0:00:00.901,0:00:04.856
The informal markets of Africa[br]are stereotypically seen

0:00:04.856,0:00:06.851
as chaotic and lackadaisical.

0:00:07.159,0:00:09.911
The downside of hearing the word informal

0:00:09.911,0:00:12.755
is this automatic grand[br]association we have,

0:00:12.755,0:00:14.404
which is very negative,

0:00:14.404,0:00:18.787
and it's had significant consequences[br]and economic losses,

0:00:18.787,0:00:20.213
easily adding --

0:00:20.213,0:00:24.297
or subrtacting 40 to 60 percent[br]of the profit margin

0:00:24.297,0:00:26.869
for the informal markets alone.

0:00:27.157,0:00:31.603
As part of a task of mapping[br]the informal trade ecosystem,

0:00:31.603,0:00:36.629
we've done an extensive literature review[br]of all the reports and reseach

0:00:36.629,0:00:39.015
on cross-border trade in East Africa,

0:00:39.015,0:00:40.712
going back 20 years.

0:00:40.955,0:00:45.208
This was to prepare us for field work[br]to understand what was the problem,

0:00:45.208,0:00:49.370
what was holding back informal trade[br]in the informal sector.

0:00:49.990,0:00:53.306
What we discovered over the last 20 years

0:00:53.306,0:00:57.488
was nobody had distinguished[br]between illicit,

0:00:57.488,0:01:01.841
which is like smuggling or contraband[br]in the informal sector,

0:01:01.841,0:01:04.204
from the legal but unrecorded,

0:01:04.204,0:01:06.419
such as tomatoes, oranges --

0:01:06.419,0:01:07.479
fruit.

0:01:07.809,0:01:10.041
This criminalization,

0:01:10.041,0:01:13.456
what in Swahili refers to as "Biashara,"

0:01:13.456,0:01:15.387
which is the trade or the commerce,

0:01:15.387,0:01:16.708
versus "Magendo,"

0:01:16.708,0:01:18.786
which is the smuggling or contraband.

0:01:18.929,0:01:22.266
This criminalization[br]of the informal sector,

0:01:22.266,0:01:23.272
in English,

0:01:23.272,0:01:26.159
by not distinguishing these aspects,

0:01:26.159,0:01:31.776
easily can cost each African economy[br]between 60 to 80 percent addition

0:01:31.776,0:01:34.676
on the annual GDP growth rate

0:01:34.676,0:01:36.784
because we are not recognizing[br]

0:01:36.784,0:01:40.884
the engine of what keeps[br]the economies running.

0:01:41.006,0:01:44.506
The informal sector is growing jobs[br]at four times the rate

0:01:44.506,0:01:46.471
of the traditional formal economy,

0:01:46.471,0:01:48.641
or "modern" economy, as many call it.

0:01:48.972,0:01:52.462
It offers employment and income[br]generation opportunities

0:01:52.462,0:01:55.870
to the most "unskilled"[br]in conventional disciplines.

0:01:56.278,0:01:59.914
But can you make a french fry[br]machine out of an old car?

0:02:00.483,0:02:04.084
So, this, ladies and gentlemen,

0:02:04.084,0:02:06.821
is what so desperately needs[br]to be recognized.

0:02:07.207,0:02:11.507
As long as the current assumptions[br]hold that this is criminal,

0:02:11.507,0:02:12.757
this is shadow,

0:02:12.757,0:02:14.431
this is illegal,

0:02:14.431,0:02:18.740
there will be no attempt at integrating[br]the informal economic ecosystem

0:02:18.740,0:02:21.688
with the formal or even the global one.

0:02:22.968,0:02:25.984
I'm going to tell you[br]a story of [Teresea],

0:02:25.984,0:02:29.981
a trader who overturned[br]all our assumptions,

0:02:29.981,0:02:33.409
made us question all the stereotypes[br]that we'd gone in on

0:02:33.409,0:02:36.200
based on 20 years of literature review.

0:02:37.675,0:02:42.991
[Teresea] sells clothes under a tree[br]in a town called Malaba

0:02:42.991,0:02:45.361
on the border of Uganda and Kenya.

0:02:45.940,0:02:48.109
You think it's very simple, don't you?

0:02:48.810,0:02:51.634
We'll go hang up new clothes[br]from the branches,

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put out the tarp,

0:02:52.697,0:02:53.700
settle down,

0:02:53.700,0:02:54.698
wait for customers

0:02:54.698,0:02:55.745
and there we have it.

0:02:55.977,0:02:59.385
She was everything we were expecting[br]according to the literature,

0:02:59.385,0:03:00.444
to the research.

0:03:00.545,0:03:02.981
Right down to she was a single mom,

0:03:02.981,0:03:04.344
driven to trade,

0:03:04.344,0:03:05.832
supporting her kids.

0:03:07.092,0:03:09.696
So what overturned our assumptions?

0:03:09.860,0:03:11.269
What surprised us?

0:03:11.269,0:03:15.015
First, [Teresea] paid the county[br]government market fees

0:03:15.015,0:03:16.870
every single working day

0:03:16.870,0:03:19.940
for the privilege of setting[br]up shop under her tree.

0:03:20.147,0:03:22.320
She's been doing it for seven years,

0:03:22.320,0:03:24.242
and she's been getting receipts.

0:03:24.560,0:03:25.928
She keeps records.

0:03:26.268,0:03:29.406
We're seeing not a marginal,

0:03:29.406,0:03:30.776
underprivileged,

0:03:30.776,0:03:35.863
vulnerable African woman trader[br]by the side of the road,

0:03:35.863,0:03:36.864
no.

