Culture and risk
Culture plays a fundamental role in the outcomes of any society. The famous quote of society gets what it celebrates mask a lot of meaning from the first reading, but upon reflection, it gives deeper meaning which are not immediately obvious.
Our culture does not tolerate failure, the implication of this is that, many first generation risk takers will only attempt to do things which are on the edge of commonality. The vector of possibilities is constrained by the views culture has on failing.
The most ambition pursuits in term of scale often encircle farming (Agribusiness) is catchy phrase adopted to sanitize agriculture, however, it embodies all the past process and void of any new technology apart from drone for taking pictures and water sprinklers which are as old as agriculture itself. The expectation is that it should not have been very hard to disprove the agriculture thesis as an economic pathway to prosperity. If science is any guidance, Karl Popper thought experiment should apply. Popper argued that “empirical truth cannot be known with absolute certainty, and that even scientific theories can’t be verified beyond a shadow of doubt, they can only be falsified by testing” He also insist that one only need one failed test to falsify a claim, but no amount of conforming instances is sufficient to verify. From his point of view, Tanzania agriculture does not pass the Popperian test, however it survive the conformist experiment.
The idea that the technology of ambition explain what happens in certain society is well exemplified in our society. The confirmed high IQ generation be by the higher learning institutions or otherwise, spend their marginally earned capital in investing in short term (less risk) activities such as poultry and other consumables (the meme economy). You will struggle to find investments areas which have high risk and the feedback is 10 years or 25 years. Even the previous national development plan entail ideas which are so obvious you would not need someone to hire a committee for them. The riskless portfolio often include agriculture and its complements and nothing on the unknown unknown orthogonal. Yet we all agree that the future is unknown and we owe to treat is with a multidimensional plan.
Our culture is also lacking in term of technical accomplishment borne out of our universities and high learning institutions financed by our financial system. The 10% lending rates afforded to farmers or maintained their fancy name agriprenuers the Bank of Tanzania is sign that we are the ultimate conformist with single consensus. Any such deviation won’t be tolerated. Both the financial sector and government policies do not reward outside the traditional perimeter. It is actually dangerous for any generation to dream outside their culture in term of productivity matrix.
Even our financial system engages more on casino behavior between each other than financing productivity. It is not such an outlandish stand to claim that Vikoba (stockvels) finance a large part of productivity in Tanzania than the financial sector does. We go back to the type of risk and reward matrix that exist within our culture. To reinforce this, in Tanzania we have approximately 50 banks, yet their footprint is scant, and the largest financial highway is from telecommunication operators which have created countless mini ATM across the country as the last mile banking, charging margins from each transaction. Technicians of these highways call themselves fintech startups and hold conferences to discuss the 5th industrial revolution and AI. One would have thought that an institution which hire north of 1000 people paid billions of shillings in salaries would have produced something bigger than what 100 people in a start-up would build.
The central bank out of shame of looking irrelevant, find new frontiers to regulate, and that is vikoba of women located in areas the bank have never set foot one in its entire existence. So the most productive financial sector now has to follow regulations designed by an institution which could not innovate at the first place. If you ask me, one would have expected that the bank leave things which are working and making it look like it is doing a great job on it is mandated conviction of fighting inflation. I suppose one will opine on the bad actors in vikoba and the need for regulation, however how has it been regulating itself? Second what is the delta of say BOT regulations in vikoba performance? What could be the returns of such effort if placed in other areas beside vikoba? If BOT as a regulator failed to control bad actors in “Halmashauri” loans which is tax payer’s money, what make us trust that they can do in a new area?
The interesting thing about vikoba is that anyone can be a member of that community, but then the rule of that community apply to you as well, contrast to the legacy financial sector which create tranches of KYC for different participants. The only critique of vikoba ecosystem will be the non-scallability of it. On risk, the member’s network similar to insurance use of law of large numbers to minimize risk and the loan return cycle make vikoba NPL (lowest non-performing loan) I know. This does not exclude those blown out event of imprudence from the intellectual class designed scams and appropriate others of their hard earn cash.
On the second strand of risk is the intolerance of first generational success. Our culture does not tolerate or even celebrate first generational success. Visibly, the common conversation one hear about successful people are associated with wild attributes such as witchcraft (easily falsifiable), or other odd convenient, simple and varying explanations (not that credible and hard truth does not vary). The implication of this is that many first generation success are often the mirror image of the past success (not new), not ambitious-just matching the past.
The young generation aspiration to building things which transform key aspect of our society is not only a technological challenge, but also a culture challenge. There is an agreement on what problems we are going to solve and which one we are not going to solve.
As a young person you need to achieve all this accepted success metrics quickly so you can move on to do other, things which are outside this agreed matrix. But to do this one will need to ignore the status quo and accelerates on how to get out of the consensus cycle. Understand that you can take a lot of risks, provided that none of them is fatal. You can build many things which seems initially as impossible and not within the reach of your abilities. You can also leverage dead talent to build on whatever you want to build. But initially solve the lowest denominator first, then leverage it to scale up.
This year I spend time reading a lot about complexity economics, and my lesson has been, that wherever you can find the complex product, you are likely to have greater per capita GDP. It is also true that wherever you find ubiquitous non-complex product, destitution is also high. So probably one will do well to increase the production of various complex products over time. Interestingly even the lack of variation in the products from the high density resource in a place, also signal of sclerosis in technology. An example of this, one can have maize, but when you count products out of maize as an input, you find very little besides the common old set. Phenomenon like this call into question all the investments done per sector countrywide. If government invest X amount into the research and development, and at the same time, year after year, no commercially produced product on the shelves of the market locally or globally, why can’t it do a self-analysis and change path? The innovation winter in our country has to change. Young people will be rewarded immensely if they put their energies in building(innovating) solutions which create markets.
In 2022, Nyerere would have been 100 years old. If you are Tanzanian and happens to travel across the country, you are guaranteed to find his sculptures in many cities as a national hero-deservingly so. Yet Nyerere sculpture should also inspire other questions, where are the Nyerere sculptures equivalent in term of science, technology etc.? What does the absence other’s heroes sculptures tell of the malaise of our culture? Surely the long arrows of history did not start in 1922 and end in 1961. It is obviously in the best interest for everyone to do something which has a proportionally high risk, but with also a huge upside if it works. May be invest both time and money in building a product that in 10 years if it works it makes all other achievements footnotes. Preferably that is a desirable culture and probably need to be tolerated and encouraged often. Have a minimal budgetary allocation on risk areas which long feedback loops.
In term of leadership risk, CMM leadership behavior have exhibited a stable narrow distribution in the past. This did help in informing investment decisions of private sector. As the say goes capital goes where it is well come and stay where it is well respected. If FDI data are any guidance the past 60 years show that, Tanzania has been a risk place for capital investment. Looking in the future, the ballot is still out. Will the party leadership management narrow distribution on the negative side change? Hard to tell.
Just as anything else, reform start from the part and never the whole. Thus as a society we owe to do a continuous auditing of our culture in term of science, traditions and even religions. Going forward, as a society we owe to work hard to increase the risk spectrum and variance of things we can do with more risk. But mostly the culture has to see risk differently. The state has a big role to play in shaping culture and tradition, to assume otherwise is tantamount to making a grave mistake.
“Man creates culture and through culture creates himself” Pope John Paul II
