ARTICO Partners Are Major Co-Investors in all their Funds: The Importance of Having Skin in the Game

Imagine you visit a Casino. At the bar, there is this well-dressed guy – let’s call him Ricky. He offers you the following deal: “I will come with you to the table and provide my professional advice for as long as you wish. I am an expert on probabilities and my advice will very likely make you rich.”

As you are not an experienced and skilled gambler, it sounds tempting to get help from a professional, but you don’t want to pay high fees. Surprisingly, Ricky continues: “Not only that, but you will get my advice for free! I shall only charge you if you win: you will keep 80% of your gains and I will get 20% as an incentive to make you win as much as possible.”

After some reflection, you find the deal to be more than acceptable and agree to the terms Ricky proposed. What you don’t know at this stage, is that your new partner offers the same deal to many other players. After a long night, you go back to the bar for drinks. There, by coincidence you meet all other players who took advice from Ricky. Together, you discover that some of the players have won money thanks to Ricky’s advice, while others have lost. Adding it up, you realise that as a group a significant amount of money has been lost. In another corner of the bar you spot Ricky who seems to be enjoying himself big time: he has become rich! Fury and anger slowly comes creeping up, while you struggle to understand what has just happened.

"You should expect skin in the game from everyone that takes decisions on your behalf. Always."

You are depressed and about to leave the bar when a guy next to you offers you a last drink. “Hi, I am Nassim. I heard your conversation. You should have read my latest book Skin in the Game [1], if you had this would not have happened to you.”

You slowly realise that, luckily, you just met Nassim Taleb, the multi-faceted thinker and philosopher on decision-making, uncertainty, risk and randomness. He is also the author of many books including The Black Swan (2007). In that book he recommended a different approach to measuring risk, introducing the notion of unpredictable events ahead of the 2008 financial crisis. It only takes you a short moment with Nassim to fully understand what went wrong in the casino.

“It is very simple,” Nassim explains: “Ricky benefitted from two key factors: randomness of the game plus a total asymmetry in the deal he offered you. First, the odds of winning or losing at the Casino tables are very close to 50%, regardless of Ricky’s professional advice. Second, he managed to agree with the players a completely asymmetric deal: He would take a 20% share of your (random) wins, while not being exposed to any of your losses! Intuitively, you believed that the profit sharing was an incentive for him to make you win the most. But the structure of the deal incentivised Ricky to play as often as possible with as many players as he could find with the largest possible wagers. He knew that he could expect to win in 50% of the cases. And, each time he would take 20% of the winnings. Not surprisingly, he became rich without having any professional foresight on the casino outcomes. On the other hand, as a group, all players had to lose, as the outcomes were random, but each player was always rewarded with only 80% of the wins. He could only win, while the group could only lose.

Nassim’s explanation is so simple - and obviously true - that you fail to understand why you did not figure it out yourself. Nassim goes on: “Ricky had absolutely no skin in this game! If he had to share in your losses, he would not have offered you this silly deal to start with. Skin in the game is the backbone of risk management. The symmetry that comes with skin in the game is a simple rule that is necessary for fairness and justice. Never trust anyone who doesn’t have skin in the game! Without it, fools and crooks will benefit, and their mistakes will never come back to haunt them.”

We are going to move away from the casino now, but, sadly, similar deals are offered and accepted around the world on a daily basis (in particular, when it comes to investment management or advisory). The difference is that financial markets host millions of players and an army of “Rickys”, most of whom are operating without any true skin in the game.

Looking at the performance of active global equity managers over the past five to seven years, it is mind-blowing to see that over 75% of managers have underperformed the global equity benchmark [2]. Well, it is not the managers who have suffered these losses, but the investors. Most of the managers did not have skin in the game. Some may have lost their job, their reputation, their clients, but only few had exposed a significant amount of their private wealth in respect of the investment decisions they took. So, is it still a surprise that the average manager did not add value to his investors over the long term?

ARTICO Partners strongly believes in the concept of skin in the game. They consider this a necessary condition of operating as a professional asset manager. They have developed an investment approach in which they believe. It is both simple and compelling: ARTICO invests in good companies, having invested thousands of hours of research to develop the necessary selection skills. The companies invested in have a higher growth rate, stronger profitability, a healthier balance sheet and a significantly lower valuation. These unique characteristics are the reason for ARTICO’s achieved outperformance over the past seven years. More important, it gives their portfolios a higher probability to outperform in the future. They know this. But how can investors decide whether ARTICO really believes in what is said? It could just be a cute marketing story based on past (random) outperformance. Professional investors will of course perform a detailed due diligence which will convince them about the validity of the ARTICO approach. But one of the most important aspects, the key fact that really makes the difference, is for investors to know that their advisor has a lot of skin in the game. As significant co-investors in all their funds, ARTICO benefits from outperformance and suffers in phases of underperformance. This – and only this – can ensure that its own interests are truly aligned with the interests of investors.

Do not grant unconditional trust in advice that – when things go wrong – has no meaningful negative impact or consequences on the persons taking investment decisions for you. You should expect skin in the game from everyone that takes decisions on your behalf. Always.

[1] Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Taleb. Random House & Penguin (2018)
[2] Source: Citywire. Performance of global equity managers 7/2011-7/2018


Mobile Phone Purchase that Turned Trading Downside Up

[caption id="attachment_13372" align="alignright" width="300"] Founder & CEO: Alasdair Haynes[/caption]

Aquis Exchange founder and CEO Alasdair Haynes had his Eureka moment while buying a mobile phone for his son, Alexander, then aged 13, in Tunbridge Wells, England.

Young Alexander “wanted the latest iPhone with unlimited everything”, of course. Alexander (now 19, and working in the Aquis IT department as part of a government education scheme) had to settle for a £9.99 Samsung. It kept him happy for the moment. But Alasdair got something more valuable from the encounter, in the form of the sudden realisation that the subscription model was the future – regardless of the industry or sector.

“I realised then that Vodafone was managing message traffic just as stock exchanges do. The whole concept was based on subscriptions.” Haynes snr looked at the markets and realised that subscription services were outstripping the competition in just about every field – except trading platforms. With everyone and their dog moving in the same direction, Haynes knew it was time to act and get ahead of the game. “One day,” he thought, “all trading will be like this.” Those prophetic words would become something of an Aquis company motto. The seed of his idea germinated, sprouted, and a year later, Aquis Exchange was launched.

Before that, Haynes had been the CEO of Chi-X, Europe’s largest stock exchange, which he sold for $360 million to BATS who then made him and over half the staff redundant. Haynes created a team from those staff members who had been let-go (something he was allowed to do as part of his contract) and he set about doing what he does best: changing things up. His intuition was on-target, and his subscription model has indeed revolutionised the way trading platforms are run.

"I realised then that Vodafone was managing message traffic just as stock exchanges do. The whole concept was based on subscriptions."

The benefit of a fixed price had proven its worth in the areas of phone calls, music and films. Aquis’ time had come. But it wasn’t all plain sailing, and there were lessons to be learned. “We made every mistake in the book,” Haynes admits. “We assumed that venture capital lends money to invest in new ventures, which I suddenly found wasn’t the case. So we ended up going to high net-worth individuals that I’d got to know in the industry. They supported us and backed us in the beginning.”

With regulatory approval and a good team behind him, it was time for Haynes to get stuck in and prove his theory. Aquis Exchange launched in November 2013.

One of the early problems to raise its head was the publication a few months after launch of Michael Lewis’ financial expose entitled Flash Boys: A Wall Street Revolt. The book fed the public a new, negative image of electronic trading. It took time to overcome those adverse perceptions, says Haynes; he estimates it pushed things back by 18 months for the company. The team soldiered on.

