Tuesday, December 29, 2009

"Stop complaining and just do something."

The quote above was taken from Gerson, one of the most inspiring individuals I've met in a while and one who really had some interesting thoughts on romanticizing the poor. Gerson works in Gurue with CLUSA, which is trying to ramp up soybean production with farmer associations (soybean is important for poultry feed), and I was able to tag along for a few days. Gurue, by the way, was called by Gerson's boss "the Garden of Eden", and he wasn't far off. But man is it rural.
There's only one paved road and late night entertainment consists of Laurentina beers and a plate of chicken at the only restaurant open after dark.

Anyway,Gerson has a lot of experience in development, on the ground and in management, so he had unique insights into what is actually happening in both arenas. His attitude is one of put up or shut up. He's sick of aid organizations talking, advertising, and getting so little done. Riding through the villages you notice the pervasiveness of aid organizations by the signposts at every corner. But you won't see any signs for his organization because they're not looking to be flashy - they just want to get stuff done.

After I really dug deep, Gerson - shy about his accomplishments - admitted that although he has only been here 10 months, he has already legalized nearly every farmer association (the number escapes me but it's something like 150). Why this wasn't done before baffles him - rather, it was just a bunch of farmers together with no legal status. At a recent meeting of local NGOs, a World Vision official said he wanted to do some work making sure all of the associations were actually legalized. The certification has been done, let's move on to bigger issues, Gerson says. He believes World Vision is looking to certify one or two associations and then claim it was an equal partner to CLUSA. This, Gerson says, is how a lot of development work gets done, or rather reported.

And he hears the same excuses, things like "It's Africa man, you can't change it." This is echoed not only by foreigners, but also by Mozambiqueans, citizens, and the government. The civil war is another common cry. Gerson argues that it's not a problem of the war or even an endemic African problem. Rather, he sees it as a problem with attitude. He said, "The war was over 16 years ago and still they use it as an excuse. I mean, come on, do something. Stop complaining and just do something." We talked about how there was so much untapped opportunity in the country, from tourism to agriculture, and why people were just sitting on their hands.

What I like about Gerson is that he doesn't get romantic about the poor. He stays practical. He's only willing to help those who are willing to help themselves, yet he understands when something goes wrong because of a factor outside of a farmer's control. And he only comments on things he has knowledge on, so when he refused to give an answer on a few topics, it made me feel more confident in his other opinions.

I also see a lot of me in him. I like how he works at the intersection of management and field work - probably a direction I'm headed if possible. And even at the bewilderment of his family and friends, who wonder "what are you doing in the bush?", he is committed to bettering his country. He's not yet looking to settle down like most locals: I asked when Mozambiqueans get married, to which the 29-year-old responded, "By now, I should have two kids." And also just like me, he can't cook. His game plan is to just throw things into a pot, entire tomatoes and onions without even dicing, and hope for the best. The dinner he made for me when I was over was pretty decent though, but then again I go for quantity over quality. He shared that when he had a big donor over one night at his boss's request, instead of cooking he ordered Chinese take out, topping it off with a roll of toilet paper in the middle of the table for napkins. It was funny because I wouldn't have done any different. But hey, don't get romantic, stay practical, right?

Friday, December 25, 2009

LabourNet Article Featured on NextBillion

Hey everyone, I'm excited to announce that NextBillion recently featured an article I wrote about whether the poor are creative entreprenurs or rather wage earners. It's a bit like the post I did earlier on LabourNet, but with a few different directions. Big thanks to my mom (the punctuation Nazi) and Jes "I love to pick on everything Rob does" Gagnon. I appreciate the criticism. You can check out the article here.

Merry Christmas,


Wednesday, December 23, 2009

The Picture that Got Me in a Tussle with the Mozambiquean Police, and Then Some

It’s not every day that you get into run-ins with the foreign police force. But, your chances improve a lot when you can’t speak the local language. Case in point: me. The other day I was up in Nampula, the third largest city in the country but an afterthought of a town. Noticing how I had basically no pictures from Mozambique, I decided to wander around with my camera while buying my lunch on the street. I ran into a vendor named Tony, who asked me for rice. As a rule I don’t give money to able-bodied individuals, but since it was food I decided to help him out. We went on an extensive search for rice, walking up and down the streets.

