038 – What Does Development Look Like?

[00:00:00] Lucie: Hi, and welcome to the IDEMS podcast. My name’s Lucie Hazelgrave Planel. I’m a social impact scientist and anthropologist. And I’m here today with David Stern, the co founding director of IDEMS. Hi, David.

[00:00:21] David: Hi, Lucie. Looking forward to a discussion today. What are we talking about?

[00:00:26] Lucie: So we went on a trip to see projects that we work with in Burkina Faso and in Niger in January. And being in those countries and, you know, just having lunch on the street and things like that you see a lot happening around you. And so we discussed some things about the sort of local economies. We saw people who do not have a very high salary going out to eat in, let’s call it restaurants. And so circulating money, well money circulating at various levels within society, which perhaps is different to what we see in Europe.

[00:01:19] David: And particularly it’s circulating at a much lower level sometimes than we would see in Europe. That low level of circulation, which is often a black market economy,

[00:01:29] Lucie: Yeah.

[00:01:29] David: doesn’t exist in Europe, but it’s the livelihoods of so many people in these sorts of regions.

[00:01:38] Lucie: Yeah, because here we’re talking about some people who, well, that you’re able to get a meal for perhaps, is it 50p or something?

[00:01:47] David: Less. I mean, that’s a good meal. Really eaten well there. No, but much, much less. And of course, these would be a lot of stores at the side of the road, and they would be things where the economies of the people running the store, they would be making an income for themselves and their family, but they would certainly be not becoming wealthy from this and not getting to the stage where they could acquire a property to have a proper restaurant.

And this is something where this sort of market economy in some ways is coming back in the UK, with your market stores and your market food sort of coming back. But the cost of it is very high, the taxes, the legislation around it, there’s a lot of different layers of bureaucracy, which all have a cost to them.

[00:02:37] Lucie: There’s a really interesting article and I can’t remember what it’s called, but saying how a lot of European economies are taking inspiration, let’s say, from a lot of the things that are going on in African economies, let’s say, for example, like Uber, that people are being more entrepreneurship. And then, there’s less security that comes with it though.

[00:02:53] David: But there’s all sorts of elements around this where you actually see elements of these gig economies coming in.

[00:02:59] Lucie: Exactly, gig economies.

[00:03:01] David: Which are actually having a negative impact on European societies in many cases because they are taking careers that were leading to sensible livelihoods and putting people into precarious livelihoods.

And so, you know, there’s a lot of issues around this in high resource environments adopting some of these things. But in low resource environments where so much of the population is in such a precarious situation…

[00:03:28] Lucie: Yeah, it gives them opportunities to do a lot.

[00:03:32] David: Exactly, it creates opportunities. And this is where I’ve seen when I was in East Africa, instances of where people have said no, we’ve got to get rid of this sort of black market economy, we’ll build a proper market. And the negative impact that that had, because the nature of the people who were there and the livelihoods that destroyed and who that created opportunities for, were not always positive.

So this is the thing, it’s this difficult thing where it is progress. But is it the right progress? You know, these are really interesting, difficult questions.

[00:04:04] Lucie: So exactly. So the whole topic of this discussion is what, what does progress mean? I guess particularly in the context of, of, well, West Africa for me, East Africa for you perhaps as well.

[00:04:17] David: More generally across the world. I mean, we don’t just work in Africa, but we’ve seen that progress happen, or that progress has happened in other parts of the world where they’re navigating some of these issues around not necessarily losing that gig economy, you know, market stores in sort of Asia, alongside a high functioning economy, you have very low cost processes.

In Japan, I was reading, is this thing where a very high functioning economy but most of your executives and people who are actually in that sort of office work would be paying a very small amount for their lunches and going out to eat their lunches in this whole variety of places where in an economy which is so expensive in so many other ways, there are so many places where that economy hasn’t been totally lost. Very interesting is the contrast for, again, a very well-developed economy, but has not made the same choices necessarily as Europe.

I want to come back to the African context which we were discussing and this area of actually recognising that there is no single route to progress.

[00:05:24] Lucie: Yeah.