There are two key things that differentiate Aquis from the competition: the subscription model, and its ban on certain types of trading. He brought in a rule that proprietary trading firms – firms that typically do not act on behalf of customers – could become part of Aquis, but only if they posted orders. This was the “post-only order type”. The trading firms had to supply liquidity to the market; they could never aggress on their own behalf or take business away. Stall-holders in a market place, with no right to buy goods from anyone else, in Haynes’ analogy.

With that single move, “the making of Aquis”, it became a protected market for customer business. “Ask any asset manager: prices move because of information leakage,” says Haynes. “Markets are informed, and prices move away.” When buying stock on Aquis, prices don’t go walkabout. Well, not far, anyway. With regulatory changes in the industry, there was an obligation to get “best execution” – and with a deep liquidity in a protected marketplace and subscription prices with a marginal cost of zero, Aquis had that one covered.

The company completed an IPO earlier in June 2018 – not so much to raise money, Haynes says, but to raise the company profile. The anticipated market share was put at 3% by the end of the year. At the time of the float, the figure was 2.25%; by October, it had risen to 3.67%. “That’s a massive rise,” observes Haynes.

His has not been not an unadulterated success story; between a career in investment banking at firms such as UBS and HSBC and running ITG, Chi-X and now Aquis, Haynes (who left school after A levels) had a bad patch.

He got cocky and set up a mini hedge fund, using his own money. “I was absolutely crap,” he says. “I found it really hard, I lost all my money. I had a house in France. I lost it. It was the lowest point you can be, thinking you can’t get out of the hole.”

Haynes scrabbled and scrambled. He got out of that hole, and risked getting into another one. Scrabblers and scramblers have their own guardian angels, and Haynes had his.

His legacy, as he would like to see it at the age of 58, is to have changed an industry. In fact, he would like those words – “He changed an industry” – as his epitaph. He is also proud of his professional conduct, having won the respect and admiration of his loyal troops – of the seven key players who started Aquis with Haynes, only one has left the company, because of ill-health. Haynes ensures the workplace is never dull. “Enjoyment is crucial to work,” he says.

Haynes the Younger, if you were wondering, wasn’t rewarded with the latest iPhone for his part in this power play. “He lays claim to a founder’s idea,” says his father, “but he is literally now the most junior person in this company.”

No moving prices, no greedy or tricksy electronic trading, no regrets – and no nepotism at Aquis, it seems.


World Bank on Social Protection in Africa: Burkina Faso Mobile Childcare Scheme Could Transform Public Works

[caption id="attachment_13383" align="alignright" width="300"] Before mobile childcare: unattended child[/caption]

Children put to sleep on the ground, exposed to sun, wind and rain near dangerous construction sites – while their mothers work.

Women without childcare facilities are falling ever deeper into poverty. Their children are missing school and sometimes watching over even younger siblings. The mothers are on the brink of exhaustion, caring for their children and working day and night.

Public works programmes serve as an important safety net by providing temporary jobs to vulnerable households during adverse times. Yet, despite growing recognition that inadequate child care is an important issue, few social protection programmes offer viable solutions. In Burkina Faso, however, an innovative approach to public works and childcare is functioning, and gaining attention in neighbouring countries.

Rebekka Grun, project leader of the Youth Employment and Skills Development Project, explained this innovative World Bank project to help readers better understand the potentially transformative impact such projects can have when they incorporate gender- and child-sensitive features.

"Some mothers will take on jobs that pay by results, and work throughout the night when their kids are asleep – only to return at dawn to take on household chores."

“In 2013, the World Bank launched the Youth Employment and Skills Development Project,” she said, “which supports over 46,000 young people through temporary work opportunities. Through a labour-intensive public works component, participants—most of whom happen to be women—are trained and recruited for six months at a time in jobs such as building roads, environmental projects and cleaning.

“You see, Burkina Faso is one of the poorest countries in the world, and it is often hit by climate and other shocks. Public works provide an important lifeline for many.”

Mobile childcare provision was not initially included in the design of the project. But during a field mission, the team noticed that many of the public works participants brought their young children to their work sites because they lacked stable child supervision arrangements. The children were next to active construction sites without any protection at all. Some would organise ad hoc care by having one mother watch all the children under a nearby tree – but with no stimulation or distraction for the children.

“In this context, where women of working age can have, on average, 5-7 children, it quickly became clear that we had to do things a bit differently,” said Grun.

Public works serve a good purpose. But they are not always the right environment for children, even when their mothers are nearby. “We heard about a past case in a separate project (not IDA funded), where a child fell into a metal bucket and did not survive. When children are injured or permanently disabled on-site, the very public works projects that are supposed to help families avoid poverty can instead increase the risk of poverty and suffering. We have not had any such experiences on our projects and want to make sure it is avoided elsewhere too.”

Female employment is often discussed, but less is said about the need to ease the burden on the mother and her children, Grun says. “Women in our client countries face difficult trade-offs between providing care for their children and providing economically for them. The coping strategies are seldom good. Older sisters are often called on to watch younger siblings – and miss out on their own childhood and schooling.”

Some mothers will take on jobs that pay by results, and work throughout the night when their kids are asleep – only to return at dawn to take on household chores. “So we decided to develop a solution that would encourage women’s participation in project activities, while allowing mothers to nurse their babies and provide meaningful care and stimulation for the children.

“Since public works involve short-term projects, the solution was to provide mobile childcare (creche mobile or garderie ambulante in French).
A project team conducted focus groups and interviews with public works participants, analysed the results and hired a regional early-childhood development expert. Although formalised child care was sometimes available, it was often unaffordable for the women concerned. It was also often located too far from the public works sites. Remote child care was not an option, especially for those with babies that needed to be breastfed.

The team then developed a model of formalised mobile childcare that would follow women as they move from worksite to worksite. The idea was that it would be built using existing tools and services to a maximum, and by working with local partners – for cost-effectiveness and for sustainability. The proposal was shared with ministries and local partners – and it met with universal approval.

Burkina Faso’s Ministry of National Education (in charge of 3-6 educational content) was particularly motivated as it had long been seeking to widen its pre-school network. Specialists from the Ministry of Women, National Solidarity and Family (in charge of 0-2 educational content), worked closely with the team. “Together we ensured that toys used complied with the Burkinabe standard toy list for preschools, and provided a stimulating programme based on the national preschool curriculum, which was amended for the needs of also younger children,” says Grun. Parenting educational content – that had been previously developed and used for the World Bank’s Burkina Faso Social Safety Net project – was also incorporated into the programme.

The pilot also created a new public works stream. New jobs were created and women were trained as childcare assistants. Given that participants potentially use the childcare service for up to six months at a time (given the standard work-term), the project team reached out to the Ministry of Health and worked with local health centres. “We put in place a mechanism to monitor the health of children and ensure that they were vaccinated.” Local health specialists visit the mobile centres to check vaccination records and set-up appointments.

Parents are also educated about where they can get free nutritional supplements for their families, and on child nutrition and general child care. The parental training materials used for the Social Safety Net project were successfully reused for this project. The mothers are offered information on topics that make the interventions more sustainable. Breastfeeding is encouraged, and opportunities to breastfeed are provided at the public works sites.

In the six months that public works projects usually last, the creches mobiles will set up under a tree, or in an empty building offered by the local authority. Unicef donated a series of large tents designed specifically for children that protect against sun, dust, inclement weather and potential accidents. Local communal vehicles (usually one of the innovative “tricycles” – hybrids of motorbike and pick-up truck) transport the materials. All the materials are weather resistant, and in one location the local community has provided a climbing structure.

“This model can easily be replicated at a very low cost. In fact, we plan to produce a ‘how-to-set-up-mobile-childcare’ video,” Grun says. “Since public works is a temporary phenomenon, the mobile childcare follows women as they move from work site to work site. It has shown us that it is very feasible to, at an extremely low cost, set up a sustainable system that works with existing services and benefits society at large – also after the bank’s project leaves. You get ‘big bang for the bucks’ as they say.”

