The Whythawk team is going through an exciting period of growth; rolling out enterprise development ratings in Gauteng, and developing a new model for rating HIV/AIDS organisations, is pushing us hard.
We have also been on an informal road-show introducing our concept to various organisations. A presentation yesterday amongst a wide range of interest groups was a welcome reminder of how far we have come. The team is so immersed in our work that we take a lot of the information for granted. It is only once we come to explain it to others that we are reminded again of how much we have learned and the differences between the development and commercial sectors.
No matter what you buy for yourself there are always choices and options. Analysts, journalists, and bloggers vie for your attention to communicate their opinions on everything from watches, to doctors, to movies and microwave ovens. You can get contrarian opinions on health food versus junk food.
The development sector is a massive no-go area.
Who says that the products and services offered by NGOs and charities are any good? You can give anything away, but that doesn’t make it useful. Charities themselves experience this when they go on donation drives. Old clothes are donated that are so far beyond use that the charities are left worse off, since they have to now have the added expense of carting the stuff to the dump. If well-meaning individuals can be so short-sighted that they don’t realise that their “gifts” are of no use, why should we take it for granted that the organisations themselves are any better?
As in everything in life, we would expect a diversity of approaches and results; some outstanding and innovative, some depressing and destructive, and everything in-between.
Outside measurement allows a harmonisation and collected endeavour. Sprinters are timed over the same course to see whose ideas of training and strategy are best; computers are measured against each other running benchmark software to see which delivers best results; consultants compare return-on-equity measures to see who delivers better profits. The purpose is not to compare approaches, or define the mechanisms by which these results are delivered, but to analyse the final results achieved in an objective and uniform way.
Poverty only becomes entrenched when you genuinely don’t care what you give away to those less well-off than yourself. That is what entrenches poverty.
If you consider the poor a market worthy of competitive services then we can find the most effective and efficient way of bridging that divide.
There is an old saying that goes, “Why do you hate me, what have I ever done for you?” Perhaps chiming in with the even more prosaic, no good deed goes unpunished.
Recently I was asked, “when does altruism end and masochism begin?”
Sadly, they may both be available at the same time. “He who has worked for a revolution is like one who has ploughed the sea,” said Simon Bolivar.
The truth of successful social development is not in helping other people directly but in creating an environment in which they are encouraged to help themselves.
It is no good destroying agriculture through poorly thought out land redistribution policies, and then expecting people to expend effort developing land that may be taken away before they experience the rewards of that labour; as Zimbabwe does. It is no good refusing to purchase agricultural produce from a nation and then, once the incentive to produce food is removed, supplying free food from the surpluses produced by your own protected farmers; as Europe does. These are moral conundrums; creating the seeds for frustration.
If you seek an emotional response from people you must be prepared for those emotions to change. Hollywood is littered with yesterday’s heroes, now today’s villains. Emotions are a tricky thing. The development sector has been promoted by pop stars and film icons; development organisations clamour to be seen and associated with that glamour. They should know better.
Development, like a properly managed economy, is run by people who do not seek the adoration of the general public. Much of what central bank Governors get up to is opaque the lay person. Alan Greenspan is understood and recognised by economists. No-one else really knows what he got up to. Scientists are recognised by their peers, not the public.
Whenever science or economics have become populist we have seen cheating. Scientists who release findings that, when subjected to peer review, are pure lies; economists who promise you can get rich from other people’s labour run their countries into the ground.
As Sun Tzu said, “The general who advances without coveting fame and retreats without fearing disgrace, whose only thought is to protect his country and do good service for his sovereign, is the jewel of the kingdom.”
The development organisation which intervenes without coveting fame and seeks long-term solutions over short-term populist grandstanding, whose only thought is to create choice and opportunities for the beneficiaries of their interventions, is the jewel of the world.
"The graduate unemployment rate stands at 10.5% for 2005 - a rate higher than most national unemployment rates in comparable middle-income countries," declares Haroon Bhorat, director of the Development Policy Research Centre at the University of Cape Town.
Bhorat goes on to indicate that the fault lies within the education system rather than with employers simply failing to offer jobs. The educational institutions responsible for training people are producing graduates who are not able to perform at the standard that their elegant looking qualifications promise.
Analysts poring over Trevor Manuel's budget have been excited at his largesse. Much money is being handed to departments to, finally, start massive infrastructure and development spending. This morning, at the Deloitte Budget Breakfast, Crispin Sonn of Old Mutual Personal Finance became the first to voice a concern that will grow louder and louder, "There are significant capacity constraints in civil society. There is plenty of money available, but where are the skills coming from to ensure effective implementation?"
This is something we should have seen coming. Most government departments across the country are critically short of staff. If you have a look in any newspaper’s job pages you’ll note that the vast bulk of jobs available are senior positions in government. It isn’t only that many of the jobs are only available for black South Africans. There are also critical shortages of skilled people. ASGiSA – the government’s accelerated skills development program – is not coming close to developing a solution to the problem.
Future growth is now imperilled, not for want of money, but for want of necessary talent.
It is not surprising that, given the incredible unemployment levels and the terrible staff shortages, many people are hired on limited scrutiny and turn out to have wholly fabricated curriculum vitae. It is no wonder that, if the applicant has qualified at a college the HR scrutineer has never heard of, the CV is binned.
The nature of education has failed to keep up with the increasing diversity of society. Educational institutes open and close with horrifying regularity; and do keep in mind that most people go to night-colleges. The centre of Johannesburg is filled with fly-by-night colleges offering graduates wonderful jobs if you'll just sign up for a course.