That’s when I ran into a tall, thick Mozambiquean in forest green pants, light green shirt, and green beret. He rapidly spouted out some Portuguese I didn’t understand and grabbed my camera right from my hand. I was immediately stunned, then pretty angry. I don’t consider myself a stubborn guy, but like anyone else I hate getting pushed around, especially foreigners trying to take advantage of me. I grabbed it back, but he didn’t let go, raising his voice to me. He grabbed my arm and took it off, then explained something to Tony while I stood there fuming. A solid crowd was starting to gather. Everyone was watching – there must have been at least 20 people around.

Tony turned to me and said, in extremely broken English, something about a photo and whether I remembered it or not. I didn’t know what he was talking about. He pointed to my hotel and we started walking until we got to the backside. He pointed to my balcony, and I heard words like “photo” and “President”. Now I remembered: I had taken a picture of the street from my balcony…but it wasn’t of anything important, at least I thought.

He escorted me over to a nice looking whitewashed house with a manicured lawn (you can see it in the picture in question), where three ladies, including one female officer, were discussing. They talked, I heard “President” thrown out there, and one of the women pointed at me. The male officer walked closer to the house, hidden behind some cars in the driveway. I followed closely, with Tony in stow. Some very confusing Portuguese ensued, with mention of “money”. Tony said some very basic English, which sounded like he or the officer was asking for money. I wondered how deep I was going to have to reach into my wallet.

I made one more grab for the camera, and a full tug-of-war ensued (my cousin, who lent me this camera, probably isn’t thrilled to hear this). The three women came over to break up the altercation. “No fighting, no fighting,” they said. Eventually they had the brilliant idea to see the pictures on my camera. They scrolled through until they found the picture above. They looked at it and handed me the camera, as simple as that. Tony and I walked away like nothing had happened.

Baffled by what had just ensued, I brought Tony to my hotel so the clerk could translate. As it turns out, my innocent picture had been of the home of the "President" of the province (or more correctly, the governor). Apparently it was considered a security threat, and any photography had to have clearance. Add this to the fact that it was foreigner taking the picture with a high resolution camera, and there you go. The shot was just too far away, so it was okay. Goodness. I felt embarrassed, angry, and stupid all at once. And I just laughed at myself. Tony and I couldn’t help laughing about it as we walked off. Maybe I should invest some time in Portuguese lessons…

AS AN ADDENDUM: The fun didn't stop there. Tony invited me to his home, to get to which we had to weave through a forest of thatched roof vendors in the city's slums. It looked like every t-shirt the US has ever donated ended up there - shirts like "Northwest YMCA Faith Warriors" or "2003 Pop Warner Cheerleading Championship" were found. And I didn't just get to see his house. Other highlights included beating his friend Larry in foosball 2 games to 1, watching a Tony and Larry partake in a drug deal and then hanging with them as they smoked, and enjoying sodas and peanuts while watching the drunks dance like zombies in this bar or play with their empty gin bottles as they stared into space. But the best part was when I found a large group of locals. They invited me over to try their smoothie-looking home brew. For $0.30 I got a sample from a worn, chewed up measuring cup. It smelled and tasted vaguely like vomit. But, in a matter of seconds I had taken it down, and they laughed hysterically upon seeing the distraught look on my face.

Then, just as I was walking away, another woman came up to me. The Portuguese she said was a blur to me, and realizing that I didn’t understand, she slowed down. She made some arm motions, I heard the words “drinking” and “casa” as she pointed over toward some homes behind her. Then she said, “Me" pointing at herself, something other Portuguese, and then "veinte.” I remember thinking, “She doesn’t look 50.” I soon realized that not only does veinte not mean 50, she also wasn’t talking about her age. As we walked away, Tony chuckled, “She want you.”Ohhhhh – it clicked. He explained, “Here a drinking, then a f***ing.” Wow. Only 20 metrecais – that’s like 65 cents. My first thought was just how unbelievable it was that she approached me, but then I realized how sad it was that she was going to offer herself up for $0.65. This was the going rate – even for a foreigner. I wondered what she charged the locals. I really need to learn some Portuguese.

