Some recent links I enjoyed

Take a look at the article by Andrea Cornwall in The Guardian on how donor policies fail to bring real and sustained change for women.

Also take a look at the blogpage of Marcus Jenal and one of my other favorite bloggers David Green (Oxfam). I assume that most of my readers are by now also subscribed to Aid on the Edge of Chaos by Ben Ramalingham (ODI). If you feel like a good laugh take a look at Ben’s post on the Genesis of Aid (a parody).

The thematic pages on Mesopartner.com that were recently updated. Also note that we still have a few limited openings at our Annual Mesopartner Summer Academy on Systemic Economic Change that will take place this year in Berlin from the 2nd to the 6th of July 2012.

Smile: Working in development

I received the following images and text via e-mail and Facebook. A quick Google search shows that credit is due to Ahmed El Mezeny at Save the Children in Egypt. It is also published on the Global Dashboard site by Alex Evans.

This cartoon reminded me of when I first told family members about my “new” job at GTZ some years ago. They listened to my explanation of travelling to distant places to help people develop, and then asked whether I will be issued with a weapon!

Now that I work more with the private sector it is sometimes very difficult to explain to business people that our industry really exist, and that it matters!

So how do you explain to people unfamiliar with development what your “development” work is all about?

Site update – complete list of publications now available

After the two earlier posts this morning I was asked if I could make my complete list of publications available. Thank you for the reminders!

I have added a new sub page on the left (main menu) with a list of the different kinds of publications I’ve been involved in. This includes books, reports and other publications.

For those that are interested in Mesopartner note that I have also updated the RALIS page on the Mesopartner site

Book announcement: Understanding Market Failures in an Economic Development Context

This is the long awaited book on Market Failures. The cover page illustration of the hard copy is by Lina Stamer and is an image that I use when I present the popular training session on how to address market failure in a practical way.

The book is available for free as a E-book, or a paperback edition can be ordered here. More books are available on the Mesopartner online bookstore.

The official description of this publication is:

Many development practitioners are familiar with the phrase “market failure”. However, not many people relate to the topic in a practical sense. Many remember boring lectures in universities where market failures were presented as abstract theoretical concepts in economics 101. In this book, Dr. Shawn Cunningham takes a perspective that the clues to begin to address market failures are in the world around us. He argues that the characteristics attributed to each market failure by clever scholars actually provide some clues to development practitioners about ways in which to address the imperfections that hinders market based transactions. Shawn also argues that market failures cannot be addressed by business management principles, and that typical market research instruments will provide little information on how to make a market system where there is demand, supply and supporting institutions work better

Book announcement: Reducing Red Tape

This book is a collaboration between Mattia Wegmann and myself, and is based on our practical experiences gained in assisting local stakeholders to identify and address Red Tape. It consolidates our work on Reducing Red Tape in the context of Local Economic Development. The book is available as a printable e-book for free, or you can order it in a A4 Paperback format (printing and shipping costs apply) from the Mesopartner Bookstore.

The official description of the book is:

Increasingly governments and international organizations are attempting to reduce bureaucracy and red tape. While many of these reforms are aimed at national laws and reducing the costs of compliance, not much guidance is available on how local stakeholders can identify and attempt to streamline red tape at a local level.

In this publication, Shawn Cunningham and Mattia Wegmann share their practical experience in reducing red tape at a local level. The manual is aimed at local economic development facilitators that are working on improving the cooperation between public and private stakeholders.

Is South African business paying too much direct and indirect tax?

One of our well-known South African economists, Mike Schüssler, has been saying for a long time that South African firms are paying too high tax. In a recent article in Moneyweb he explains why and how South African firms pay much higher taxes than our main competitors. As we are awaiting our national budget to be published in a few days I think these kinds of articles are very important.

What Mike is not discussing in enough detail is that we should also consider the other indirect financial burdens on South African firms (that they also see as taxes). For instance, South African firms have to spend a higher premium than others on skills development and for skilled workers. Our firms also suffer from more downtime due to industrial action, and we are drowning in labour and other laws that we don’t fully understand. I would also include Black Economic Empowerment programmes that often further increases the costs of doing business in South Africa and that also raises the costs of securing potential staff, partners and contracts. Another indirect tax in business is the very high transaction costs to acquire internationally sought after skills, a process that is made extremely difficult due to our clumsy policies on immigration. Comparatively speaking we are paying an indirect transport tax because we are often far away from both our markets and important suppliers.

No wonder so many large (and small) South African firms have moved many of their activities out of the country.