[00:05:24] David: And this is something where, I’ve had these discussions with a number of development people, particularly coming from Europe, who have a very single view of what progress looks like. Progress generally looks like becoming more like my home. That’s what progress should be. Obviously, we’re doing very well at home, and here am I in a place which is not as wealthy. Progress means become more like what I’m used to. And that’s a very dangerous concept, and it’s surprising how often I see this and feel this with people who are really good, but still haven’t recognized that actually maybe we should be learning. That to me is the key.

I learned so much from going to see the university dorms.

[00:06:11] Lucie: Oh yeah? In Niger?

[00:06:14] David: Yeah. So we were there in Niger and we went to visit just outside the university dorms. And most of the students have a side hustle. They are paying their way through university by cutting people’s hair by doing anything, by…

[00:06:27] Lucie: You just to picture for everyone, you have, just like in British universities, perhaps you have some dorms for the students, and then sort of in the courtyard, let’s say, but between the buildings, there were loads of, well, not only in the courtyard between the buildings, there, there were loads of students who were especially cutting hair. That’s the hairdressing area, I think.

[00:06:48] David: Well, there was a hairdressing area, but if you look more carefully, there were all sorts of services on offer. There were people making omelettes.

[00:06:55] Lucie: Well, exactly, so the street was lined with little stalls, where students had arranged between themselves, and sometimes working collaboratively, in order to man the stall and to offer the service, whether it was omelettes or whether it’s selling other things or, yeah, especially food.

[00:07:10] David: All sorts of things. Yeah, and a lot of it was food, well, food, hairdressing, these sorts of things, you know, things that students need. And it creates a very vibrant local economy. And the costs involved are very low, which means the students can afford them. But also, more importantly, this is how many of the students actually survive at university.

Now, okay, of course, you can look at this and say, wouldn’t it be much better if they actually got proper scholarships? But there isn’t the money for that.

[00:07:44] Lucie: Yeah, there isn’t enough to go around.

[00:07:47] David: There isn’t enough to go around, so then you’d actually cut the number of students. So, the fact that actually there is this amazing economy which develops around the student dorms, and there are some students who end up spending more in it because they have finances from their family or from other things which come in, and maybe there are some who have scholarships.

And there are other students who are then getting a livelihood, but they’re not just getting a livelihood, they’re getting skills and experience. You know, if you get a job in the UK to support yourself as a student, actually it’s a lot less entrepreneurial.

[00:08:21] Lucie: Exactly.

[00:08:22] David: And so you’re learning probably a lot less. You know, you might get a job behind the bar. I’m not saying that you don’t get useful skills from that, but that’s somehow less than actually running the bar for yourself. The layers of responsibility you’re often not getting exposed to the same experiences. So, at the same time as getting their formal academic education, they’re getting a whole other entrepreneurial education potentially on the side.

It’s breeding a whole different set of skills, which are maybe not valued as they should be. And maybe there are ways that we should be studying this and exploring this and seeing how do we create and get student managed enterprises in UK universities. That would be a fantastic study to actually look at how to bring that entrepreneurial spirit, to enable it to work, to function.

Now, that’s just a particular context, but this same idea can be played out in all sorts of areas. If instead of looking at what there is and saying, oh, we need to change that to be more like what we’re used to, we look at it and we say, okay, how could this evolve? As development happens it could evolve in positive ways. It’s a very different outlook.

[00:09:33] Lucie: I think I sometimes live in a happy bubble where the idea that society moves in one line towards the same sort of development goal, or what that development goal looks like, to me, that’s a hundred years ago. And so I live in a happy little bubble where other people recognize that no, of course, obviously there’s different ways that the future exists in different forms and modernism takes different forms or development takes different forms. And that’s what’s so exciting about it all.

[00:10:00] David: Well, and this is what arguably was recognised so well by the Sustainable Development Goals, which actually recognise that it’s not just low resource environments which need to evolve. High resource environments are far away from a sustainable goal.

[00:10:15] Lucie: Absolutely.

[00:10:16] David: And so everybody needs to evolve. And actually when you look at those beautiful pictures which show that everybody needs to be moving, you can see how there’s so much learning which can and should happen from these different environments.