This project helped create a new stream of jobs, with carers receiving the same wages as other workers. These jobs are often offered to pregnant beneficiaries or those unable to participate in manual labour. The project team, noting that many caregivers hold very basic levels of education, developed a system of training and support. The caregivers are trained by the Ministry of Education’s specialists with expertise in early childhood development. Women that show particular talent and dedication are offered an extra six months of employment in order to teach yet another cohort of children.
Care work is often unpaid but by Creches Mobiles shifting care work from the unpaid domain into the paid domain, it comes with the added benefit of raising the prestige and profile of this kind of work.

There are many ways that the project brings benefit. And what would be the cost and implications be of not providing care, Grun asks.

Ex ante we would expect a variety of positive effects, which can be broadly grouped into (i) women’s work and productivity, (ii) children’s human capital and (iii) women’s agency.

Women’s Work and Productivity:

Frees up women’s time so that they can work productively. Evidence suggests that where childcare is available, women’s labour force participation is higher

Makes husbands comfortable to let their wives work. They know their children will be well cared-for and receive developmental content.

Contributes to reversing any biases when men and women are selected for Public Works participation. In theory, participation should be completely random, based on a lottery. In practice, local authorities have enforced quotas for men in varying degrees, sometimes claiming the nature of work was less suitable for women.

Creates a new line of work and skills developing opportunities for women.

Improves status of childcare work, often unpaid and rarely acknowledged as “work”.

Children’s Human Capital:

The early childhood content and play-based stimulation enhances the development of children and prepares them for school. Evidence suggests that the first five years are the most important for cognitive development and ultimately impact lifetime opportunities, such as income.

The vaccination of children will not only protect the children but can reduce contagious disease transmission to other family and community members.

Improves the educational outcomes of older siblings by freeing-up time that would otherwise have been used to care for siblings.

Provides protection from the elements.

Guarantees breast-feeding breaks and improves nutritional outcomes, minimising risks associated with mixing formula with unsafe water.

Women’s Agency:

Improves women’s bargaining power within the household.

Parental training emphasises the rights and needs of women within the households, especially when pregnant and nursing.

Ensuring female participation in public works could improve prospects for future project-planning.

There has been no impact evaluation of the Creches yet, but the team has conducted interviews and focus groups and will repeat this data gathering. “The first wave of qualitative data gives us insights into the views and values of the mothers and fathers working on the sites,” says Grun. “We also plan to run a randomised controlled trial of the creches and evaluate their impact.”

[caption id="attachment_13385" align="alignleft" width="300"] True Kindergarten Cop: The supervisor of the Creche of Manga. He has taken on the developmental content and sensitises Creche users and community about essential family practices such as handwashing.[/caption]

So what are the lessons learned from this project? “First, and most importantly, it is feasible to set up mobile childcare from existing services with some additional ingredients and effort,” Grun says. “It is economical, and parents have shown a willingness to contribute, despite their constraints. The mothers contribute a modest amount monthly, which is held in a collective mobile pay account and used to buy the ingredients for daily food preparation for the kids.”

Some funding for this pilot is being provided through the World Bank financed project budget. It should be mentioned that the World Bank's Early Learning Partnership (ELP) and its Umbrella Facility for Gender Equality (UFGE) financially contributed to the project, while, logistical and organisational support is contributed by local partners. Additional costs have been low, because much of the provision rests on existing public service providers from education, health and social protection. Service integration can be achieved with limited financial resources.

Early lessons indicate that it can be replicated in different contexts, such as agriculture projects, refugee camps, outdoor work sites in general. Although the country context may vary, certain things remain the same and certain existing materials can be reused across countries, with slight modifications. There is no need to reinvent the wheel.

The concept has already been shared, with two pilot sites having started in Cameroon in October this year. Following a 10-day study tour in Burkina, the Project team in Cameroon has attempted a three-month pilot version of the Creches Mobiles in a fragile area. They will also benefit from the help of regional ECD specialist Professor Oumar Barry, who helped configure and organize Burkina Faso’s Creches Mobiles. Madagascar is also interested and starting a pilot.

“I’d like to emphasize again that it is all about working with local partners,” Grun says. “In our case, local authorities support the activities through logistical facilitation. To maximise impact, we worked through government counterparts, and closely with other development partners. This is a project that can be replicated.”

After witnessing the work of the creches, it is valid to ask: Why didn’t this happen before? “I believe the project made a crucial difference by giving women, youth and children a voice,” says Grun. “Women, young girls and children are the primary beneficiaries of the creches, but they do not have prime agency. They have the least political power.

“And this may be the one danger when it comes to sustainability: the power differences. These stakeholders’ plea may simply be forgotten when other people sit at the table and make the decisions. Even though the most powerful may care, it may not be the first thing on their radar.”

Donor partners must stay involved to strengthen the key stakeholders, to make workers’ and children’s voices central to the daily running of public services. This includes sensitising and strengthening especially the community, “which needs to be 100% onboard, as they will ultimately be the hosts and drivers of the public works”.

But regulation may stifle this type of creche, Grun warns. “I know that the Djibouti Social Protection And Jobs team has thought about this in the past, but they ran into stringent regulatory requirements. This is an issue in countries of all income levels, including high income. Some have explicitly legislated for a second or third tier of childcare that differs from a five-star professionally staffed creche with a heavy infrastructure footprint.”

“Regulation can be tricky, but the law usually has some explicit or implicit wriggle-room.”

About Rebekka Grun

[caption id="attachment_13386" align="alignleft" width="188"] Rebekka Grun[/caption]

Rebekka Grun von Jolk is an economist with 20 years of experience working on the design, appraisal, implementation and evaluation of policies. Grun has worked with the World Bank since 2005, currently as team leader for Social Protection in the Africa region, and sometimes acts for the Chief Economist for Human Development. Before that, Grun was an advisor to the World Bank group president, and led her sector's re-engagement in the Middle East/North Africa after the Arab Spring. Prior to joining the bank, she worked on the UK Prime Minister’s Strategy Unit and consulting. She has guest-lectured at Stanford and Georgetown, and received awards for her research and policy design work – some of which she has presented on international television. Her researchgate.net presence has several times ranked the most-read in her department. Rebekka Grun holds a PhD in Economics from University College London and a lic.oec. from St. Gallen.


Ann Low, US Department of State: Go Green by 2019 - Make Business Registration Easy Everywhere by 2019

The “Go Green by 2019” campaign is designed to promote transparent and user-friendly business registration processes worldwide. It is a joint initiative of the Kauffman Foundation’s Global Entrepreneurship Network (GEN), the United Nations Conference on Trade and Development (UNCTAD) and the U.S. Department of State. The campaign uses non-traditional partnerships, global collaboration and information technology to address root causes of poverty, corruption and opaque government administrative processes. The “Go Green by 2019” campaign is built around the Global Enterprise Registration website, www.GER.co, which is the world’s first platform that provides, in one location, links to all official business registration websites in the world and ratings of each website’s user-friendliness.

The GER.co website shows that 69 countries in the world have not put their business registration processes online. Only 25 countries have developed single windows to allow easy online registration; of those, only two (Switzerland and Denmark), provide all mandatory registrations and certificates online. The remaining 127 countries with online business registration processes offer information portals describing those processes. The best of these tell a person where to go to register a business, what to do, how much it will cost, and how long it will take, and they provide links to legal justifications for all required registrations. However, of the 127 information portals online in June 2015, only 23 had all that information, and only another 7 described all of the mandatory registrations a business needs to operate legally. There is enormous potential for improvement.

“By focusing attention and resources on government services that touch peoples’ lives, governments can build trust between their populations and the administrations that serve them.”

