Smile: Working in development

I received the following images and text via e-mail and Facebook. A quick Google search shows that credit is due to Ahmed El Mezeny at Save the Children in Egypt. It is also published on the Global Dashboard site by Alex Evans.

This cartoon reminded me of when I first told family members about my “new” job at GTZ some years ago. They listened to my explanation of travelling to distant places to help people develop, and then asked whether I will be issued with a weapon!

Now that I work more with the private sector it is sometimes very difficult to explain to business people that our industry really exist, and that it matters!

So how do you explain to people unfamiliar with development what your “development” work is all about?

Site update – complete list of publications now available

After the two earlier posts this morning I was asked if I could make my complete list of publications available. Thank you for the reminders!

I have added a new sub page on the left (main menu) with a list of the different kinds of publications I’ve been involved in. This includes books, reports and other publications.

For those that are interested in Mesopartner note that I have also updated the RALIS page on the Mesopartner site

Book announcement: Understanding Market Failures in an Economic Development Context

This is the long awaited book on Market Failures. The cover page illustration of the hard copy is by Lina Stamer and is an image that I use when I present the popular training session on how to address market failure in a practical way.

The book is available for free as a E-book, or a paperback edition can be ordered here. More books are available on the Mesopartner online bookstore.

The official description of this publication is:

Many development practitioners are familiar with the phrase “market failure”. However, not many people relate to the topic in a practical sense. Many remember boring lectures in universities where market failures were presented as abstract theoretical concepts in economics 101. In this book, Dr. Shawn Cunningham takes a perspective that the clues to begin to address market failures are in the world around us. He argues that the characteristics attributed to each market failure by clever scholars actually provide some clues to development practitioners about ways in which to address the imperfections that hinders market based transactions. Shawn also argues that market failures cannot be addressed by business management principles, and that typical market research instruments will provide little information on how to make a market system where there is demand, supply and supporting institutions work better

Book announcement: Reducing Red Tape

This book is a collaboration between Mattia Wegmann and myself, and is based on our practical experiences gained in assisting local stakeholders to identify and address Red Tape. It consolidates our work on Reducing Red Tape in the context of Local Economic Development. The book is available as a printable e-book for free, or you can order it in a A4 Paperback format (printing and shipping costs apply) from the Mesopartner Bookstore.

The official description of the book is:

Increasingly governments and international organizations are attempting to reduce bureaucracy and red tape. While many of these reforms are aimed at national laws and reducing the costs of compliance, not much guidance is available on how local stakeholders can identify and attempt to streamline red tape at a local level.

In this publication, Shawn Cunningham and Mattia Wegmann share their practical experience in reducing red tape at a local level. The manual is aimed at local economic development facilitators that are working on improving the cooperation between public and private stakeholders.

Is South African business paying too much direct and indirect tax?

One of our well-known South African economists, Mike Schüssler, has been saying for a long time that South African firms are paying too high tax. In a recent article in Moneyweb he explains why and how South African firms pay much higher taxes than our main competitors. As we are awaiting our national budget to be published in a few days I think these kinds of articles are very important.

What Mike is not discussing in enough detail is that we should also consider the other indirect financial burdens on South African firms (that they also see as taxes). For instance, South African firms have to spend a higher premium than others on skills development and for skilled workers. Our firms also suffer from more downtime due to industrial action, and we are drowning in labour and other laws that we don’t fully understand. I would also include Black Economic Empowerment programmes that often further increases the costs of doing business in South Africa and that also raises the costs of securing potential staff, partners and contracts. Another indirect tax in business is the very high transaction costs to acquire internationally sought after skills, a process that is made extremely difficult due to our clumsy policies on immigration. Comparatively speaking we are paying an indirect transport tax because we are often far away from both our markets and important suppliers.

No wonder so many large (and small) South African firms have moved many of their activities out of the country.

However, most of these issues are not dealt with by the minister of finance. It is a highly sensitive issue that is made explosive not only by political rhetoric, but by the stark differences between the health of our private sector (which includes the health of its direct and indirect dependents), the health of our public sector (and its direct and indirect dependents)  and the health of the society that is not benefiting directly from our private and public sectors (I call this group the excluded sector). To decrease the size of the excluded sector we have to address the health and well-being of the public and private sectors as much as we try to absorb the excluded people into a healthier society. We need to be very concerned about the health and the wealth of the private sector, as much as we are worried by the costs and the complexity of addressing the reasons why so many people are still excluded from a healthy and happy society. This means that we should be sensitive to the fact that running a business in South Africa is often expensive for more than just tax reasons, but due to those indirect taxes that we also have to absorb. to be profitable in South Africa is not so easy – ask any small business owner that’s been around for more than five years!

My advise is for an understanding that the private sector is under financial strain. This is caused not only by the direct taxes, but also by indirect taxes like I’ve mentioned. We should be not only tax competitive, but also aware that we have higher costs (and often smaller markets) and a scarcity in higher-skills. We might be killing the goose that lays the golden egg. I wonder how many more businesses would be financially viable if we could directly address (or maybe even acknowledge) those other indirect taxes. I believe that the private sector is overtaxed on all fronts.

 

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