The news services are alive with reports that Finland has declared broadband of 1mb/s a basic right for all Finns. Quite interestingly commercial service providers will be obliged to provide this service from 1 July to all households. No I can hear you all say “but that is a developed country, we have different priorities in a developing nation!“. And you would all be right. I agree completely with you. We have huge unemployment here in South Africa and the rest of Africa. Apparently, we (South Africa) have more people receiving grants than we have employed persons(also reported internationally today).
However, you have to wonder what the potential effect on our and other developing countries may be. Exactly what happens to the levels of innovation and of course comparative advantage when a whole society gains access to the internet at high speed for free? Will this affect our economy? In which way? How will this affect the so-called knowledge gap between industrialised and emerging economies?
To do business in Africa is not easy. I am not being pessimistic with this statement. I am based in Africa because I believe in our opportunities here. But lets face some truths:
We are far from input suppliers (a problem for many and an opportunity for others)
We are far from our customers (I mean those international customers or the pockets we have on the continent)
Things take longer to arrive here (inputs and my Amazon book parcels), and
We stretch our infrastructure on a daily basis (roads, rail, health, education).
It is not difficult to trade between countries, or to find partners, markets etc. because of various barriers (I think Europe and Asia is ahead of us in overcoming technical and cultural barriers to trade – whether perceived or real)
Our societies spend a huge amount of time arguing, blaming and politicising that could probably be better applied to solving problems and exploring opportunities
We have many government and market failures (more on this in another post) that only benefits elites (public and private)
Most people think that we have to innovate to reach markets that are far far away, line Europe or the US. Or we think that we have to out-innovate the Asians. But we have something right here under our noses. We have demands from consumers, businesses, policy makers. These demands are not yet always expressed as needs. If you think it is important to save energy in Europe to save the planet (or save money), then we have an additional and more urgent reason to save energy – our constraints to produce enough to go around. Same for water, food, technology and other areas.
So why are we not exploiting the opportunities created by local demands and unexpressed needs?
I think part of the answer is about our policy incentives, and then another part is about our low self esteem. Ok. There is also the fact that innovation is increasingly becoming difficult, because consumers are getting so smart at selected the better products that combines elements of good design with functionality (functionality alone often doesn’t make the cut). What I mean with difficult is that you have to spend a lot of time searching for the right components, process technology (and perhaps even patents).Many of you will probably come up with other reasons as well.
But here is a question worth spending our collective brain power on: what can we do to stimulate more demand led innovation here in Africa?
The OECD last year had an interesting seminar on this topic. I am relieved to find that industrial countries are also thinking about these things (it means we are not so far behind), but I am very envious because we also need to be discussing these things in Africa. Perhaps our greatest resource is not our minerals. Perhaps it is the huge number of problems that we still have to solve, and the millions of demands that are not yet articulated. But how do we turn these challenges, problems (or opportunities if you like) into profitable ventures?
Gapminder has realised some fantastic graphs about the FIFA Worldcup.
For instance, for a view on how uneven the participation in the Worldcup is, click here. For instance, 53 countries in Europe competes for 13 spots in the Worldcup. Africa competes for 5, with Asia competing for 3. More than half of the teams competing in the Worldcup are from rich countries. Click here to see this visualised.
On the question of whether popilous countries far better, click here. Although it seems harder for a very small country to be successful, Slovenia and Uruguay shows that it is possible.
Next is the question of whether rich countries far better than poorer countries? Here you can see the correlation between income and the ranking made by the International Football Association, FIFA.
Gapminder is making statistics a beautiful game….
To this point, the spirit in South Africa around the Worldcup is great. I hope that our teams exit will not mean an end to the euphoria that is still ruling the cities.
You may be interested in the following paper from UNU-MERIT by C. Huang, A. Arundel & H. Hollanders
The official abstract is below.
Non-R&D innovation is a common economic phenomenon, though R&D has been the central focus of policy making and scholarly research in the field of innovation. An analysis of the third European Community Innovation
Survey (CIS-3) results for 15 countries finds that almost half of innovative European firms did not perform R&D in-house. Firms with weak in-house innovative capabilities and which source information from suppliers and competitors tend to innovate through non-R&D activities.
In contrast, firms that engage in product innovation, find clients, universities and research institutions an important information source for innovation, or apply for patents or use other appropriation methods are more likely to perform R&D. However, non-R&D performers do not form a consistent block, with several notable differences between firms that use three different methods of innovating without performing R&D. Many of these determinants also influence the share of total innovation expenditures that are spent on non-R&D innovation activities. Furthermore, an analysis of the determinants of the share of each firm’s total innovation expenditures for non-R&D activities shows that the
factors that influence how innovation expenditures are distributed is generally consistent across sectors and European countries.
What I find interesting is that these empirical findings are very similar to what I have found in my interviews with South African firms. Many firms do a lot of innovation without spending any money on R & D. A large number of firms use specialised product developers (or freelance experts) to do research on their behalf. Or they depend on universities or technology stations for research. Amazingly, the majority of the firms doing product development (as their area of specialisation) are small firms.
The 2010 African Economic Outlook was launched on the 24th of May 2010. The report states that 80% of economies in Africa still showed economic growth in 2009, compared to 10% of the OECD countries. To see the statistics, head over to their website. You can even manipulate (or interact) with the data for your own research. The best thing is that access to this data is free!
While browsing their site I found an interesting page on the topic of “China in Africa: Debunking myths and debating truths“. The influence of China in Africa is now even a topic at family barbecues, so perhaps this is a good place to gain some new perspectives.