- Assistant Secretary of State, Economic and Business Affairs, Charles H. Rivkin

This lack of clear, complete and accurate information about business registration procedures is indicative of a bigger problem. Many government processes, from licenses to building permits to visas and immigration applications, are exceedingly complex and often opaque. Frank Grozel, Coordinator of UNCTAD’s Business Facilitation Program (www.businessfacilitation.org) explains that, “within governments, many administrations act in silos and see the world not from their customer’s standpoint, but from their administration’s standpoint. Business registration typically involves registrations with four or more administrations (business registry, national and/or state/municipal tax identification number, social security, pensions). If those administrations don’t collaborate, the customer won’t know whether he’s actually done all the required registrations or just some of them, and he won’t know in which order to complete the procedures most efficiently.” Such collaboration across administrations takes time, leadership and political will. It’s hard.

Simplification requires even more perseverance and political will. The first step towards simplifying a business registration process is documenting the existing procedures. According to Grozel, “seeing a process documented in its entirety often shocks government officials, who each understood their piece of the puzzle but had no idea the puzzle comprised 84 pieces. Typically, when governments see their processes in detail, they want to simplify; then begins the hard work of administrative collaboration and compromise.” Over the past 10 years UNCTAD’s business facilitation program has helped 27 countries put 1,786 administrative procedures online, and in the process reduced the number of steps required to register a business by 80 percent on average.

James Zhan, Director of the UNCTAD Investment Division, explains, “UNCTAD and the countries with which it works have accomplished administrative simplification by creating smarter workflows and eliminating unnecessary steps that were not required by law. My division produces Investment Policy Reviews that advise governments how to encourage foreign direct investment. We recognized complex administrative procedures as a barrier to investment and established the business facilitation program to find solutions. Each country’s situation is unique, but the basic types of information businesses need are the same, whether for domestic or foreign investors. The great thing about this program is that developing countries that embrace reform can, and do, excel. Some of the most user-friendly business registration websites in the world are in developing countries. Governments and businesses can support those reformers by taking notice, investing in their countries and suggesting additional procedures to simplify.”

According to a 2009 report by the Organization for Economic Cooperation and Development (OECD), 1.8 billion people work in the informal economy, out of a global working population of 3 billion [1]. That is 60% of the global workforce, with the proportion projected to increase to around 66% by 2020 [2]. Unregistered businesses can’t open bank accounts, so they can’t take out loans to grow, and they don’t have access to health or social insurance. The same report estimates that the informal sector’s contribution to GDP is 19% in transition countries, 30% in Latin America, 31% in Asia, and 64% in Sub-Saharan Africa [3]. According to Zhan, “formalizing even just a small portion of this sector could increase government fiscal revenue and support the infrastructure development vital for domestic growth and attracting foreign investment.” A 2010 report by UNCTAD estimates that potential annual income to state budgets derived from taxation of the informal sector would be about 6% of regional GDP for Latin America and the Caribbean, 5% of regional GDP for Asia, and 11% of regional GDP for Africa, .e.g. amounts that are in most cases significantly larger than annual official development assistance or foreign direct investment flows to those regions [4].

Use GER.co: Your visit to GER.co tells governments that simple administrative procedures matter. More site traffic makes simple processes a priority.

Please link GER.co to your website, encourage site usage, and advocate for simple administrative procedures globally. Computer code for linking your website to the GER.co website is part of the “Go Green by 2019” promotional materials. The GER.co website is a great resource for chambers of commerce, any organization promoting international trade and investment, any global business, and entrepreneurs everywhere.

Governments: do a self-assessment of your website to see it from the user’s point of view. If your business registration processes are not online, learn about solutions on GER.co.

Businesses owners: tell us about your experiences registering a business by rating the website you used. Go to the GER homepage and click the “rate website” banner by the economy’s name.

Thank you for helping the world to go green by 2019!

Ambassador Charles Rivkin, Assistant Secretary for Economic and Business Affairs at the U.S. Department of State, emphasizes that “business registration can play a catalytic role in financing sustainable development and stabilizing fragile states. By focusing attention and resources on government services that touch peoples’ lives, governments can build trust between their populations and the administrations that serve them. Such trust is the bedrock on which rests rule of law. Simple business registration procedures, coupled with incentives to register, make it easier for entrepreneurs to start businesses and can increase a country’s tax base. Add a simplified tax regime and compliance results.” According to Rivkin, “countries can enter a virtuous circle of increased business registrations generating more tax revenues, leading to better services, allowing more economic growth, leading to more business registrations.” It is for these reasons that the February 2015 White House Summit to Counter Violent Extremism identified GER.co as a community-led solution to address extremism by facilitating economic opportunity through entrepreneurship, and good governance (www.state.gov/r/pa/prs/ps/2015/02/237647.htm, point 9).

The GER.co website is new, but it is already having an impact. In April 2015, officials in charge of business climate reform in the West African Economic and Monetary Union (WAEMU) member States (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo) announced their decision to pursue administrative simplification, in particular by providing entrepreneurs with online registration services. According to their press release (www.uemoa-climatdesaffaires.com/pages/ComPress_suite.php), “one of the objectives is to undertake reforms beyond traditional indicators (Doing Business, World Economic Forum, Mo Ibrahim Foundation, etc.) and improve their ranking in the Global Enterprise Registration index (www.ger.co). Online services will stimulate entrepreneurship, help formalize micro-enterprises, increase government revenues and reduce corruption.”

“Reducing the number of steps required to start a business saves entrepreneurs and investors time and reduces opportunities for corruption,” states Jonathan Ortmans, President of the Global Entrepreneurship Network (GEN) and founder of Global Entrepreneurship Week. A 2002 study found that business entry costs as a percentage of GDP per capita were an astonishing 94% and 67% for Africa and Central Europe, respectively, versus a mere 3% for high income countries [5]. Complex administrative processes pose an enormous barrier to small and medium-sized enterprises which, lacking the resources to comply with such processes, forego potential business expansion. According to Ortmans, “for individuals, GER.co’s assistance with business registration brings the dignity of a step towards participating in the formal economy, and for governments, the platform helps identify the best business registration practices, simplify their own business registration procedures, and foster an inclusive global economy.”

The “Go Green by 2019” campaign is a call to action for governments everywhere to make their business registration processes clear and simple by 2019. This will facilitate economic growth and good governance globally. If governments see that they can make business registration processes easy, they will be inspired to simplify other administrative procedures, which will improve investment climates exponentially.

[caption id="attachment_11153" align="aligncenter" width="864"] Grey: Countries/economies that have not put their business registration processes online are grey on the map. Green: When a government’s website meets the ger.co criteria, the country/economy becomes green.[/caption]

The campaign targets governments with two messages:

To governments that have not put their business registration processes online: please do so. (See “How it works /Not listed” on GER.co for a list of 69 economies without online business registration websites. These economies are grey on the GER.co world map)

To all governments: please clarify and simplify business registration processes. (Start the simplification process by completing the “Governments/Assess your website” form on GER.co).

The GER team rates each country’s official business registration website for its user-friendliness, using a scale of zero to ten green dots, with more green dots signifying better processes: hence, “going green”. According to Ortmans, “governments can help entrepreneurs everywhere by creating and maintaining business registration websites that rank high on the green dot scale, continuing their efforts to simplifying procedures, and putting more government administrative procedures online.”

References
[1] OECD. (2009, March). Is Informal Normal? Messages, figures and data.
[2] UNCTAD. (2010, February 15). Public investment in administrative efficiency for business facilitation- sharing best practices, 5.
[3] Ibid., 6.
[4] Ibid., 7.
[5] Bannock, G. et al. (August 2002), 15.