At the same time, information has become completely distributed. It is possible to learn virtually anything via correspondence or over the Internet. This is a wonderful opportunity for countries with limited infrastructure and support of their own.
However, how do you prove that you gained the education you say you did if all you have to show for it are lots of receipts from Internet cafes? Current education systems are incapable of recognising the learned and acquired abilities of the self-taught.
It may be that ratings are the future of trust relationships. You are far more likely to experiment with a new product from your favourite retailer than purchase the same product from some street-trader. Simply because you trust your retailer.
The future must be different. Your skills that you developed on your own are not always readily visible to the person interviewing you are giving 20 seconds sight to your CV. However, imagine that, at the top of the page, was the name of a trusted and familiar brand; and they had rated your skill for the task at hand.
Viacom - network parent of MTV, Comedy Central and Paramount Pictures - has agreed on a distribution deal with fledgling Internet television service, Joost.
Started by Niklas Zennstrom and Janus Friis, creators of Kazaa and Skype, Joost promises “infinite choice, and TV that is truly interactive.” The revenue sharing model is attractive to media producers, and gives them the opportunity to reach an international audience directly.
Many South Africans are already users of Skype and significantly reduce their cost of Telkom, the exorbitant state telecommunications monopoly, calls. Joost threatens to bypass the South African Broadcasting Corporation (SABC) and their monopolistic and one-sided news service.
The gradual introduction of technologies threatens the thing that centralised, monopolised states demand: their control of access to information and freedom of communication.
Wireless broadband communication allows for a wide range of new technologies. Satellite-based communications are already used in lieu of local telephone exchanges across Africa. As the price for these services comes down it gets easier and easier to use the new online services.
Joost will soon strike deals with news services like CNN and the BBC. It makes sense for the producers since they want to sell stories – their product can be as easily disintermediated as music was when it shifted from CDs to MP3s.
A probable future will contain computers and cell phones linked together in a meshed distributed broadband network able to make calls anywhere in the world or receive any information from a range of sources.
The end of monopolisation follows.
The pity, for governments, is that by refusing to engage with the process – by indulging in maintaining their monopolies – they are left calamitously behind. The most productive members of an entire nation can move on without physically going anywhere.
Governments, so used to using their own monopolies to carry their message and – as the ANC has recently done with the BBC – bludgeoning their message across whether anyone wants it or not, will find that no-one is there to listen anymore.
Ignorant of conversation and the equality of dialogue they may become marginalised from the discussions their own people are having.
National prestige is not only measured by the weight of population but also by the economic prosperity and growth that citizens enjoy. Countries that may be minnows when it comes to absolute numbers can still shine by virtue of the scale of their business interests.
Switzerland, with a population just over 7 million, is home to Nestle, UBS and Credit Suisse, and has a GDP per head of US$ 54 000. Their influence on financial markets is profound despite having only limited ability to project its power through numbers of people, or military might.
What happens to nations that lack a homogenous and large population attractive as a massive market (such as India, China or Indonesia), overwhelming business and financial power (such as Hong Kong, Taiwan or Singapore), a dynamic and industrious labour-force (Vietnam, Cambodia) – or some combination of these (the US)?
In semi-nations, like South Africa, aspiring to be taken seriously by the international community, it means openness and transparency imposed by strong outside forces.
The Johannesburg Stock Exchange (JSE) has seen numerous big-listings flee overseas where capital is more readily available. Foreign investors couldn’t read the JSE and so didn’t investigate. Recently, the JSE and Financial Services Board (FSB) have introduced IFRS regulations from abroad, designed to harmonise all financial disclosure by companies. The result is that our disclosure is now identical to European and US companies. Suddenly we can be read and understood. This has unleashed a tremendous amount of activity on the main bourse at the JSE and pushed it to its highest levels ever.
At the same time, though, plenty of financial mismanagement is exposed. The sorry saga of Fidentia, a massive fund manager, is a case in point. The fund managers are suspected of having simply pocketed the money they were supposed to be managing. The Living Hands Trust invested R 1.47 bn with Fidentia, cash needed to fund monthly payments to widows of deceased miners. All of it is missing.
Revelations come daily, the most recent of which concerns Danisa Baloyi, a self-declared business magnate, who was meant – as a director of Fidentia – to be in a position of impartiality to oversee the running of the fund. Turns out she took an R 8 million soft loan from Fidentia, such declared as a "material conflict of interest" by the FSB in January.
What’s good about all this disclosure is that – imposed from the outside – come laws and regulations that benefit South Africans. Fraud and corruption at the highest levels are often blamed for the perpetuation of poverty and it is useful to have these exposed.
As wealth generation moves ever further into the realms of ideas the entanglement of nations gets greater. A common set of rules allows simple communication and straightforward transactions. Those nations with financial clout will set the rules that they are happy with. Nations that want that investment and trade will have to play by those rules.
The most developed nations are in the process of getting rid of cash and going totally electronic. This starts having a significant impact.
The anonymity of cash has supported crime and corruption. Once it becomes possible to track the flow of money it becomes a lot easier for people to demand transparency from their governments.
Corrupt governments may not like it. Again, disclosure is likely to be imposed by investors from the outside who just won’t part with their wealth until systems are in place to track that investment.
In this they will be cheered on by ratings agencies such as Whythawk. Transparency allows for direct and meaningful analysis and comparison. And that helps everyone, especially the poor.
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