Monday, December 21, 2009

Can the Poultry Industry Save Mozambique’s Poor?

No. That’s a dumb question to begin with, given that 75% of the population lives on less than $1.25 a day. But it can help a lot of them, which is exactly what TechnoServe’s (TNS) work over the past four years has shown. During my time here, I'm trying to paint a picture of how the effects of an emerging poultry industry are reaching everyone in the poultry industry, especially the poor. I’ll attempt to tell you a bit more about drumsticks and what I’ve seen so far.

If you’ve ever wondered how “development aid”, gets to (primarily African) countries, TNS is one of the conduits. Most people think of development aid as US tax dollars going into the black hole budgets of corrupt African governments. However, some aid is earmarked for organizations like TNS. TechnoServe is unique because it aims to make a broad-based impact across the economy using market-based approaches. It hauls in McKinsey consultants, investment bankers, and anyone else with outstanding experience and gets them to analyze the entire value chain of an industry to see what can be done. I told my friend it's the first time I've felt like the dumbest person in the room at any given time.

For example, in order to raise awareness for domestic chicken, TNS ran a huge marketing campaign, one TV ad of which you can see above. You'll see a sexy Mozambiquean hen strutting by ogling male chickens. It was so successful that a poultry company created their own animated ad to piggyback off the TNS idea. This is exactly what TNS wants. And its poultry work is spilling over into other industries. In Mozambique the highest cost in chicken production is the soy for the feed, so right now I’m in northern Mozambique talking with soy farmers who are now farming a crop that fetches 2-3x more than the corn they have traditionally planted.

I’m getting to talk with everyone to get their side of the story, from farmers in mud huts to some of the biggest businessmen and top politicians in the country. As a 22-year-old gringo who can’t speak Portuguese, to see me sitting down with these people is a sight to say the least. But I’m learning so much so quickly, about development in general and poultry specifically. I go to sleep thinking about hatcheries and wake up with images of outgrowers (picture 2: the poultry pad/TNS office). I know such inane things like the how many centimeters should be spaced between soya plants or what the normal feed conversion ratio is for chicken.

But it’s not just about high level delegating or policy making. TechnoServe specifically picks entrepreneurs with outstanding backgrounds who fit the mold of what they think will be successful and can serve as industry role models. This is what is most interesting to me. Jake Walter, the Country Director, told me, “The World Bank doesn’t like to pick winners. We pick winners…Sometimes it’s just so obvious.” TechnoServe doesn’t want to waste time or money on people or projects it knows will probably not work out in the long-run. Jake added that unfortunately, the people they are helping may not be the poorest of the poor. Experiments with the very poorest found that instead of feeding their poultry, the poor farmers often ate the chicken feed instead. It’s a sad reality these people resort to eating chicken feed, but Jake admits that these types of business approaches probably aren’t suited for the hard-core poor.

These ideas of entrepreneurship and approaches for the ultra poor reinforce what I’ve already seen and learned at LabourNet (entrepreneurship) and BRAC (approaches for the ultra poor). In effect, I believe that we should probably focus a bit more resources on promising entrepreneurs and a bit less on those with no hope; and at the same time we should probably forget about business approaches for the very poorest. What do you think?

Friday, December 18, 2009

Trying to Fill the Void and Failing Miserably

I’m not superhuman. I used to think I was. In college I would brag about how I only went home twice a year and would someday live in China and only come back occasionally. I was grown up, or at least I was trying to give the impression. I wanted to show that I could thrive even without my mom, dad, siblings, and childhood friends. It’s inevitable for families and friends to disperse as the kids get older, but for some reason I wanted to speed this process up. I wanted to prove a point, and I don’t entirely know why. Maybe it’s because I’m independent. Maybe it’s because I’m from a small town. Maybe it’s because I didn’t make the basketball team in 8th grade.