About the Author

Ann Low is Deputy Director of the Office of Investment Affairs at the U.S. Department of State, and the architect of the GER.co initiative and Go Green by 2019 campaign. She has over 25 years of experience working on multilateral and economic affairs. Ms Low has served as the US Representative to the Asia Pacific Economic Cooperation (APEC), the OECD Working Party on State Ownership and Privatization Practices, and several United Nations’ bodies (UNCTAD, UNDP, UNICEF, DHA, ECOSOC, UNGA). Ms Low graduated from Georgetown University’s School of Foreign Service and has a Masters of Management degree from Northwestern University’s Kellogg School of Management. She has served as a visiting diplomat and adjunct professor at Columbia University.


OCCAM, the UN-affiliated Observatory on Digital Communication: ICT Village Programme Impact in Stark Contrast to Wealth and Aid

It is calculated that the eight richest people in the world between them control the same amount of wealth as 2.5 billion of the poorest.

How can the massive flow of technological innovations bring development and raise the overall level of welfare, inverting the process of wealth concentration that makes the rich richer and the poor poorer than ever?

What can we learn from the previous industrial and electrical revolution, seeing that it has progressively improved social and economic conditions in countries where it originated in the 19th Century, from 90% poverty to present-day widespread wellbeing? Can new technologies defeat poverty and spur development? How does ICT (Information and Communications Technology) impact the life of the disadvantaged?

OCCAM, the Observatory on Digital Communication, was created by UNESCO in 1997 to work on these issues. In 1999, UNESCO, responding to calls by the people of Honduras struck by Hurricane Mitchel, asked OCCAM to promote solar villages by installing the solar panels in two isolated villages, San Francisco (in Lempira) and San Ramon, with the assistance of the Honduran Ministry of Technology, the Oklahoma University and the InterAmerican World Bank. These facilities permitted the experimental use of computers at a community level.

"Can new technologies defeat poverty and spur development? How does ICT impact the life of the disadvantaged?"

The program also made possible the construction of a school, a community centre and a dispensary. These efforts resulted in a connection from ONSATNET, a pioneer company for internet via satellite, which built a three-metre antenna, with considerable speed.

The newly-named ICT Villages saw increased e-learning activity in schools with surprising results; two top students became class tutors in Oklahoma. Thanks to medical consultations held between midwives and the regional hospital in the dispensary, it was possible to save the lives of at-risk pregnant women and new-born babies.

An internet point opened in the community centre showcased to the local farmers new solutions of cultivation, harvesting and storage, making use of suggestions from distant academic experts, who, working from photos and data, provided assistance and evaluated critical issues.

To share these results with a wider audience, at the suggestion of many UN organizations, OCCAM launched the first Infopoverty World Conference (IWC) in 2001, since scheduled annually at the UN headquarters in New York, organised in partnership with the European Parliament and other prestigious Institutions. The conference, declared a UN Flagship Initiative by the UN General Assembly in 2012, has enjoyed growing participation from public and private institutions and prominent members of academia, ICT companies and organisations within the UN system.

From discussions and proposals at IWC2, the Infopoverty Programme was created in 2002 with the aim of implementing ICT villages to help disadvantaged communities. The WSIS 2003 (World Summit of Information Society) in Geneva approved the ICT Villages Model, and realised, with the support of the Tunisian Government, the village of Borji Ettouil on the occasion of the second phase of the summit, held in Tunis in 2005.

Further ICT villages have been created in Meis El Jabal, South Lebanon, for a group of young refugees, in Villa El Salvador in Peru, for a community of women in difficulty, and in Mahobong, Lesotho, safeguarding a potato crop by training local experts and monitoring the harvest from afar. Other projects include one in Dagara, Ethiopia, supplying the community with didactic and special m-devices, and another setting up “ICT hogans” in the Navajo Nation.

Mission to Fight Poverty

The Observatory on Digital Communication (OCCAM) was founded with the mission to fight poverty using the new technologies, and to promote sustainable development actions in the Least Developed Countries (LDCs).

The acronym stands for Observatory for Cultural and Audio-visual Communication in the Mediterranean (OCCAM). It works to support the United Nations strategies for achieving the Sustainable Development Goals (SDGs), and former Millennium Development Goals (MDGs, 2000-2015).

OCCAM was established by UNESCO in Milan in June 1996, with agreements signed by the director general, Federico Mayor Zaragoza, and Milan mayor Marco Formentini.

Since 2003, OCCAM has been associated with the United Nations Department of Public Information, and in 2005 it received Special Consultative Status at the UN’s Social and Economic Council (ECOSOC).

Since 2006, OCCAM has been a leader of e-service development of Community of Expertise within the Global Alliance for Information and Communications Technologies and Development (UN – GAID) initiative launched by the UN Secretary General Ban Ki-Moon in Kuala Lumpur.

OCCAM is organised into five operational segments:

Observatory on the phenomena of the digital revolution

Research and experimentation on social-oriented ICT innovations

The Infopoverty conference, which organises the annual IWC in NYC

The Infopoverty programme for monitoring and management of the projects

Communication and secretariat.

The observatory has two representations at the UN, one in New York and one in Geneva, and an international head of Institutional Relations.

The ICT Village project includes providing computers, internet and renewable energy sources (solar PV) to disadvantaged communities to enable them to promote their own sustainable development.

OCCAM, with many local NGOs, has activated other actions to support rural communities, orphanages and dispensaries in Ghana, Cameroon, Sierra Leone, Liberia, RDC, Mozambique, Burundi, Kenya and Zambia, providing connectivity and ad hoc services in the ambit of the Infopoverty programme. At IWC3, the first announcement was made of the Millennium Challenge Corporation by Chris Israel, the deputy minister of US Department of Commerce, and, at IWC7, the first peer-to-peer money-transferring experiments by Safaricom in Kenya. At IWC8, the network for rural internet access in Somalia was promoted by Youssouf Ismail Bari-Bari, Somalian ambassador to the UN in Geneva, late and lamented victim of a terrorist attack in Mogadishu in 2015.

Sambaina, in Madagascar, stands out. This ICT village was established in 1996, promoted by the President of Madagascar, Marc Ravolanama. The village’s dispensary, connected to national and regional hospitals using free public airband-width, furnished the maternity unit with e-ultrasound tools, decreasing the mortality rate. A local school, supplied with 40 computers, helped 320 pupils to find jobs by exploiting local rural and craft resources.

The municipal seat opened to internet community access. The entire population could learn how to access useful information and facilitate governance with e-documentation. Specialised assistance – in the harvesting of rice, cattle farming, pest-control and water and food security – was furnished to local farmers, as well as 85 doctors specialising in clinical imaging at the National University, able to assist with new mobile x-devices.

At its launch in 2007, a UN delegation led by Jeffrey Sachs proclaimed the ICT Village of Sambaina as a UN Millennium Village. It became the model for future projects and was planned to be cloned over all Malagasy territory, with 2,700 ICT Villages – but a coup d'état impeded this evolution. OCCAM continues to support Sambaina, and is relaunching the Millennium Village, with the support of STmicroelectronic foundation, Telma Foundation, and the courage of inhabitants and local institutions.

What can be drawn from these experiences?

With the worldwide diffusion of mobile devices, everyone can acquire knowledge and skills oriented towards life improvement.

Indigent peoples do not need charitable hand-outs as much as empowerment of their capacities to exploit their own human and material resources at local levels.

Only adequate digital services, provided by competent institutions, permit disadvantaged communities to take control of their skills, receive healthcare, guarantee good education, use natural resources, give efficient instruments of e-governance, and supply people with identification, property rights, access to microcredit and e-commerce.

In this regard, OCCAM designed a special ICT-Village Infrastructure Module (ICT-VIM), consisting in ad hoc tech kits, oriented to upgrade the basic facilities for a Village of 1000 people (at a cost of $50K) and the IWC16 Conference, launched the Infopoverty Platform for E-Services, focalised on the achievement of the first three SDGs: No Poverty, Zero Hunger, Good Health & Well Being, restructuring Services Providers (academia, laboratories, hospitals) in a network that sustains local Services Users, able to furnish the needs of local Communities with solutions, sharing knowledge and competences efficiently to all.

