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.

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.

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.

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.

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.

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.

India, China, the US, and Trickle Down Growth

I know what you're thinking: Reaganomics...uggh. But just hear me out. Ask almost any slum dweller or villager in India, and they will confidently tell you that the IT boom and growth in India over the past 10 years has had no marked impact on their lives, except to raise prices. I think they're wrong on the first point - they just haven't noticed (or perhaps the 10 year horizon I gave them wasn't long enough).

To be sure, the slum parents I've spoken with aren't being recruited for call centers en masse. Heck, most of them have little to no education. However, every morning at 8:00am, women in colorful sarees flood into the gated community of one of my translators Manish, who works for an Indian firm that creates software for HP. His roommates create software for T-Mobile and Verizon. The women, who live in nearby pockets of slums, come to homes like Manish's to wash dishes, clean the bathroom, or look after the children.

Meanwhile, the added income allows their children to go to school. One man I met in a Mumbai slum was earning $140 per month for his family of four as a driver for a German company - the 7%+ annual growth and able workforce had obviously been part of the attraction to come to India. The income was enough to put his children in a private school, and the older son was speaking decent English in only grade 5. The father could only speak Hindi, but I could communicate mostly directly with the son. For India, like this family, it's one step at a time, and most people seem confident that their children will have a better life than they.

India needs to grow its knowledge and service sectors such as IT and cinema/media (e.g. Bollywood), which have the potential to employ many more people than the capital-intensive industrial revolution the country never had, but still seems to want. It might be okay for India to skip over Big Industry and focus on its knowledge and service sectors. In doing so, India would focus on growing its middle class, which even at the turn of the century was still less than 20% of the population. To focus on the middle class, as Gucharan Das puts it in India Unbound, "is to focus on prosperity, unlike in the past, when our focus has been on redistributing poverty." This doesn't mean you ignore the poor. Exactly the opposite: the primary purpose of the pro-business, pro-growth policies is to lift the poor into the middle class. Once the middle class expands, the country will have greater resources to work on a smaller group of poor people.

China and the US figure largely into this equation, but relations could be better. Indians think Obama is giving the nod to China, especially after his visit to Beijing and the joint statement that the two countries "would work together to promote peace, stability and development" in South Asia. This seems like a slap in the face to the democratic and English-speaking India, especially considering that China supports India's arch rival Pakistan, among other nefarious practices. To be sure, the fact that China holds over $800 billion in US debt has something to do with it, but to put it plainly, China is also the stronger country and better positioned for the future as of now. Just from my experience in the countries, China seems 10 or so years ahead of India.

India, China, and the US all need each other. Indians like Manjit, who works for Infosys and who I met on a flight from Kunming to Calcutta after he had finished up consulting for a Chinese company, need the other two countries as markets for its IT and BPO (business process outsourcing) sectors. Chinese like Zhuo Ma at Mei Xiang Yak Cheese need Americans to buy Western products like its cheese that are not yet suitable for the domestic population, or various goods in our Wal-Marts. You and I need these countries to buy our airplanes, drive our Fords and GMs (which are "cool" in India and China), or in the case of China, to finance our spending. For each of these countries I'm only providing half of the equation, but you get the idea. If we can grow together instead of bickering we might just be able to improve the lot of all three of our nations' poor, especially the enormous population in India. I'd love to hear your comments or criticism.