But here in Mozambique, I realize how wrong I was. I think I heard a statistic somewhere that the Christmas season is when depression and suicide rates are highest. While I’m not depressed and certainly not going to kill myself, this makes sense to me right now. I’m doing my best to recreate the holiday season I miss so much. I’m rocking so much Christmas music that even my mom would be proud; I’m hosting and attending Christmas parties to mingle with other nostalgic Americans; and I’m staying faithful to my PTI podcasts so I can keep current on Tim Tebow crying and the Bowl season.

None of it works. Everything sends little reminders, but doesn’t recreate it. Christmas songs make me crave drives down the “Street of Lights” in our hometown, which my mom forced my brothers and me to go down but which I would give anything to see now. Emails with my college friends about plans for a Mardi Gras get-together brings me right back to senior year in the crowd of the Flaming Lips at Rites of Spring, with the rain and streamers floating down on all of us like confetti at the culmination of one last big hurrah. Even innocently watching Man City beat Arsenal in a Mozambiquean pub reminds me of high school, where I would sit in the freezing cold (okay, Florida freezing cold) and watch my high school buddies (oddly enough all soccer players) beat Bishop Kenny, or any of the other teams on their schedule.

What I’ve found to be semi-successful is to stay busy – physically, mentally, and socially. Every day I rise at 6:20 and pound out a 5-miler. At TechnoServe, I bury myself in my work, arriving to the office by 8:10am, leaving around 6pm, then coming home to work more. That’s if there’s no party going on. Holiday parties are frequent these days, and I haven’t decided if this helps or only aggravates it. But at the end of the day, these are people I barely know. Some of us are becoming good friends, but most of the relationships are fleeting, and when I leave Mozambique I’ll just be another guy to them and they’ll just be another bunch of acquaintances to me. These aren’t the people I really want to be spending my holidays with. Guess ole' Uncle Eddie will have to pull me through.

Tuesday, December 15, 2009

It’s All Fun and Games Until I Get Robbed

Just a few days into my Mozambiquean experience, I took a short walk out of my swish hotel through the seedy neighborhood in which it was situated to haggle for a dress shirt and buy some milk. With my Tommy Hilfiger knock-off firmly in stow, I swerved through hawkers selling everything from cheap sandals to AC adapters, all spread out on the sidewalk from both sides. There was a tight walkway between all these sellers, and one young guy, coming towards me, tried to push past me on my left. At the same time, two young guys behind me kept moving and pushing on my right. I was essentially in the middle of a big sandwich, with them swiping by me on both sides.

Annoyed by their impatience, I turned to the two guys behind me, “Will you just chill out?” I kept walking to get the milk, and less than 15 seconds later, it happened again. I was scissored between three guys. This time I felt their hands go at both my pockets. I caught the guy on the right, and turned to the guy on the left. He unabashedly held out my hotel card, giving it back to me with a grin on his face. It was almost like he was lightly saying, “Oh, you caught me, but I’ll getcha!” I had a few choice words for them, but not knowing Portuguese, it was to little effect. I continued my walk, much more wary of their little trick, but the fact that they had failed twice didn’t stop them. Another one of their hooligans walked right past me from behind, looped around me and had a go at my left pocket. I grabbed his arm just as he got inside my pocket and threw it away. I turned and all his friends were laughing.

By the way, did I mention this was 2:30 in the afternoon?

Just a couple days prior to this, I was having lunch with a few TechnoServe colleagues. Iris had had things stolen from her hotel room by the cleaning ladies, and both her and Tricia’s credit cards had been “cloned” (don’t ask me how it works) at ATMs in Johannesburg. With just over a half a year left to the World Cup, the Johannesburg airport is plastered with promotional ads reading “SOUTH AFRICA 2010: ARE YOU READY?” Well, “Organized crime is!” Jake Walter, TechnoServe’s Country Director, joked. We all had a good laugh, knowing the inherent dangers we live with being abroad as foreigners.

As a single international traveler with white skin and everything you own on your back, you have to know you’re going to be a target. Fortunately, I learned my lesson well in 2007 when I had my wallet stolen aboard a crowded Chinese bus. Now I’m a little less naïve and a bit more vigilant.

