How to kickstart a developing country

ImageI recently finished the book Dead Aid by Dambisa Moyo and really enjoyed its honest tone and the very down to earth suggestions on what many African countries could do to improve their situation in the world.

The book really inspired me! Together with Niall Ferguson‘s TED-talk “The Six Killer Apps of Prosperity” it inspired me enough to formulate my own “killer apps” for kickstarting a developing country. I will present these below, but first a few words about Dead Aid.

The book, as the title suggests, is very – and I mean very – critical to the aid programs that have been going on since the 1940’s or so. In these programs “the west” have more or less given (thrown!) away money to most African countries completely without thought. In fact, as Dambisa, says (my interpretation), the west really didn’t care what happened with their money – they just kept on giving so that they could get the African problem out of the way quickly each year when it came up for discussion again.

Each time I read a book a few things stick in my mind forever and some of the things I will remember from this book are:

– The African aid programs were inspired by the highly successful Marshall Plan where America helped Europe rebuild its economies and societies after the second world war. If it works in Europe it should work in Africa, right? Wrong! Why? Because Africa didn’t have anything to rebuild – what it needed was help building an economy and societies from scratch. More than 60 years have passed since the major African aid programs was started and they still just continue since no one cares about it any longer. Totally irresponsible!

– China alone accomplished more in Africa during five years around year 2000 than 60 previous years of aid did. Why? Because China came to Africa to do business – not to “help”. The dominating forces of our world require everyone to do business or be hopefully left behind or even ruthlessly exploited. China of course doesn’t care about Africa – China only cares about itself and what it can get from Africa – but that really doesn’t matter since some business is better than no business for Africa.

– African countries need to first help themselves and then start helping each other, starting with their neighbours. By encouraging trade between the people in the country itself, things will start happening! People will start making money by selling things or services, taxes will be paid, etc. By cooperating with neighbouring countries, they can more safely and more profitably start playing in the international financial markets, by issuing bonds, etc. Cooperation with neighbouring countries will of course also increase trade between the countries, by, for example, eliminating custom charges and all other trade barriers.

– Many Africans own property – the land they live on and where their relatives have lived for many generations – but today in many African countries there are no real property rights. This makes it impossible to use land – the only thing of worth many Africans have – as a collateral for bank loans, meaning that most Africans won’t get a bank loan or will get one with horrible conditions (interest rates around 20% is quite common). By ensuring proper rights to their land, many Africans would be able to unlock huge economic potential and start doing business by their own power.

These are quite major issues which might take a lot of effort to change, but Dambisa also lists many smaller things that are much easier to implement, but please see the book for those – it’s a great read even though the first third was a bit uninspiring.

Below is my own list of killer apps which I think would help kickstart a developing country. As Niall argues in his speech, the order of which killer apps like these should be introduced probably is crucial, so I have tried to list them in order of introduction:

  • An electronic market place where individuals can sell “stuff” to each other. Ebay (or in Sweden) is an example of what I mean but it has to be dead easy and cheap to use and should be probably be tailored for mobile/sms use. The electronic market can easily be enhanced with real life events where people actually bring their stuff somewhere to meet potential buyers – like a flea market
  • Pawn shops which allow people to trade items for money instantly without having to find a buyer.
  • Delivery services and freight companies which can “grease” the individual to individual trading by offering simple and cheap means of moving stuff between people.
  • Micro job agencies which can help people to find short term jobs (minutes(!), hours, days, weeks, projects). I think this is great way of transferring money from wealthier people to poorer people because if it’s easy to get a job done, jobs will be created! Don’t have time to run down and buy your own lunch? Send someone to do it! See, a job was just created out of thin air!
  • Micro lending to individuals. Not much need to be said about this, proof of its efficiency can be found all over the world.
  • Simple pre-packaged business ideas which allows an individual to try if a certain idea is something they would enjoy doing or could become successful doing. Coca cola is more or less doing this by making it very easy for someone to go to a central location, buy a box of bottles/cans, take the products back to their own village/part of town and re-sell the product. If sales are good, the same individual will probably come back the day after. If not, someone else will probably take his/her place. This could be done for large range of products and by coordinating from a few central points the outcome could be optimised by, for example, avoiding two individuals to sell on the same street, etc.
  • IT/entrepreneurial activities: competitions, education, networking, financing, mentoring, micro loans to companies, crowdsourcing, etc. This more or less closes the circle since many of the points above require IT services to be conducted efficiently, so perhaps this killer app should be introduced first? 🙂 The idea of this point is to find talented individuals in the society and introduce them to the wonders of IT since this will help them unleash their true potential by quickly implementing their ideas.

The big difference between my list and Niall’s and Dambisa’s suggestions is that my list can be implemented by the people themselves, with virtually no help from the government. This will hopefully ensure a quick and cheap transition for the country which embraces it!

When presenting this list for a friend of mine he asked me if these really are the first things needed by a developing country? Isn’t a proper legal system more important he argued? He’s probably right, but I actually think that’s a luxury reserved for developed countries! Too many laws and legal systems might actually be a hurdle for countries who want or need to develop quickly. Also, for me, the practice of law often seems more like a competitve debate rather than the blind justice my friend was aiming/hoping for. Even if you are right you often end up loosing since you couldn’t fight well enough for your cause.

About Henrik Bergström

Software developer who loves to learn and share knowledge.
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