WEBVTT 99:59:59.999 --> 99:59:59.999 The informal markets of Africa are stereotypically seen 99:59:59.999 --> 99:59:59.999 as chaotic and lackadaisical. 99:59:59.999 --> 99:59:59.999 The downside of hearing the word informal 99:59:59.999 --> 99:59:59.999 is this automatic association we have, 99:59:59.999 --> 99:59:59.999 which is very negative, 99:59:59.999 --> 99:59:59.999 and it's had significant consequences and economic losses, 99:59:59.999 --> 99:59:59.999 easily adding -- 99:59:59.999 --> 99:59:59.999 or subrtacting 40 to 60 percent of the profit margin 99:59:59.999 --> 99:59:59.999 for the informal markets alone. 99:59:59.999 --> 99:59:59.999 As part of a task of mapping the informal trade ecosystem, 99:59:59.999 --> 99:59:59.999 we've done an extensive literature review of all the reports and reseach 99:59:59.999 --> 99:59:59.999 on cross-border trade in East Africa, 99:59:59.999 --> 99:59:59.999 going back 20 years. 99:59:59.999 --> 99:59:59.999 This was to prepare us for field work to understand what was the problem, 99:59:59.999 --> 99:59:59.999 what was holding back informal trade in the informal sector. 99:59:59.999 --> 99:59:59.999 What we discovered over the last 20 years 99:59:59.999 --> 99:59:59.999 was nobody had distinguished between illicit, 99:59:59.999 --> 99:59:59.999 which is like smuggling or contraband in the informal sector, 99:59:59.999 --> 99:59:59.999 from the legal but unrecorded, 99:59:59.999 --> 99:59:59.999 such as tomatoes, oranges -- 99:59:59.999 --> 99:59:59.999 fruit. 99:59:59.999 --> 99:59:59.999 This criminalization, 99:59:59.999 --> 99:59:59.999 what in Swahili refers to as "Biashara," 99:59:59.999 --> 99:59:59.999 which is the trade or the commerce, 99:59:59.999 --> 99:59:59.999 versus "Magendo," 99:59:59.999 --> 99:59:59.999 which is the smuggling or contraband. 99:59:59.999 --> 99:59:59.999 This criminalization of the informal sector, 99:59:59.999 --> 99:59:59.999 in English, 99:59:59.999 --> 99:59:59.999 by not distinguishing these aspects, 99:59:59.999 --> 99:59:59.999 easily can cost each African economy between 60 to 80 percent addition 99:59:59.999 --> 99:59:59.999 on the annual DP growth rate 99:59:59.999 --> 99:59:59.999 because we are not recognizing 99:59:59.999 --> 99:59:59.999 the engine of what keeps the economies running. 99:59:59.999 --> 99:59:59.999 The informal sector is growing jobs at four times the rate 99:59:59.999 --> 99:59:59.999 of the traditional formal economy, 99:59:59.999 --> 99:59:59.999 or "modern" economy, as many call it. 99:59:59.999 --> 99:59:59.999 It offers employment and income generation opportunities 99:59:59.999 --> 99:59:59.999 to the most "unskilled" in conventional disciplines. 99:59:59.999 --> 99:59:59.999 But can you make a french fry machine out of an old car? 99:59:59.999 --> 99:59:59.999 So, this, ladies and gentlemen, 99:59:59.999 --> 99:59:59.999 is what so desperately needs to be recognized. 99:59:59.999 --> 99:59:59.999 As long as the current assumptions hold that this is criminal, 99:59:59.999 --> 99:59:59.999 this is shadow, 99:59:59.999 --> 99:59:59.999 this is illegal, 99:59:59.999 --> 99:59:59.999 there will be no attempt at integrating the informal economic ecosystem 99:59:59.999 --> 99:59:59.999 with the form or even the global one. 99:59:59.999 --> 99:59:59.999 I'm going to tell you a story of Theresea, 99:59:59.999 --> 99:59:59.999 a trader who overturned all our assumptions, 99:59:59.999 --> 99:59:59.999 made us question all the stereotypes that we'd gone in on 99:59:59.999 --> 99:59:59.999 based on 20 years of literature review. 