This served me well in India a month ago. On a bus packed like a clown car, there were arms criss-crossing around my head to find handles, completely blocking out my left field of vision. Every time the bus made stop, I was essentially thrown into the woman in front of me – bless her soul – but I couldn’t feel if my wallet was still there. After consecutive bumps, it got to the point where I was certain I felt a hand tugging at my wallet. I threw down everyone’s arms, and sure enough, found the hand of a middle-aged Indian right next to my pocket. I said something to the extent of, “I would appreciate if you left my wallet alone.” Knowing he had been caught and not wanting to pursue it any further, he silently and quickly pushed toward the middle of the bus and away from me. Quite angry at the time with fists looking for action, I almost wanted to catch him with it in his hand.

This makes me wonder why people steal, but also gives me great hope for humanity, as lame as that might sound. Unfortunately, I think most of the time desperation isn’t the main motive or only part of the reason behind theft. But if it were, at least the victim would be funding someone who really needs it! Instead, I think it’s just because it’s so easy. I once heard from someone who had experience shoplifting from Wal-Mart that “The bigger it is, the easier it is to steal.” Naïve tourists like myself are particularly easy, especially in these developing countries where the police force is abysmal. It always saddens me when someone tries to rob me, but it also gives me hope because I feel confident that most people aren’t like this, even despite the ease of the whole operation. As I was walking home that day after buying my milk, a Mozambiquean teen came up to me and said through broken English, trying to support me, “They try rob you. Bad men.” It wasn’t much, but it made me smile a little bit.

Sunday, December 13, 2009

Boas Vindas a Mozambique: Development Ground Zero

In an effort to chase summer, I’ve decided as my next stop Mozambique. The weather doesn't hurt, but the actual reason I’m here is to work for TechnoServe as a volunteer consultant. TechnoServe is an NGO that uses market-based approaches such as supporting key entrepreneurs and institutions to create industry-wide changes that can transform a country's economy. During December and January, I’ll be working to assess their impact on the poultry industry, talking with people on all levels, from the government policy makers to the chicken growers living on less than a dollar a day. More on that later, but first, what is Mozambique all about?

Given my limited time here, it's hard to tell. The country emerged from a nasty, long civil war only in 1992. Seeing people with missing limbs around town isn't uncommon. Many of the Portuguese and Mozambiqueans of Portuguese heritage fled during the war, and there still seems like a disconnect between the native Mozambiqueans and the Portuguese that remain (e.g. often I see those of the Portuguese heritage running the restaurant, and the native Mozambiqueans serving as waiters). However, for the most part, economic barriers seem to be the only restrictions for social mingling - skin color doesn't matter. And, on a lighter note, they've good seafood, but given that my hometown is the home of the modern shrimping industry, it's somewhat of a non-factor for me...Man, I could go for a grouper sandwich right now...Back to the point - Maputo, at least, has a Latin American/island feel. Palm trees line the beaches of the Indian Ocean, as locals trod around in sandals on sand dusted roads.

What I can say is that this place is Development Ground Zero. Here “Millennium Challenge Account” or USAID logos are often sighted on trucks passing by. The building I work in houses USAID, the African Development Bank, and other aid organizations. The other night I was at an expat-laden party, and here’s a list of the jobs of the people I talked to, in the order (I remember) talking with them:

  1. World Food Program (United Nations)
  2. European Commission (European Union)
  3. Ministry of Agriculture
  4. German Agency for Technical Cooperation (GTZ)
  5. Ministry of Planning and Development
  6. Population Services International (PSI) (a social marketing/global health organization)
  7. Another person with GTZ
  8. Another person with PSI
  9. Bartender
**And the next day at a gingerbread house-making party, I met a guy who worked for the Clinton Foundation with pediatric aid patients.

Guess which person on that list was the local? Come to think of it, I haven't met a single foreigner who is working in something other than development. No businessmen, no tourists. Whereas I had never before seen a massive social society sector on the scale of India and Bangladesh, here I'm seeing what big time aid looks like. One development worker I met called Mozambique "the development darling of the world." It's been a big success story so far, with an impressive post-war growth rate (now at 6.5% annually), and aid seems to be working. However, it's still ranked as the 6th poorest country in the world and suffers from crippling problems. It's pretty obvious to me that this African experience is going to offer a much different glimpse at poverty alleviation than what I saw in Asia.