The IWC18 launched the World Food and Health e-Centre, (WF&HSeC) created as legacy of Milan EXPO 2015, aimed at transferring knowledge and competences, enlarging the sharing economy to those hitherto excluded, promoting best practice and new tools, refining ICT innovations for performative solutions, and raising the standard of living to include medical care, professional assistance, and access to education-oriented job creation in an incremental process – governed by blockchain technologies.

Its network of service providers, composed of primary stakeholders (200 specialists, 40 universities and research centres, hospitals and organisations) brings together many of the agro-alimentary scientific organisations, the Smithers Foundation and the International Institute of Telemedicine to co-operate. This includes the sharing of appropriate digital services for telemedicine, food security, e-learning, and applications for new sensors and robotic devices.

This could be the new trend for sustainable social enterprises: people-centred, empowered by 5G connection, using wearable high-performing devices supported by AI and IoT, interacting with high-level service-provider clusters – to serve all 7.6 billion people.

The benefit of this trend is in an increase in the quality and quantity of food, and creating basic welfare for all. It could represent the most effective lever for development and value-creation, with a market outlook for 2020-2025 of 1.8% GDP.

All these issues will be discussed at the 19th Infopoverty World Conference, How Smart Cities can fight poverty by eliminating slums and promoting ICT Villages for rural development at UN HQ in New York on April 12, 2019, to be screened worldwide by UNTV.

About the Author

[caption id="attachment_13399" align="alignleft" width="178"] Founder & President: Pierpaolo Saporito[/caption]

Pierpaolo Saporito is the founder and president of OCCAM (the UN-affiliated Observatory on Digital Communication) and the Infopoverty World Conference and Program - aimed at fighting poverty through ICT. As an architect specialised in public infrastructures (railway stations, hospitals, universities, urban renewal) and an environmental development planner, he has served as an advisor to the Presidency of the Council of Ministers and to the Ministry of Transport of Italy. Pierpaolo is an expert in ICT integration systems, and currently serves as a High Level Advisor at UNGAID, and vice-president of IFTC-UNESCO.


United Nations Leadership Launches Initiative Against Unregulated Small Arms Circulation

[caption id="attachment_13405" align="alignright" width="300"] United Nations Secretary-General: António Guterres[/caption]

"The United Nations has sought to tackle the widespread availability of illicit small arms and ammunition from many angles: peace and security, gender equality, sustainable development, transnational crime, counter-terrorism and humanitarian action. United Nations peacekeepers often work on disarmament programmes around the world; they are an integral part of our work on sustaining peace.

But our work has been spread across twenty different agencies. It is fragmented and limited.

I am therefore launching a new initiative to combat the illicit circulation and trade in small arms at the national level and across borders. I will dedicate resources within the Peacebuilding Fund to support government action on illicit small arms and light weapons, including collection and destruction, and the development of legal and policy frameworks.

United Nations peacekeepers work on disarmament programmes around the world.

My initiative will have a strong basis also in the 2030 Agenda for Sustainable Development, the world’s blueprint for peace and prosperity on a healthy planet.

Excessive spending on weapons drains resources for sustainable development. It is incompatible with creating stable, inclusive societies, strong institutions, effective governance and democracy, and a culture of respect for human rights.

And there is also a strong gender dimension to this work. Almost universally, guns are infused with masculine characteristics. Men make up the overwhelming majority of the owners and users of firearms. Women are several times more likely to be victims of gun violence than perpetrators.

The presence of excessive and unregulated firearms exacerbates gender-based violence and shores up traditional gender roles and power relations. We must prevent a culture of violence and bloodshed, and a cycle that is difficult to break.

...

Disarmament prevents and ends violence.

Disarmament supports sustainable development.

And disarmament is true to our values and principles."

Source: Extract from speech on given on May 24th, 2018 by United Nations Secretary-General His Excellency António Guterres at the University of Geneva, Switzerland at the launch of the UN Disarmament Agenda


AI Convergence in 4IR

Artificial intelligence (AI) and machine learning are gaining a strong foothold across numerous applications, lowering the barriers to the use and availability of data (figure 1). From now on, AI will not only be relevant to just a few large corporations but will form an integral part of most business strategies and is likely to influence our daily lives in more ways than we may recognise (figure 2).

[caption id="attachment_13410" align="aligncenter" width="924"] Figure 1: Articial intelligence (AI) key uses. Source: CFI.co[/caption]

New cloud-based and AI-enhanced enterprise-as-a-service software requires less expertise and lower upfront investment. Companies no longer need to develop their own applications and end users do not need to gain extra knowledge or learn a new interface as AI runs in the background (figure 3).

"AI innovation and sophistication is on an exponential growth curve. AI promises a new cognitive partnership between man and machine."

As an emerging technology, AI is taking hold as virtual assistants, chatbots, deep learning (see below) autonomous systems (e.g. self-driving cars), and natural language processing. AI innovation and sophistication is on an exponential growth curve. AI promises a new cognitive partnership between man and machine. From assisted intelligence, the future holds new forms of augmented intelligence and autonomous intelligence. Automation based on robotics and machine learning facilitates functional (and sophisticated) jobs today. Tomorrow, the opportunities will arise from artificial augmentation and the Internet-of-Things powered by 5G connectivity. This is not about single technologies but the convergence of many cognitive enterprise systems all inter-connecting with AI and exponential data at the centre.

Difference to Machine Learning

One definition of AI is intelligence demonstrated by machines as opposed to natural intelligence by humans. Thus, AI is the science of engineering intelligent machines. AI research identifies three types of systems:

Analytical (with cognitive learning and decision making)

Human-inspired (as above plus emotions)

Humanised artificial intelligence (as above plus self-consciousness and self-awareness)

AI and machine learning are often used interchangeably. Yet, machine learning can be defined as systems learning and improving (as in ‘Analytical’ above). Thus, machine learning is a specific subset of AI that excludes emotions, self-consciousness and self-awareness – and also human (DNA hardwired) dimensions such as ethics and morals. AI is not confined to biologically observable approaches only. Whilst the world has been able to construct machine learning systems, it still has fallen short of ‘broader’ AI with human aspects as mentioned above.

[caption id="attachment_13412" align="aligncenter" width="651"] Figure 2: The future for AI industry is for the many businesses, not just the few giants. Source: CFI.co[/caption]

Deep Neural Networks

AI and machine learning comprise deep-learning neural networks. Here, ‘deep’ simply means more sophisticated neural networks that have multiple layers which interconnect. Neural networks include new performance offerings with current relevance such as:

Computer vision (e.g. face recognition and visuals for cars)

Natural language processing

Big data predictions and analytics

The new neural networks can be based on neuromorphic chips that mimic the brain’s neurons with a lot more power than current chips.

[caption id="attachment_13413" align="aligncenter" width="642"] Figure 3: New availability of resources powers AI growth. Source: CFI.co[/caption]

AI Confluence in 4IR

The dream of AI has gripped the imagination of philosophers throughout the ages. Machine learning has evolved since the 1950s with the advent of computing power. First came the counting computer (spreadsheets) and after that the programmable era. We are now at the tail end of the third industrial revolution in the cognitive era where new available resources and technology (figure 3) allow the embedding of AI and machine learning into new products that, in turn, streamline decision-making processes.

AI in the fourth industrial revolution (4IR) is a continuum promising a convergence of new technologies such as, for example, quantum computing. The fusion of digital and biological technologies empowers the internet-of-things and internet-of-everything (figure 4).