So, as always, you know, these are not original ideas. These are ideas which have been around for a long time in certain circles. They’re well established and well recognized. But I find it surprising that even in circles where sustainable development goals are part of the language, you still get people discussing in ways where their view to the future in these low resource environments is going to follow a very similar path to the paths followed by more high resource environments.

And despite the fact that actually now when you look at the world, and you look at the variety of high resource environments, you have such diversity. Japan is such an interesting example to study and to look at differently. Sweden is again very different from the UK and all of these, and from the US.

All of these are in many ways high functioning societies. All of them have advantages and disadvantages. And there’s such a diversity, to actually recognise that diversity and to recognise that if you think about development in general, not just for low resource environments, but in general, well, it looks very different for everyone because different people are doing well or badly or different things.

Even the Sustainable Development Goals, they had this sort of image of the sustainable future, which is the same for everyone. I still feel that’s wrong. It’s going to be different. Now, admittedly, that’s along these certain indicators. So they’re looking across these indicators at getting people in those indicators.

But indicators are very interesting things because if that’s what you measure, that’s what you do, that’s what you’re aware of. Whereas actually quite a lot of the diversity that exists in high resource environments is on things that aren’t measured so much.

[00:12:24] Lucie: What do you mean?

[00:12:26] David: Well if you measure GDP and you measure life expectancy, two very sensible measures of development, then you get a very simplistic picture of the world.

[00:12:38] Lucie: Yeah, which is why you’ve got happiness index and things like that coming out.

[00:12:42] David: Exactly, and so you’ve got things like the happiness index, but even if you take the happiness index, it’s very interesting that some of the countries with the highest happiness also have high suicide rates. Why would you have high suicide rates in countries with high happiness?

[00:12:55] Lucie: They’re too happy!

[00:12:58] David: I mean, no, don’t get me wrong, there’s some interesting correlations in these sorts of ways, which are to be explored and so on. So it doesn’t matter what your index is. If you put your faith in an index, you turn a complex problem, you turn complexity into simplicity.

[00:13:12] Lucie: Yep.

[00:13:13] David: Actually, the richness is always in the complexity.

[00:13:15] Lucie: And so if I can just come back to what you were saying about looking at what all of these countries are doing and sort of trying to learn from each other. Of course, just as perhaps something works in Japan, it doesn’t mean that it will work in the UK or something. So coming back to this gig economy thing you know, what works very well in one context, let’s say Niger in the UK, it’s had problems in terms of people’s social well-being and financial well-being.

[00:13:40] David: And it’s not necessarily that it works very well in the Niger context, but it is how the society is functioning. So, just take one very simple aspect of this. And this is something I’ve been thinking about for years, which I’d love to, at some point, dig into. But you take that sort of gig economy in somewhere like Niger, or it could be Kenya, there’s similar elements. And the point is, all of it’s a black economy. So at some point, as the economy develops and as it grows, you probably want to turn that black economy white.

[00:14:12] Lucie: Okay.

[00:14:12] David: Actually, what does that mean?

[00:14:14] Lucie: Exactly. So the question here is what does development look like for gig economy in somewhere like Niger?

[00:14:20] David: Yes. And so in particular, I’m thinking about taxes.

[00:14:25] Lucie: Yep.

[00:14:25] David: Well, this is a black economy where you just have cash flowing in different ways versus a white economy where people, you know, pay their taxes. These problems exist even in Europe. So if I look at that in the European context, it’s a really hard problem. But if I go to Niger, it’s absolutely obvious. If you want to turn that gig economy, that black economy, white, in the context of the students doing business in this way. It’s very simple, the taxes shouldn’t apply to very small transactions. You need to have basically a zero tax rate on small enough transactions so that it makes no difference whether it’s black or white. And then you need to put the incentives in, that actually if it’s really small transactions, maybe there are even incentives and there are things to be given back to the sort of very small levels of transaction which are happening, which will stimulate that.

And then you only get the friction that comes from taxes that comes in once it gets to a certain level. Now, imagine if you did that in a context like Niger where you have these tiny transactions of a couple of cents here or there, people trying to make a couple of dollars a day. People who are doing their business and making a couple of dollars a day because that’s a livelihood which they can survive on. If you add a tax to that, it’s going to be a disaster. You know, you’re creating poverty, you’re worsening poverty, absolute poverty. Because two dollars a day at the moment, give or take, it’s roughly that point of absolute poverty.