Saturday, December 12, 2009

A Tour into Dharavi Public Housing

On the day before my exodus from India, Murugan and I went into Dharavi for interviews focused on my study on the IT industry and how the poor have been affected. If you can remember back to my previous post on housing for the poor, I talked about the plans for Pune, which were being modeled after the schemes in Mumbai. We happened to stumble across the building of one such scheme, and intrigued, I dropped all my plans for the IT study.

We approached the nearly abandoned building to find several guys sitting on the window sill. They invited us into the littered and ghostly building, a prime place for loitering and recreational drugs (which I was offered several times during our chat). They explained that this building was a MHADA (Maharashtra Housing and Area Development Authority) scheme building. The development schemes attempted over the years in Mumbai are confusing at best and mind-boggling at worst.

After about an hour of conversation between two different groups, we were invited up to the home of Murugan (name coincidence with my translator). It was actually quite clean, but the evidence of a job left undone was clear – a big drum in the bathroom full of water (see tenet Murugan in pic 2) or the kitchen sink that had no spicket, both because the water was never completed. Explained Murugan's sister Anita, “We are taking trouble [for] two years…Two years past – no light, no water, no nothing.” The government told them they could move in and after 15 days, water and electricity would be usable. Unfortunately, it was never to happen.

The lack of windows and poor hygiene were also creating serious problems. “Look at all the small children we are having…I’m having three children. All the mosquitoes are filled here…Three of them died also here.” Those are her neighbors Anita’s talking about. We asked others in the building and they confirmed that four people had died recently from malaria, asthma, and unsanitary conditions. But with their homes destroyed, they have nowhere else to live. She wanted me to contact the government, contact the media, do something. Murugan and I plan/hope to write a joint paper and submit it to the Dharavi School, which he is close with, to see if they can do something.

The next day I wanted to learn more, and I met other Dharavi residents, some who were pleased with their new housing and others who were being enticed by developers to agree to the project but felt the terms were grossly unfair. I did meet some people and go into their homes – they were very happy with the efforts made to give them cheap housing. It had allowed one man to put his children in private schools. But the same man estimated that 90% of his neighbors weren’t the intended dwellers. Instead, the slum dwellers were renting out their new housing and living right back in Dharavi shacks. Even after a quick, three day investigation of the situation, it’s clear to me how complicated the issue. And with political motives at play, it’s unclear whether anything will ever get done.

Monday, December 7, 2009

Slumdog Millionwhat???

In my final three days in India, and all of Asia for that matter, I settled into the Salvation Army Red Shield youth hostel in Mumbai. This place was rough, even for hostel standards: the walls - on which there were numerous knife-etched warnings to "KILL THE BED BUGS" (the Lonely Planet I made copies of confirmed this itchy problem) - were so thin in my dorm room I could hear a boisterous group of Koreans deep into the night. One morning, when I told an employee the water wasn't working, he remarked that yea, it was out. "When would it be back?" He just shrugged and stood there. But, it was only $4 a night AND it included breakfast. Winner winner.

However itchy or smelly it was, the Red Shield wasn't nearly as bad as the housing for the majority of Mumbaikers, many of whom live in Dharavi. Dharavi, if you remember, is the Indian mega slum that figures largely into 2008's Slumdog Millionaire. In the movie we see Jamal and his friends running through the labyrinthine Dharavi passageways, his mother killed by radical Muslims, or children getting their eyes burned out and sent off to beg. The images shocked many Americans, myself included.

Over three days I had the opportunity to visit Dharavi, specifically the Sion neighborhood. On the first day I visitedthe Dharavi School, which is providing holistic education to children in the neighborhood. The next two days I ventured deeper in the busti for interviews and research. It had been a while since I'd seen the movie, and what I found blew me away. Of course, true to the movie...which was true to real life...it was crowded. Very crowded. It's hard to overstate this fact for a community of 18,000 people per square acre. I weaved through passageways that were no wider than a meter and was often times forced to duck under arrant wires.