However, most of these issues are not dealt with by the minister of finance. It is a highly sensitive issue that is made explosive not only by political rhetoric, but by the stark differences between the health of our private sector (which includes the health of its direct and indirect dependents), the health of our public sector (and its direct and indirect dependents)  and the health of the society that is not benefiting directly from our private and public sectors (I call this group the excluded sector). To decrease the size of the excluded sector we have to address the health and well-being of the public and private sectors as much as we try to absorb the excluded people into a healthier society. We need to be very concerned about the health and the wealth of the private sector, as much as we are worried by the costs and the complexity of addressing the reasons why so many people are still excluded from a healthy and happy society. This means that we should be sensitive to the fact that running a business in South Africa is often expensive for more than just tax reasons, but due to those indirect taxes that we also have to absorb. to be profitable in South Africa is not so easy – ask any small business owner that’s been around for more than five years!

My advise is for an understanding that the private sector is under financial strain. This is caused not only by the direct taxes, but also by indirect taxes like I’ve mentioned. We should be not only tax competitive, but also aware that we have higher costs (and often smaller markets) and a scarcity in higher-skills. We might be killing the goose that lays the golden egg. I wonder how many more businesses would be financially viable if we could directly address (or maybe even acknowledge) those other indirect taxes. I believe that the private sector is overtaxed on all fronts.

 

Complexity and international development

A while ago I posted an article about the exciting developments in the various fields around complexity science and development (actually there are several earlier articles making reference to this topic). Recently Marcus Jenal wrote a great review of the work of Ben Ramalingam (author of the blog Aid on the Edge of Chaos) and Harry Jones with Toussaint Reba and John Young. The paper can be downloaded here.

 

Perhaps you have noticed that I often make reference in my posts to “complexity”, “evolution” and “complex systems” in the context of development. Some have even asked me why I do this. Well, already there are moves by donors and monitoring bodies to start using a more complexity-sensitive approach to evaluation. This is not entirely fair, as too many development programmes are still designed in a very linear way (log frames, impact chains are mostly used in a linear fashion). This means that to reach your impact you must combine your programme activity with faith and good luck (plus good weather) because most programmes are operating in a sea of complexity. There are just too many factors that can influence your outcomes. And even if you hit all your targets the system may remain exactly the same way. (wink wink: I wonder why no-one is making more of a fuss of the poor track of donor programmes in South Africa that were supposed to deal with systemic failures in education, rural development and even Local Economic Development?)

Another reason I am interested in these topics (other than my usual curiosity) relates to my practical activities around building industrial systems from the bottom up. Although I am still biased towards manufacturing with some emphasis on specialized services, I am trying my best to understand the complexity of not only relations between the actors, but also between the factors that are influencing their behavior. Then throw in some factors like policies several self justified meso-level organizations, mix in some government failure, market failure, network failure and also just the uncertainty from Europe. That makes for a complex system where there are a myriad of vicious and virtuous cycles and then the dynamism of time delays.Mix into this that the political system in South Africa also fights bottom up decision making. Local stakeholders have a limited number of instruments at their disposal and can hardly hold other spheres of the public sector (and other organisations) accountable. Despite this all kinds of firms are innovating, and there are even innovation systems that involves individuals in public agencies that are committed to support local actors (even if their institutions is unwilling or incapable to assist).

I find a lot of comfort and maybe some good questions in the literature on complexity and perhaps also the literature on evolutionary economics. Perhaps I even find some comfort that even the so-called industrialized world is struggling with the increasingly complex and interrelated policy environment.

If you are working on bottom-up industrial policy then please let me know, perhaps we can exchange notes.

What do we mean with systemic?

There are hundreds of ways of describing the word systemic. Yet in development it is important that we at least narrow down the definitions as to not cause confusion.

Richard Hummelbrunner describes three emergent features of methods and approaches from systems thinking:

  • An understanding of interrelationships
  • A commitment to multiple perspectives
  • An awareness of boundaries

Richard then explains that each of these features focused in the development of the systems thinking field in the last fifty years. Up to the 60s, the focus was interrelationships. This was followed by an increasing awareness of the different perspectives as a critical issue. This affected the way people recognized interrelationships. In the 1980s the focus shifted towards the boundaries of the system, as practitioners realized that they system had to be bounded in some way to allow for diagnosis. This raised the ethical question of who decides what is part of the system and what is not, as the shifting of these boundaries has great influence on what is revealed and understood when the system is diagnosed.