Tomorrow is the 1st of May. The significance of this date is two-fold. Firstly, it is the day that I completed my PhD-Thesis 12 months ago. One year ago I hit ‘SAVE’ the last time on my thesis document. A 5 to 6 year long (depending on whether you ask me or my wife) project came to an end, leaving me with evenings, weekends and holidays to spend (almost) any way I want. On many occasions I thought that I would not be able to finish that mammoth project.
Secondly, my best friend, mentor and business partner, Jorg Meyer-Stamer, passed away. Not only did his sudden departure leave me without a special friendship, Jorg also left me with a huge list of ideas, schemes, concepts, powerpoint slides and unfinished papers. It took me months just to figure out which ideas I could possibly pursue without his energy, insight and inquisitiveness (and pushing). Don’t get me wrong, I am very grateful for his legacy, but I have on more than one occasion caught myself thinking that he left me with too much raw material. I once or twice caught myself for blaming Jorg for not being here. Perhaps I simply miss arguing with Jorg about things that we both knew we could not change or influence, like the time when we were debating how local government has hijacked and almost completely stifled local economic development in South Africa. But more about that argument in another post.
What are some of the open questions that I am working on thanks to my late friend Jorg?
How can we get business leaders to take the lead in local economic development activities in a market orientated, trust building and positive externality creating way?
How can we get more people to understand markets, market failures and other forms of transactions in a non-theoretical but significant way?
How can we create a development practice field around innovation systems similar to the movement that now exists around value chain promotion? The follow-up to this is “how do we get more private sector development experts involved in this topic that is now dominated by academics and policy makers?”
How can we get people to shift their attention from micro-projects in LED towards initiatives and incremental improvement of territories?
Jorg always asked me the following questions:
How can we make this topic easier to understand without making it less sophisticated?
What happens when we combine insights from another academic or research discipline with development practice?
How do we take these ideas, practices and tools to scale so that more people can use it? You may not be aware of this, but Jorg was one of the first people to take a tool such as Porters 5 forces (designed to develop the strategy of a single firm) and develop it further into a workshop format that could be applied to many homogeneous firms simultaneously.
How can we make this practical and fun?
How can we knock our participants, colleagues, peers and partners socks of in our next workshop or event?
In this last year I have also managed to leave some pet topics behind, and I find that I am almost exclusively now focusing on private sector development, innovation systems promotion and value chains. I am spending a lot of time developing tools around the diagnosis of innovation systems, and this automatically led me to work almost exclusively in advanced sectors (it just happened naturally).
And you know what? The problems here in the advanced sector are the same than those we face in rural development, or agriculture. The target group now simply wear ties and have more zeros in their calculations. The advanced sectors also have low trust, also suffer from poor information flows (even if there is more information flowing), they also lack public goods (many public goods become privatised) and are also confronted by bullies and plagued by market failures. The big difference is that these people are overlooked by development practitioners and policy makers, and they have never heard of development facilitators or our ideas and facilitation methods.
Now isn’t that a nice problem to solve? Let me know if you want to join me on this journey.
While you ponder that. What challenges did Jorg leave you with?
What questions are you working on?
On which path are you now searching for new answers (and hopefully some new questions as well)?
This one is aimed at Colin 😉 Which answers have you found that need some good questions in order to make sense?
I challenge you to share your thoughts in public.Jorg always shared his learning, and he always took all of us along on his journeys. Let us celebrate his legacy by sharing our ideas, or at least our progress down the path.
Apologies for being so silent. I am currently leading a team that is analysing the innovation system in the electronics sector in South Africa. I cannot help but feel inspired to meet such brilliant business minds. And they all want to share, they all want to help to grow the country. It is so sad that many people see the succesful business people as the enemy in my homeland.
In the meantime, I quite Cicero. Listen to this wisdom from 55BC.
“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.”
– Cicero – 55 BC
Thank you Michael Meadon for sending me the link to the Evolution for Everyone blogsite by David Sloan Wilson. In a series of blog articles David describes evolution in economics from different perspectives. Reading these articles made me realise why local stakeholder groups are so ineffective in promoting or driving local economic growth. Very often the social dynamics and social power plays are ignored. We have to find better ways of recognising local initiatives, but we also have to be aware of the social selection process that allows for this emergence.
Those of you that follows literature on the wisdom of crowds probably know of the video clip of this shirtless guy dancing in a crowd at a festival.
Derek Sivers recently dedicated a TED talk to this guy, and narrates some excellent leadership lessons. The video clip can be seen on Youtube, and a transcript of the narrative can be found on Derek’s site.
Thank you Tim Hadingham for bringing this clip to my attention!
Why my initial shock? Well, it seems like going backwards to return to such an age-old method. But then, I have also
visited several rural farms where land transfers are taking place, where farmers were sitting on un-used lands because they were waiting for a ‘tractor’ contractor. The same happens with small farmers supported by several municipalities. So in these cases, using oxen to plough would already be a step in the right direction. However, then the Director General motivates this advice on the basis that using a tractor to till a small piece of land will emit to many gases. I am not so sure that many poor farmers would just give up farming with a tractor on this argument alone….
Furthermore, the news article makes reference is made to India. Well, I have seen farmers ploughing with oxen in Thailand and Indonesia as well. As long as they can keep their production costs below market prices, I guess it is worth pursuing. A huge visible difference between Southern Africa and Asia is that farmers in Asia seem to get by with extremely little government support, agricultural extension and modern farming equipment.
OK, so now that I have my cup of coffee in my hands I am willing to reconsider my initial response. Perhaps the Director General should have said “instead of waiting on someone else, use oxen!”.
Can any of the readers of this blog with more experience in rural development perhaps comment or contribute on this issue?