As Ian Fletcher from IBM explains in the CFI.co summer 2018 issue, the 4IR and augmentation come together to capitalise, cultivate, and orchestrate data assets in order to improve performance. They also increase the capacity for continuous change whilst building a cognitive platform, encompassing self-learning systems, natural language processing, robotic process automation, enhanced data intelligence, augmented reality, and predictive patterns – all accessible through an open API (application program interface). These elements should be supported by a cognitive journey map, cognitive enabled workflows, business process automation – empowering businesses to make faster and more informed decisions. In short, AI and 4IR technology confluence must be culturally imbedded in the corporate DNA.

[caption id="attachment_13414" align="aligncenter" width="442"] Figure 4: Technology Convergence in the 4th Industrial Revolution Source: CFI.co[/caption]

Moore’s Law and Metcalfe’s Law

This meteoric change is made possible in the fourth industrial revolution because of two key observational concepts: Moore’s law and Metcalfe’s law.

Moore's law is the observation that the number of transistors in a dense integrated circuit doubles about every two years, whilst Metcalfe's law states the effect of a telecommunications network is proportional to the square of the number of connected users of the system (n2). The less costly devices made possible by Moore’s law, increase the number of nodes boosting the network's value in Metcalfe’s law. One key outcome is more powerful chips designed to mimic human behaviour.

New fourth industrial revolution neuromorphic chips have biological inspired neuro transmitters growing and learning - providing an exponential level of extra intelligence. Other ground-breaking and powerful technologies are starting to emerge – such as DNA computing, which permits the storage of hundreds of trillions of terabytes of data on 1 gram of human DNA, fusing our digital and biological worlds.

AI’s relevance is forming part of - and being at the heart of - the confluence of this brave new world of 4IR technologies, which must be well understood in order to harness its full potential.

Will AI develop consciousness - and if so, what are the moral and ethical implications?

Read the article from the Winter 2018-2019 print issue, or from the CFI.co app (download from iTunes or Google Play).


WEF: Back to the Basics?

Concerned over widening geopolitical fissures, the World Economic Forum (WEF) has embarked on a quest to map and leverage global commonalities. The 2018 WEF summit in Davos centres on Creating a Shared Future in a Fractured World. The organisers note that economic prosperity and social cohesion are no longer twin values. In a nod to the rise of cold pragmatism, they also acknowledge that realpolitik has now found applications outside its original Cold War realm.

Interestingly, the WEF also finds that the social media-driven ballooning of the chattering classes has not led to a corresponding increase in mutual understanding – or the emergence of a collective purpose. If anything, the internet in all its guises has shown humanity to be at cross-purposes. The annual get together of global powerbrokers and their hangers-on in the Swiss Alpine resort – billed as a “true summit of summits” – is to kick start the repair of the global commons.

All the usual suspects – Ginni Rometty, Christine Lagarde, et al – are present to make the case for a renewed and vigorous commitment to international collaboration. Over 2,500 others from nearly all walks of life have been asked to attend the invitation-only event. The buzzword of the 2018 has also been set: multi-stakeholder collaboration, albeit without the hyphen to give the freshly-minted term a more contemporary look.

"It is for the benefit of that person going quietly about his/her business that the cognoscenti make their annual trek to Davos."

In Davos, convoluted corporate jargon reaches new heights – or lows depending on the reader’s tolerance of twaddle. Take this wonderful example: “WEF communities and organisational capacity dedicated to driving positive change through 14 distinct System Initiatives, participants at the meeting will contribute to multiple agendas.” George Orwell would have a thing or two to say about that.

Small wonder then that the WEF in its brief of the event notes that citizens everywhere yearn for responsive leadership. Hint: this is probably not what the proverbial man/woman in the street imagines responsive leadership to look like. After all, it is for the benefit of that person going quietly about his/her business that the cognoscenti make their annual trek to Davos.

The 48th annual WEF general meeting struggles to focus on a viable course of action – or a set of well-defined topics – that appeals to an audience outside the rarefied atmosphere of its own collective. Apart from the specialist press, coverage of the proceedings is minimal and often limited to curious yet telling anecdotes such as the 1,700 or so private jets that ferry the VIPs to their Swiss mountain retreat where they then express grave concerns over global warming and concoct grand plans to limit CO2 emissions.
But, those sour grapes of the pathetically private-jet-deprived majority must not be allowed to stand in the way of the common good or the WEF mission to make the world a better place. How can anybody be against such a noble pursuit? Oxfam, always ready to play ball, will undoubtedly remind the assembled high-flyers that just a few dozen of them own half the world’s assets.

Enough already of the negativism and onto “system leadership via platform engagement.” Huh? In Davos, there are no less then fourteen system initiatives that all aim to “shape the future” in a particular segment such as economic progress, food security, mobility, production, and consumption – to take but a sample. Via these system initiatives – workgroups just hasn’t got the same ring to it – the World Economic Forum deploys its organisational capacity – including its formidable “convening power, insight generation, and platform technology” – to drive change.

Despite its reluctance to deflate its onerous language – a spade is just that and not a human-powered earth moving implement – the WEF has an important, perhaps even crucial, role to play. Originally conceived as an informal gathering where the world’s movers and shakers could lower their guard, engage in chitchat, share a few drinks and meals, and voice their frustrations, the WEF has now become a venue for grandstanding, posturing, and talking down to the little man/woman. This is most decidedly not what Klaus Schwab – the likeable German professor who founded the forum – had in mind when he first invited a few friends and acquaintances for a meet up in Davos.

Tone down the self-aggrandising rhetoric, return to the basics, do as you preach, set more modest goals, and connect with the people and issues that cause concern. In other words: instead of charting the erosion of the social contract between states and their citizens – yet another pearl from the 2018 meeting’s brief – set an example by addressing universal concerns such as the absurd level of inequality and the prevalence of rulers – both political and corporate – who make all the right noises but still refuse to do the right thing. That’ll be tuppence, please. i


Alexandria Ocasio-Cortez: Young Congresswoman Refuses to Play Nice

It takes the gumption of a hero to identify as a socialist in the United States, and something of a miracle to get elected to public office under a red banner. But that is what 29-year old Alexandria Ocasio-Cortez has done.

She pulled off a massive upset in the 2018 midterm elections, beating incumbent Joe Crawley in the primaries and ejecting the chair of the Democratic Caucus from the House of Representatives. As she forced an end to Crawley’s political career – and received 78% of the vote in New York’s 14th congressional district – Ocasio-Cortez also became the youngest woman to take a seat in the US House of Representatives, where she arrived to popular discontent – and great expectation.

Ocasio-Cortez is not one to keep quiet or defer to colleagues with more Washington-time beneath their belts. Even before being sworn in she gave a taste of what was to come, tearing mercilessly into the Harvard orientation session traditionally organised for freshman lawmakers – an event which she branded “biased” and called a “pro-corporate lobbyist project”.

Ocasio-Cortez is not enamoured with corporate America, or the way politics are conducted in the nation. She was one of the first to question the hundreds of millions of dollars in tax breaks awarded to Amazon, which enabled the online retailer to build one of its three corporate headquarters in New York City. Arguing that the money could be much better spend on the city’s crumbling subway network, or its disadvantaged boroughs, Ocasio-Cortez led protests against Amazon’s plans.

She has also taken her conservative critics to task and seems wholly unafraid to push back – hard – to the point of trolling them and exposing their faux pas – such as the embarrassing moment lived by representative Steve King (R-Iowa), who during a meeting of the House Judiciary Committee grilled Google CEO Sundar Pichai over the obscenities he found on his daughter’s iPhone, prompting the executive to sigh and point out that the iPhone is made by a different company. Ocasio-Cortez also enjoys sniping at habitual peddlers of fake news, such as Kellyanne Conway, Donald Trump’s former campaign manager and current adviser.