Our firm, Mesopartner, is known for the “Systemic Competitiveness” framework that we use in our work. The framework originated within the German Development Institute in the mid 90s. One of the common misunderstandings about Systemic Competitiveness is that people confuse systemic with systematic. The latter in my mind would refer to a very detailed and exact way of understanding and doing things that may be very rigid. This may detract from the fact that to really understand a system we might have to embrace complexity, dilemmas and issues in a more dynamic way, something that a very recipe driven systematic approach may not allow.

Reference:

Williams, B and Hummelbrunner, R. 2010. Systems concepts in action: a practitioners toolkit. Stanford Business Books.

ESSER, K., HILLEBRAND, W., MESSNER, D. & MEYER-STAMER, J. 1995.  Systemic competitiveness. New patterns for industrial development. London: Frank Cas.

MEYER-STAMER, J. 2005.  Systemic competitiveness revisited. Conclusions for technical assistance in private sector development. Mesopartner

The benefits of being aware of how a system works

For those that have participated in any of the training events that I have contributed to in the last years would hopefully recall my favorite energizer called the Systems Game. In this game we simulate a complex system, with all the participants moving around trying to position themselves between two targets in the group, without the targets being aware who is chasing them. Things usually start of neat and tidy, but soon chaos breaks out.  After the game we reflect on the system and how to better understand its behavior, and also how to figure out how to stimulate change of behavior in the system.

The pictures below were taken in the last Mesopartner International Summer Academy on Economic Development.

The participants secretly determine who they will follow
The participants tries to become system aware – who is following me?

One of the first insights is that our job as practitioners is not to try and fix the system, nor to solve a problem on behalf of the system. Our first job is to try and get the system to become more aware of its own behaviors, issues and dilemmas. Very often this will allow us to use some of the existing relationships, routines and networks of the system to improve the performance or to address some issues in the system.

I received the following little e-mail story recently that actually shows how actors that are aware of the system can easier manipulate the system to achieve certain outcomes. From a few google searches I could not determine the source of the story, except to see that its been featured in many fora. Therefere if you know the original source then please let me know so that I can give proper credit.

Here is the story as I received in my e-mail:

An old man wanted to plant a tomato garden, but it was difficult work, as the ground was hard.

His only son, Vincent, who used to help him, was in prison, and so the old man wrote a letter to his son:
Dear Vincent,
I am feeling sad because I won’t be able to plant my tomato garden this year. I’m too old already.
I know if you were here,  you would happily dig the plot for me, like in the old days.
Love,
Papa

A few days later, he received a letter from his son.
Dear Papa,
Don’t dig up that garden. That’s where the bodies are buried.
Love, Vinnie

At 4 am the next morning, FBI agents and police arrived and dug up the entire area without finding any bodies.
They apologised to the old man and left.

That day, he received another letter from his son:

Dear Papa,
Go ahead and plant the tomatoes now. That’s the best I could do under the circumstances.
Love, Vinnie

Now the moral of this story is that only people that are aware of how a system might behave can fully exploit the system to their advantage. I wonder how we can use this insight to promote better inclusiveness in development? From my everyday work experience I know that in value chains and production systems the poor, weak, small and marginalized are often the least aware of how the bigger system(s) around them work. The powerful, better informed and more successful entrepreneurs often have better information at their disposal. While some of this information could be formal, quite a bit of it is qualitative based on a deeper understanding of how things (might) work.

Happy 2012

Hi,

You may have noticed that I took it slow for most of December. This picture that I received in an e-mail joke probably best describes my December holiday. I am at the moment trying to figure out what the best way would be to start 2012.

Early on during our December holiday our family stayed over at a beautiful Hole in the Wall holiday resort at the Wild Coast in the Eastern Cape province. The scenery and landscape was breathtaking, and I cherished the time spent with my family.

 

 

However, my mind could not rest due to the visible poverty all around us. The people live in small huts, scattered over the country side. The environment shows the strains of poverty. The animal rescue centre nearby has collected more than 8000 illegal snares and traps in the last 2 years, and the locals trade in undersized lobsters and fish in order to stay alive. How do you build market systems in such a place where there seems to be little scale of anything?

A small hut and a kraal for sheep
Cattle and people mix on the beach

 

 

 

 

 

 

 

 

 

I decided not to write any blog posts in that state of mind.

 

Reflecting on 2011, I made 23 blog posts, and had about 6000 visitors on the blog site (excluding visits to my Linkedin page). Seems like it is worth the effort to continue investing time reflecting here. If you have any ideas, requests or comments that will help me improve this personal reflection space then please let me know!

I wish all my readers, friends and fellow adventurers a prosperous 2012!

Shawn Cunningham