Robert Neuwirth: The power of the informal economy

Summary

The video script explores 'System D', the informal economy, through the lens of Makoko, Lagos, Nigeria. It showcases how businesses thrive without traditional infrastructure, from mobile stores to artisan boat makers. Highlighting the global scale and potential of this economy, the speaker argues that embracing rather than suppressing it could lead to greater global development and equality. The talk challenges the perception of the informal sector and suggests it's a significant, yet often overlooked, driver of economic growth.

Takeaways

• 🏪 System D refers to the informal economy, which is often misunderstood as underground or black market but operates openly and aboveboard.
• 🛶 In communities like Makoko in Lagos, Nigeria, businesses like mobile stores and artisanal boat makers demonstrate a self-reliant and entrepreneurial spirit.
• 🐟 Global businesses, such as fish smoking in Lagos, rely on the informal economy, with products like fish being sourced from as far as the North Sea.
• 📈 The informal economy is massive, with 1.8 billion people working in it, making it a significant force in global employment and economic growth.
• 🌐 Big businesses have recognized the power of the informal economy, adapting their business models to sell products through street vendors and kiosks.
• 📱 Mobile companies like MTN have successfully penetrated markets by selling airtime through the informal economy rather than traditional plans.
• 🛍️ Products from multinational corporations are often sold in the informal economy, indicating its importance to global distribution networks.
• 👕 Piracy and counterfeit goods are widespread, serving as market research for some businesses and reflecting the demand for certain brands.
• 💼 The informal economy faces challenges, such as tax evasion, but so does the formal economy, with large corporations also engaging in questionable practices.
• 🌐 The potential of the informal economy is vast, with the hypothetical 'United Street Sellers Republic' being a major global economic player.
• 🤝 The informal economy can be seen as cooperative, highlighting the importance of recognizing and embracing its role in global development.

Q & A

What is the main subject of the video script?

The main subject of the video script is 'System D', which refers to the informal or self-reliant economy, and the various business practices and implications within this sector.

What is the significance of the photograph taken in Makoko, Lagos, Nigeria?

The photograph signifies a store in a shantytown built over a lagoon, where the store comes to the customer due to the lack of streets for traditional shopping, exemplifying the adaptability and ingenuity of System D.

What is business synergy as described in the script?

Business synergy in the script refers to the cooperation between businesses within the same community, such as the artisan who makes boats and paddles and sells directly to those who need them in the community.

How does the script describe the global business involving fish smoking in Makoko?

The script describes the fish smoking business as a global operation where fish is caught in the North Sea, frozen, shipped to Lagos, smoked, and sold for a small profit on the streets, demonstrating the reach of System D.

What is the role of Olusosun dump in the informal economy?

Olusosun dump is the largest garbage dump in Lagos where 2,000 people work, turning waste into a source of income, and showcasing the entrepreneurial spirit within the informal economy.

How does the script differentiate System D from the traditional informal economy?

The script differentiates System D by emphasizing that it is open and aboveboard, not underground, and that it is a self-reliant or DIY economy, rather than just an informal or black market.

What is the 'pickle economy' as mentioned in the script?

The 'pickle economy' is a metaphor used in the script to describe the current economic focus on the luxury economy, which excludes a large portion of the workforce and does not account for the vast potential of the informal economy.

How does the script suggest big businesses are recognizing the potential of System D?

The script suggests that big businesses, such as UAC foods and Procter & Gamble, have adapted their business models to cater to the informal economy, recognizing its size and potential for growth.

What is the significance of the mobile phone market in Nigeria as described in the script?

The mobile phone market in Nigeria is significant as it demonstrates how companies like MTN had to adapt their business strategies to fit the informal economy, selling airtime instead of expensive monthly plans, and achieving most of their profits through System D.

How does the script address the issue of intellectual property in the context of System D?

The script addresses intellectual property by highlighting the prevalence of pirated and counterfeit goods in the informal economy, but also suggesting that some companies may use piracy as a form of market research.

What are some of the principles that could be derived from a flea market economy as suggested by the script?

The script suggests principles such as cooperative development, recognizing the relativity of facts in different contexts, and the importance of alternate economies and currencies as key aspects of a flea market economy.