0:03:36.864,0:03:40.724
We were seeing somebody who's keeping[br]sales records for years.

0:03:40.724,0:03:46.931
Somebody who had an entire ecosystem[br]of retail that comes in from Uganda

0:03:46.931,0:03:48.679
to pick up inventory.

0:03:49.172,0:03:53.317
Someone who's got handcarts[br]bringing the goods in,

0:03:53.317,0:03:56.285
[or the] mobile money agent[br]who comes to collect cash

0:03:56.285,0:03:57.671
at the end of the evening.

0:03:57.671,0:04:00.980
Can you guess how much [Teresea] spends

0:04:00.980,0:04:01.980
on average

0:04:01.980,0:04:04.600
each month on inventory --

0:04:04.600,0:04:07.558
stocks of new clothes[br]that she gets from Nairobi?

0:04:07.867,0:04:10.151
1,500 US dollars.

0:04:10.577,0:04:16.086
That's around 20,000 US dollars[br]invested in trade goods and services

0:04:16.086,0:04:17.434
every year.

0:04:17.664,0:04:19.241
This is [Teresea],

0:04:19.241,0:04:20.573
the invisible one,

0:04:20.573,0:04:21.853
the hidden middle.

0:04:22.601,0:04:26.654
And she's only the first rung[br]of the small entrepreneurs,

0:04:26.654,0:04:30.768
the microbusinesses that can be found[br]in these market towns,

0:04:30.768,0:04:33.770
at least in the larger Malaba border,

0:04:33.770,0:04:35.651
she's at the first rung.

0:04:36.667,0:04:39.217
The people further up the value chain

0:04:39.217,0:04:42.349
are easily running[br]three lines of business,

0:04:42.349,0:04:47.343
investing 2,500 to 3,000[br]US dollars every month.

0:04:47.873,0:04:51.920
So the problem turned out[br]that it wasn't the criminalization.

0:04:51.920,0:04:57.068
You can't really criminalize someone[br]you're charging receipts from.

0:04:57.068,0:05:02.458
It's the lack of recognition[br]of their skilled occupations.

0:05:03.152,0:05:07.171
The bank systems and structures[br]have no means to recognize them

0:05:07.171,0:05:08.682
as microbusinesses,

0:05:08.682,0:05:10.139
much less the fact that,

0:05:10.139,0:05:11.365
you know,

0:05:11.365,0:05:13.528
a tree doesn't have a forwarding address.

0:05:14.016,0:05:16.137
So she's trapped in the middle.

0:05:16.365,0:05:18.819
She's falling through the cracks[br]of our assumptions.

0:05:18.819,0:05:22.301
You know all those microloans[br]to help African women traders?

0:05:22.646,0:05:25.531
They're going to loan her[br]50 dollars or 100 dollars.

0:05:25.531,0:05:27.029
What's she going to do with it?

0:05:27.029,0:05:29.622
She spends 10 times[br]that amount every month

0:05:29.622,0:05:31.247
just on inventory,

0:05:31.247,0:05:33.554
we're not talking [about][br]the additional services

0:05:33.554,0:05:35.388
or the support ecosystem.

0:05:35.864,0:05:39.601
These are the ones who fit[br]neither the policy stereotype

0:05:39.601,0:05:42.028
of the low-skilled and the marginalized,

0:05:42.028,0:05:44.922
nor the white-collar,[br]salaried office worker

0:05:44.922,0:05:46.806
or civil servant with a pension

0:05:46.806,0:05:49.964
that the middle classes[br]are allegedly composed of.

0:05:50.115,0:05:54.810
Instead, what we have here[br]are the [proto...],

0:05:54.810,0:05:58.529
these are the fertile seeds[br]of businesses and enterprises

0:05:58.529,0:06:00.358
that keep the engines running.

0:06:00.589,0:06:02.266
They put food on your table.

0:06:02.266,0:06:03.827
Even here in this hotel,

0:06:03.827,0:06:05.393
the invisible ones,

0:06:05.393,0:06:08.491
the butchers, the bakers[br]the candle-stick makers.

0:06:08.774,0:06:12.362
They make the machines that make[br]your french fries and they make your beds.

0:06:12.362,0:06:15.767
These are the invisible businesswomen[br]trading across borders.

0:06:17.125,0:06:19.650
All on the side of the road,

0:06:19.650,0:06:22.413
and so they're invisible[br]to data gatherers.

0:06:22.853,0:06:26.510
And get mashed together[br]with the vast informal sector

0:06:26.510,0:06:31.481
that doesn't bother to distinguish[br]between smugglers and tax evaders

0:06:31.481,0:06:34.293
and those running illegal whatnot,

0:06:34.293,0:06:38.125
and the ladies who trade[br]and who put food on the table,

0:06:38.125,0:06:40.197
and send their kids to university.

0:06:40.442,0:06:43.354
So that's really what I'm asking here.

0:06:43.685,0:06:46.520
That's all that we need[br]to start [by] doing.

0:06:46.884,0:06:50.089
Can we start by recognizing the skills,

0:06:50.089,0:06:51.363
the occupations?

0:06:51.533,0:06:56.180
We could transform the informal economy[br]by beginning with this recognition

0:06:56.180,0:07:00.884
and then designing the customized[br]doorways for them to enter

0:07:00.884,0:07:03.116
or integrate with the formal,[br]

0:07:03.116,0:07:04.498
with the global,

0:07:04.498,0:07:05.910
with the entire system.

0:07:06.150,0:07:07.921
Thank you ladies and gentlemen.

0:07:07.921,0:07:09.483
(Applause)