There’s a five dollar a day, there’s a two dollar, anyway. So if you start trying to tax people who are making two dollars a day, of course you’re going to make things worse. And therefore that’s going to be a black economy, unless you had a white economy where they could be reporting on this, they could be doing their accounting and getting it in and, you know, actually not just getting the fact that they don’t have to then lose any of that because they’re only making two dollars a day, but they could be finding, well actually you might be eligible for this because you’ve completed all this process.

And then you could be supporting them to grow. And if they got beyond the 5 dollar a day mark, which means that they’re out of poverty, well then you could start having the taxes coming in. But you’ve had them all the way through. You’ve actually seen them develop in that way. And I’ve taken these to sort of extreme cases in some sense, because this is absolute poverty, but, you know, it’s a very simple concept where this is very, very different to… well, it’s not very different because it’s the same thing in some sense with that in the UK. Below a certain threshold, you don’t have to pay that.

[00:17:04] Lucie: Well exactly, I was going to ask what is the difference here then?

[00:17:08] David: I would argue it’s this element where often those thresholds in Europe and the UK, they’re very bureaucratic and they’re sort of all or nothing. If you’re a very small company and you turn over less than 80, 000 pounds a year, then you don’t need to pay that. But if you register for that and you start paying that, it’s 20%.

[00:17:28] Lucie: Okay, it’s not incremental enough.

[00:17:30] David: There’s no sense of incremental, really incremental taxation, or micro amounts. Because it’s not about micro amounts. Because most people are functioning in a society where they just pay their taxes, because that’s the nature of UK societies and most of Europe. Whereas in a society where a lot of the society is currently a black market society, wouldn’t it be amazing if you could find a way to actually get that accounting to happen?

And this is where my wife’s PhD was on micro businesses, particularly female micro businesses in Western Kenya. And the obvious thing that came out is because they didn’t do their accounts, they didn’t actually know if they were profitable businesses or not. And most of them weren’t. Most of them were survival businesses where basically they’d get injections of funds from elsewhere which they’d gradually use until the next injection of funds came down.

So it was a way of turning one off cash payments from relatives or from partners into a long term source of sustaining the family. And so the businesses were just gradually going down and down and down all the time. Now, if you had your accounts, then the difference between a business that just gradually goes down and down and down and a business that gradually goes up and up and up is actually often very small.

And often to know the difference between those two, you need to have your accounts to be able to make decisions, to make sure that you’re on the upward trajectory. And that leads to whole different sets of opportunities and so on. And often simple accounting could help with that. How could you incentivise that?

[00:19:04] Lucie: Okay, and you want to incentivise that through, well, through taxing, but through taxing in a appropriate manner and helpful way.

[00:19:13] David: Well, I mean, it’s the sort of thing where actually there are lots and lots of people who go through this through the banks and thinking about loans, but it’s the same thing. Wouldn’t it be much better if you could actually have the company’s accounts, the little organisation, micro loans, micro insurance. These are all big things which people are thinking about and doing. But they’re irrelevant if you haven’t actually got the information, if the people who are coming to you for this don’t have the information about their business themselves.

And that’s the big thing. Often, their perceptions are very different from the actual realities because they don’t have those formal accounts. And so, forgetting about trying to get this as these other bits of support until you’ve got that basic accounting in place makes sense. But actually putting that accounting in place, and then turning the black economy white, well at the moment that would be a disaster because suddenly you’d be taxing the poorest people in society in a way which just doesn’t make sense. You’d actually disrupt innovation and you’d disrupt the whole gig economy which is making these societies work.

[00:20:15] Lucie: Yeah.

[00:20:15] David: And so actually thinking about this from a very different perspective would be extremely powerful. Now, I’m not saying that this is appropriate in the UK, because in the UK we’re fortunate. Our base levels are so much higher. There are people who are in real issues about poverty, but it’s a proportion of the society which is relatively small, so we should be resolving that for a small percentage of the society.

