connect concepts that were not connected. We started working on some of my ideas together and I realised that he was always very interested in my ideas, and wanted me to follow my intuition with some deeper exploration.  As time went by this mentorship relationship evolved into a deep friendship. Jorg did not treat me like a student (and fact he hardly ever did), but as an equal. When I announced my departure from GTZ Jorg immediately urged me to join mesopartner, the international though leader on territorial development.

Together, Jorg and I have presented more than 40 training events or sessions. Over time we became so

Jorg in action
Jorg in action

accustomed to each other that I could almost predict his next move, and he mine. We did not always agree on everything, but allowed each other the space for personal interpretation. Many people commented on how well we worked together as a team. We always evaluated ourselves critically after each training, and worked hard on improving all areas of our joint-performance. This means that even when we presented our favorite sessions, such as “market failure” or “stimulating competitive local economies”, it always felt new and improved from the previous attempts.

In March, when it became apparent that Jorgs cancer was very serious, he urged me to continue the work we started together. I am determined to do this, because I will forever be indebted to the generosity of Jorg. He took all of us with him on a challenging journey to demystify development and to share practical knowledge with the development community.

I miss my weekly Skype conversations with him about how the world is connected, and how many developmental concepts are disconnected. Jorg was an extremely productive person, and e-mails with ideas, new papers, presentations and general correspondence flowed into my inbox day and night.  My inbox has gone silent now, and I regret ever complaining about all the e-mails coming from Jorg with more ideas, more work, more thinking.  As I am trying to wrap up some of the projects that we initiated together I am intensely aware of the silence.

Yet, I am reminded of Jorg on a daily basis by his legacy of ideas, papers, tools, and models. For many people that have just discovered his papers, or who have just recently learned about PACA, the Hexagon, or some other ideas of Jorg, he is alive in the text and diagrams. Those of us that worked with him can hear his voice in our heads, explaining why quick wins are important, or how the law of unintended consequences works.

Jorg explaining industrial heritate to a group of South Africans in 2008
Jorg explaining industrial heritate to a group of South Africans in 2008

Do you have any great pictures of Jorg in action? Please submit them to the blogsite!