However, what mainly impressed me, rather than the crowdedness, or even the poverty, was the vitality. Everywhere I stumbled, someone was peddling a different product, making an honest living. There was hope, and the market buzz was one little piece of evidence. The magnitude of the diverse economy within Dharavi is enormous - estimates put it around $665 million per year.

At the 13th Compound, we saw ground zero of India's recycling industry, where plastic from all around the world is sorted into colors, crushed into shards, melted, colored, and formed back into pellets before being sold back to domestic and global companies for plastic production. And I think it's safe to say that no Muslims will be raiding the Hindus anytime soon. We walked by one shop and watched as Muslim carpenters crafted miniature Hindu temples made for adorning the local biryani restaurant.

Many of them were doing quite well, and it showed. One girl I talked to named Jaychitra (2nd picture) was studying Business Communication, Banking and Commerce at a convent university. With a strong command of English, she explained to me how her father was a driver and was able to put her through a private university with no loans. She was the first member of her family to attend university, but her was just a few years behind her. Right now she was bus
y applying to banking jobs through Monster.com and personal emails to companies using her recently enlarged social network.

She wasn't the only of this kind. I met a couple of other young men who were starting up a tourism business, and another who was doing basic graphic design. One Dharavi man even claimed his daughter worked in an investment bank in Mumbai. During my time in the slum, there were certainly signs of poverty, but the overwhelming feeling I got was one of forward progression. I kept thinking back to the slums of Dhaka, where people were losing the battle day by day, some even literally dying in their homes. I kept comparing the tin homes and muddy, flooded land on which the Dhaka homes sat on, to the concrete structures and drainage systems of Dharavi. The Dharavi residents have hope, if not for themselves, for their children. It seems there aren't as many "slumdogs" as might be expected.

Thursday, December 3, 2009

LabourNet's Question: How Do You Formalize an Entire Country’s Informal Economy?

Maybe when you were younger, like me, you mowed lawns for extra cash, or maybe on a hot summer day you’ve spent a nickel on a glass of lemonade from a cute kid. Of course, neither of you are paying taxes, have any kind of company health insurance, or given social security half the thought of SpongeBob or your next baseball card. Now think of the same situation, only with adults too, and on a much bigger scale – emphasis on much.

That’s the situation in India, where close to 90% of India’s workforce is informal. So you’ve got all these migrant workers looking for work, sometimes working only half the month or just whenever something comes up. The people at Maya Organic, the first organization founded by Mr. Solomon, saw builders looking for workers, saw workers right down the road twiddling their thumbs, and noticed the workers had cell phones. Maya put 1 and 2 together, carried the 4, rounded up, and presto, LabourNet was born. Well, it wasn’t quite that easy – there were failures along the way and LabourNet is still in the development process – but the business model is forming.

Notice I said “business model”. The way it works is workers come to LabourNetand say, “I want to be a part of your organization.” They pay a $3 annual fee, and are added to LabourNet’s system. Then, clients such as construction companies or households come to LabourNet for anything from a plasterer to a maid. If the project is located in the north part of town, LabourNet sends a text message to every registered worker that matches the desired profile in that area (the picture at the right is the Coordination Center where this happens). A Gujarti family might specify they only want a maid from the same state, and LabourNet will check its database. The first one to call back after the text message gets the job. The company gets secure labor with only one pay point – LabourNet. Meanwhile, LabourNet makes a small profit and sends 70% of the revenues to the workers, who are happy to have more consistent work.

But the ancillary components of LabourNet’s package are actually more valuable than the job security to some workers. LabourNet provides continuous training, health insurance, and maybe most importantly, a bank account, which allows a worker to join in the crucial process of wealth creation. Imagine being a migrant worker in a slum where everyone knows you’re alone and stashing a wad of money under your mattress. Good luck.