99:59:59.999 --> 99:59:59.999 Theresea sells clothes under a tree in a town called [Manaba] 99:59:59.999 --> 99:59:59.999 on the border of Uganda and Kenya. 99:59:59.999 --> 99:59:59.999 You think it's very simple, don't you? 99:59:59.999 --> 99:59:59.999 We'll go hang up new clothes from the branches, 99:59:59.999 --> 99:59:59.999 put out the tarp, 99:59:59.999 --> 99:59:59.999 settle down, 99:59:59.999 --> 99:59:59.999 wait for customers 99:59:59.999 --> 99:59:59.999 and there we have it. 99:59:59.999 --> 99:59:59.999 She was everything we were expecting according to the literature, 99:59:59.999 --> 99:59:59.999 to the research. 99:59:59.999 --> 99:59:59.999 Right down to she was a single mom, 99:59:59.999 --> 99:59:59.999 driven to trade, 99:59:59.999 --> 99:59:59.999 supporting her kids. 99:59:59.999 --> 99:59:59.999 So what overturned our assumptions? 99:59:59.999 --> 99:59:59.999 What surprised us? 99:59:59.999 --> 99:59:59.999 First, Theresea paid the county government market fees 99:59:59.999 --> 99:59:59.999 every single working day 99:59:59.999 --> 99:59:59.999 for the privilege of setting up shop under her tree. 99:59:59.999 --> 99:59:59.999 She's been doing it for seven years, 99:59:59.999 --> 99:59:59.999 and she's been getting receipts. 99:59:59.999 --> 99:59:59.999 She keeps records. 99:59:59.999 --> 99:59:59.999 We're seeing not a marginal, 99:59:59.999 --> 99:59:59.999 underprivileged, 99:59:59.999 --> 99:59:59.999 [wearable], 99:59:59.999 --> 99:59:59.999 African woman trader by the side of the road, 99:59:59.999 --> 99:59:59.999 no. 99:59:59.999 --> 99:59:59.999 We were seeing somebody who's keeping sales records for years. 99:59:59.999 --> 99:59:59.999 Somebody who had an entire ecosystem of retail that comes in from Uganda 99:59:59.999 --> 99:59:59.999 to pick up inventory. 99:59:59.999 --> 99:59:59.999 Someone who's got handcarts bringing the goods in, 99:59:59.999 --> 99:59:59.999 [and the] mobile money agent who comes to collect cash 99:59:59.999 --> 99:59:59.999 at the end of the evening. 99:59:59.999 --> 99:59:59.999 Can you guess how much Theresea spends on average each month on inventory -- 99:59:59.999 --> 99:59:59.999 stocks of new clothes that she gets from Nairobi? 99:59:59.999 --> 99:59:59.999 $1,500 US dollars. 99:59:59.999 --> 99:59:59.999 That's around 20,000 US dollars invested in trade goods and services 99:59:59.999 --> 99:59:59.999 every year. 99:59:59.999 --> 99:59:59.999 This is Theresea, 99:59:59.999 --> 99:59:59.999 the invisible one, 99:59:59.999 --> 99:59:59.999 the hidden middle. 99:59:59.999 --> 99:59:59.999 And she's only the first rung of the small entrepreneurs, 99:59:59.999 --> 99:59:59.999 the microbusinesses that can be found in these market towns, 99:59:59.999 --> 99:59:59.999 at least in the larger [Malaba] border, 99:59:59.999 --> 99:59:59.999 she's at the first rung. 99:59:59.999 --> 99:59:59.999 The people further up the value chain 99:59:59.999 --> 99:59:59.999 are easily running three lines of business, 99:59:59.999 --> 99:59:59.999 investing 2,500 to 3,000 US dollars every month. 