But in societies where actually a large proportion of the population are in this difficult situation, then you need a different approach. And I think there’s sort of wonderful opportunities to actually get common learning and to get learning from what happens in that sort of context to build structures which might help support people who are in poverty in the UK who exist and who have genuine issues. And actually to build systems that work better for everyone but by actually starting not from rethinking how do we rebuild what exists, but actually how do we build something new which serves the needs of these populations?

And that’s, you know, I don’t have answers, I have questions. I would love to be working with other people who actually want to really be imaginative in thinking about this differently. Well, when I say I want to, I’m fortunate to also be working with some people who already do that in different areas, and I want to work with more people doing that.

[00:21:41] Lucie: It’s been a surprisingly anthropological discussion. And I shouldn’t be surprised though that it’s come down to data. It’s sort of like, if the question is what does development look like in the case of gig economies, for example, I shouldn’t be surprised that the answer is data. Improved data.

[00:22:00] David: It’s not just about improved data. It’s about data for who? Whose data? For who? And for what purpose? And how could that data actually add value? You’re right. Unfortunately, I do have a bit of a data tendency in me, but it’s…

[00:22:17] Lucie: And through data we have learnings.

[00:22:19] David: This is it. We are in the data era. We should be using this. We have opportunities now to actually… It’s incredible to think, if you go back I was going to say 100 years, but that’s too far back, you know, 80 years, 70 years, the most powerful computer on the planet was probably less powerful than the smartphone that pretty much everybody anywhere in the world has.

[00:22:46] Lucie: Yeah.

[00:22:46] David: Technology, as is now widely available, means that what was complex or unimaginable was done at scale. If you go back a few hundred years, you know, there were lots of computers all over the world. You’re aware of this, of course, because this was a profession.

[00:23:04] Lucie: Okay.

[00:23:07] David: You know, go back before the technological computer existed and these were humans who did the accounts and did all of these things at scale for businesses all over the world. This is how the British Empire worked. It worked because you had these human computers doing these calculations. And now anybody can have a smartphone and do more powerful calculations than was imaginable even just a hundred years ago.

And the opportunity of that to be able to sort of really rethink how we think about developing a society compared to how our societies developed.

[00:23:46] Lucie: Yep.

[00:23:47] David: There’s an opportunity to leapfrog. There is a real opportunity to think about this differently, to imagine societies of the future which look different based on taking people as they are now, enabling them to preserve their culture, to preserve things that they find valuable.

[00:24:03] Lucie: Exactly.

[00:24:03] David: I would argue one of the things which I find so difficult, over the last 15 years when I’ve been really working a lot in Eastern and Western Africa, the thing which I find so hard to see is the exodus from rural environments where rural communities which have often had long histories in different ways, the youth has left or is leaving because there are no local opportunities.

The opportunities locally are just not there for them. And therefore you’re having this incredible exodus. Which is meaning there’s culture loss, there’s all sorts of things. And we are in a moment in time where depending on what happens in the next 20 years, there are two very different development pathways which are open, which either lead to sort of this extremely strong urbanization and a very different future, or maybe some innovation. This wouldn’t be unheard of but it’s exactly what’s happened all over the world and it leads to a whole set of other problems which people know about.

And I believe across Africa at the moment there’s an opportunity to seize a different route to development because the jobs are no longer physical jobs in a factory. They are digital jobs using your mind and technology. That can happen anywhere.

[00:25:28] Lucie: And we’re seeing that in our work, yeah.

[00:25:30] David: Yes, exactly. And if we could use those digital jobs to support local communities to actually become vibrant, self-sustaining, well, they have outside work in different ways. They can be offering services, digital services.

[00:25:44] Lucie: Shall we do that in another podcast?

[00:25:47] David: I think we should do another podcast on that, because it’s a topic I love. Sorry, it’s another episode, we’ve been told off for that in the past. It’s going to be an episode in this podcast rather than another podcast series.

[00:26:01] Lucie: Yes, exactly. Exactly.

[00:26:03] David: But yeah, another episode. Good. Thank you.

[00:26:07] Lucie: Thanks, David, for the discussion.