As workers move up the ladder from unskilled to skilled labor, LabourNet allows them to stay in their roles as wage earners or try their luck at entrepreneurship (they can even leave LabourNet if they want). Their move out of thesystem allows LabourNet to focus on the next batch of unskilled workers. Herein lies their biggest problem, which refreshingly, they were quick to admit. They want to market their workers as ones who can do the best job, but LabourNet’s best workers aren’t the ones who need the help the most – it’s the newbies in the system.

And certainly, no LabourNet employee is bankrolling here. That’s what makes it a social business: it has the social passion of an NGO but the business mindset of a CEO. Explains Jayaram Krishnan, who heads up the 3-month old marketing department, “When we do earn money, that money’s plowed back into worker welfare and into infrastructure. It’s not like any other pure commercial business, where the profits go to the shareholders. Except for that, on the business side, it’s gotta compete and it’s gotta win on its own merit by providing superior services to customers, by acquiring more customers and clients.”

If it seems like I’m excited about what this organization is doing, it’s because I am. It’s easy to talk about sustainable models but to actually implement them is another question. LabourNet sees the value in a model like this: everyone kept talking about scalable this and scalable that. They want to go big, and think profits can take them there: Over the next seven years they plan to expand to the seven largest cities and touch over 1 million workers.

Tuesday, December 1, 2009

Are the Poor Wage Earners or Entrepreneurs? Thoughts from LabourNet

In 2007, Dr. Muhammad Yunus came back to his and my current alma mater as the Commencement speaker. It was a big deal. Just one year prior he had received the Nobel Peace Prize for his work in microfinance. Microfinance – banking for the poor – is now a staple in development efforts, and even commercial banks are starting to dip their toes in the water.

Microfinance institutions (MFIs) like Yunus’s Grameen Bank, for the most part, see the poor as creative entrepreneurs who just lack the capital to get started. But not just any poor people - specifically, women. They’d like to give these poor females a loan and see them start businesses. LabourNet, a Bangalore-based social business working with informal labor, sees things differently. I had the opportunity to visit LabourNet a few weeks ago. What I learned was completely contrary to everything else I’m hearing and seeing. Yet it all makes sense.

Since LabourNet deals with wage labor, I wanted to know what they thought about microfinance. J.P. Solomon, its founder, feels that microfinance has “very little to do with poverty alleviation. Microfinance gives access to finance to people, but building a business and creating a livelihood option is another matter altogether.” He thinks there needs to be more development than just handing the poor a wad of cash and expecting a business. He even sits on the boards of some MFIs, and in his words, “I keep telling them that we need to move towards real, solid livelihood programs. And some of them are trying hard to do that."

Rajesh Joseph, LabourNet’s Manager of Strategy and Reserach, told the same, and put it plainly that not everyone is cut out to be an entrepreneur. He gave an example of how uneducated subcontractors will juggle money and workers between construction jobs. “In the end, I ask any of the subcontractors who have actually gone from a worker level to a subcontractor level, actually, and I ask them, ‘How much profit are you doing?’ Nobody knows. Nobody knows.”

I don’t agree with Mr. Solomon that microfinance has no role to play in development. Even if we assume that these loans don’t lead to long-term income appreciations, it can still have powerful effects, for example improving female self-confidence or facilitating income smoothing during bad crop harvests. And, just because we think the poor don't have the necessary capabilities, does that mean they shouldn't get a chance?

However, LabourNet’s perspective seems to fuel lingering concerns I’ve always had about microfinance. There’s no silver bullet to poverty alleviation, unfortunately, though for many in the microfinance sphere, their strategy is about the closest thing. But when an alleviation strategy leaves out half of the development equation right off the bat – men – and then precludes the option of more secure wage labor, could there be better ways? LabourNet believes that if you want to be a microentrepreneur, great. If you want to be a wage earner, that’s fine too. Both men and women should be given this choice.

So to answer the question posed in this post’s title simplistically, LabourNet thinks the poor are much like you and me: some of us thrive as employees and others want to do our own thing. There’s a lot more to this discussion (such as the economies of scale lost through tiny microbusinesses), so feel free to indulge me with a comment or direct email. In the next post I’ll cover how LabourNet wants to use its perspective to reshape India’s labor landscape.