99:59:59.999 --> 99:59:59.999 So the problem turned out that it wasn't the criminalization, 99:59:59.999 --> 99:59:59.999 you can't really criminalize someone you're charging receipts from, 99:59:59.999 --> 99:59:59.999 it's the lack of recognition of their skilled occupations. 99:59:59.999 --> 99:59:59.999 The bank systems and structures have no means to recognize them 99:59:59.999 --> 99:59:59.999 as microbusinesses, 99:59:59.999 --> 99:59:59.999 much less the fact that, 99:59:59.999 --> 99:59:59.999 you know, 99:59:59.999 --> 99:59:59.999 a tree doesn't have a forwarding address. 99:59:59.999 --> 99:59:59.999 So she's trapped in the middle. 99:59:59.999 --> 99:59:59.999 She's falling through the cracks of our assumptions. 99:59:59.999 --> 99:59:59.999 You know all those microloans to help African women traders? 99:59:59.999 --> 99:59:59.999 They're going to loan her 50 dollars or 100 dollars. 99:59:59.999 --> 99:59:59.999 What's she going to do with it? 99:59:59.999 --> 99:59:59.999 She spends 10 times that amount every month 99:59:59.999 --> 99:59:59.999 just on inventory, 99:59:59.999 --> 99:59:59.999 we're not talking about the additional services 99:59:59.999 --> 99:59:59.999 or the support ecosystem. 99:59:59.999 --> 99:59:59.999 These are the ones who fit neither the policy stereotype 99:59:59.999 --> 99:59:59.999 of the low-skilled and the marginalized, 99:59:59.999 --> 99:59:59.999 nor the white-collar, salaried office worker 99:59:59.999 --> 99:59:59.999 or civil servant with a pension 99:59:59.999 --> 99:59:59.999 that the middle classes are allegedly composed of. 99:59:59.999 --> 99:59:59.999 Instead, what we have here are the [proto-esenes], 99:59:59.999 --> 99:59:59.999 these are the fertile seeds of businesses and enterprises 99:59:59.999 --> 99:59:59.999 that keep the engines running. 99:59:59.999 --> 99:59:59.999 They put food on your table. 99:59:59.999 --> 99:59:59.999 Even here in this hotel, 99:59:59.999 --> 99:59:59.999 the invisible ones, 99:59:59.999 --> 99:59:59.999 the butchers, the bakers the candle-stick makers. 99:59:59.999 --> 99:59:59.999 They make the machines that make your french fries and they make your beds. 99:59:59.999 --> 99:59:59.999 These are the invisible businesswomen trading across borders. 99:59:59.999 --> 99:59:59.999 All on the side of the road, 99:59:59.999 --> 99:59:59.999 and so they're invisible to data gatherers. 99:59:59.999 --> 99:59:59.999 And get mashed together with the vast informal sector 99:59:59.999 --> 99:59:59.999 that doesn't bother to distinguish between smuggles and tax evaders 99:59:59.999 --> 99:59:59.999 and those running illegal whatnot, 99:59:59.999 --> 99:59:59.999 and the ladies who trade and who put food on the table, 99:59:59.999 --> 99:59:59.999 and send their kids to university. 99:59:59.999 --> 99:59:59.999 So that's really what I'm asking here. 99:59:59.999 --> 99:59:59.999 That's all that we need to start by doing. 99:59:59.999 --> 99:59:59.999 Can we start by recognizing the skills, 99:59:59.999 --> 99:59:59.999 the occupations, 99:59:59.999 --> 99:59:59.999 we could transform the informal economy by beginning the recognition 99:59:59.999 --> 99:59:59.999 and then designing the customized doorways for them to enter or integrate 99:59:59.999 --> 99:59:59.999 with the formal, with global, with the entire system. 99:59:59.999 --> 99:59:59.999 Thank you ladies and gentlemen. 99:59:59.999 --> 99:59:59.999 (Applause)