Belittling the new congresswoman has now become a dangerous proposition since Ocasio-Cortez has at least as much venomous clout as her conservative opponents. Sarah Palin was commended on her exceptional vision (she claimed to be able to see Russia from Alaska), and ridiculed for mixing up of North and South Korea – and picking the wrong one as an ally. Also noted by Ocasio-Cortez was another of Palin’s geographical gaffes (she called Afghanistan “our neighbouring country”). Palin has since retreated to the wilderness, wisely leaving Ocasio-Cortez alone.

The young congresswoman ticks all the boxes that make Republicans see red: she is pro-gun control and pro-choice, supports universal healthcare, free tertiary education, and an end to mass incarceration policies. Ocasio-Cortez also describes global warming as the single biggest national security threat facing the country. She is an advocate of immigration reform, and would like to see a path to citizenship for undocumented immigrants.

Ocasio-Cortez has so far leveraged her political stardom to withstand the pressure put on her by Democratic peers to fall in line, play nice, and follow convention. She is, as some pundits have remarked, a replica of the 2010 class of Republican congressional members, who used their Tea Party credentials to challenge the Republican leadership.


UN SDGs and Gun Control: UNODA to Coordinate Action on Small Arms Under UN Disarmament Agenda

The UN Secretary-General’s has a detailed action plan for disarmament in order to save humanity – including future generations - from weapons of mass destruction and forthcoming weapons technologies.

The plan includes 40 action points to save the planet. The practical measures for disarmament of weapons also includes conventional arms and number 14 reads:

“The United Nations, through its coordinating mechanism on small arms under the leadership of the Office for Disarmament Affairs will promote more effective State and regional action on excessive and poorly maintained stockpiles in all available forums and through its regional centres, as well as through new and existing partnerships.”

This action point (no.14) in particular ties in with SDG goal #16 which is “peace, justice and strong institutions” and specifically no 16.4 which states:

“By 2030, significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organised crime”

One of the key indicators for the success of this goal is the “Proportion of seized, found or surrendered arms whose illicit origin or context has been traced or established by a competent authority in line with international instruments”.

Disarmament action point no 14 is also closely linked to SDG goal no 5 which is to “achieve gender equality and empower all women and girls.” This SDG goal aims to eliminate all forms of violence against all women and girls in the public and private spheres.

And guns play their obstructive part. In the words of UN Secretary-General Antonio Guterres:

“Almost universally, guns are infused with masculine characteristics. Men make up the overwhelming majority of the owners and users of firearms. Women are several times more likely to be victims of gun violence than perpetrators. The presence of excessive and unregulated firearms exacerbates gender-based violence and shores up traditional gender roles and power relations.”

A report released by the UN specifies 2017 world total imports at about ½ million small arms (in particular handguns).

So it’s fair to say that UNODA has its hands full.

https://youtu.be/bvdyPoEBKTk


President Armen Sarkissian: Quantum Politics Defined, Explained, and Considered

[caption id="attachment_13437" align="aligncenter" width="1200"] President Armen Sarkissian (left)[/caption]

Armenia is ready for its time in the spotlight.

The landlocked country experienced a watershed moment earlier this year when journalist-turned-politician Nikol Pashinyan, 43, set out on a protest march opposing the long rule of Serzh Sargsyan, who served two consecutive five-year terms as president and clung to power by being elected prime minister (despite his promises to step down and retire from public life). The move, described as a power-grab by the opposition, reignited the protests, which rocked the country during Sargsyan’s reign.

Setting out from Gyumri, the country’s second city, Pashinyan walked almost alone. But by the time he reached Yerevan, on April 13, he had walked for 14 days. Social media had been set alight and thousands had joined the protest, marching peacefully on the capital, and believing change was about to take place. It was – but not before the besieged government had its last gasp. Leading the protesters – occupying squares, blocking traffic, and calling for civil disobedience throughout the city – Pashinyan marched on parliament to prevent Sargsyan’s appointment as prime minister. An appeal to Sargsyan to discuss the terms of his resignation and a peaceful transfer of power resulted in Pashinyan’s arrest. There was public outrage – and the next day Pashinyan was released. A few hours later, the embattled prime minister resigned. It would take another 10 days of protests and political wrangling to convince the ruling party that the change was definitive. On May 8, parliament caved-in and Pashinyan was declared prime minister, completing Armenia’s Velvet Revolution, during which no shot was fired, and no life lost.

One of the few calm voices heard during the weeks of political upheaval was that of President Armen Sarkissian, who ventured out into the crowds to hear grievances. “That was my job as president, to ensure the stability of the state and create a national dialogue,” he said.

The Power of Velvet

Meeting with CFI.co in Geneva, President Armen Sarkissian explained the issues that powered the Velvet Revolution. “One of the drivers of this revolution was that people were not happy, because of widespread corruption,” he said. “The courts were not working properly, and that created an unhealthy environment. The younger generation was especially affected, because if you have that kind of environment, it may look a bit stable, but is not just.”

"In Armenia during the revolution you didn't need an organisation to mobilise protesters, and close off a street or avenue. The only thing you needed was a smartphone with Facebook."

The president agrees with the protesters’ demands. “What we need in Armenia is law and order and as little corruption as possible,” he said. “We need stability. We also need a proper understanding of economic development and a plan to attain our goals, starting with tax law and including all other areas of relevance. We need proper governance, as simple as possible, with less bureaucracy and more predictability. “Anybody in the country should know that it is not only stable today, but stable tomorrow and beyond; that there is no corruption and things are working well and managed well. People and businesses should be confident that in five- or 10-years’ time, the country is still predictable and that everybody will know where Armenia is heading and with what sort of a legal system, what sort of tax code (we will have). Only this will create an environment that encourages people to invest in their future. So, this is what the government has to accomplish. It is my role as president to lead with the word, the vision, and the strategic direction.”

Sarkissian readily admits that his nation has some way to go before it finds that stability: “Armenia is in transition. I would not say that we are in a very stable situation, but I will say that the general mood towards the future of the country is much more optimistic. “In fact, very optimistic – and so much so that we have to work hard to avoid disappointment. Expectations are running high among Armenians in the country and the millions of Armenians throughout the world, who are closely following events in their ancestral home. “However, one thing is clear: there is no way back. There is no way that we are going to repeat the mistakes we made before.”

Quantum Politics

President Armen Sarkissian is, without doubt, one of the most interesting of the world’s heads-of state. A respected theoretical physicist and co-inventor of the Wordtris game, a twin to Tetris, Sarkissian could not possibly be further distanced, intellectually or politically, from his US counterpart. But he grasps better than most the various personal traits that make Donald Trump not just unique, but a harbinger of politics 2.0–or as the Armenian president prefers to call it, “quantum politics”.

Sarkissian is not one to join the global chorus that derides Trump’s style of politics. “Many world leaders, accidentally or otherwise, have grasped and applied the very essence of quantum politics,“ he said. Thanks to the advent of instant communication and the social media that leverage its power, politics has changed forever, and is no longer a linear pursuit. New leaders of the “quantum era” understand that.

“Political parties, institutions, and processes underpinned by logic have been replaced by popular movements that coalesce and dissipate quickly – and by beliefs not necessarily grounded in reason. “Social media provide the emotional connectivity that can spark revolutions.” According to Sarkissian, a reassessment of modern politics guided by the principles of quantum physics can make sense out of trends that baffle and undermine the establishment. “Just as the classic post-Newtonian world was predictable, so was politics, until quite recently. Contrast this to what we know about the quantum world – which is uncertain, yet interconnected, and changes depending on the vantage point of the observer.”

Sarkissian sees parallels in politics, where the understanding of events is fluid and largely determined by who is observing what, and where. “Newsfeeds on Facebook, Google, and other platforms have become highly individualised, and thus serve up an array of different takes on any given event. Thus, the act of observing changes reality.

“Some leaders intuitively grasp this concept and bypass the established media to serve-up they own version of reality generating millions of followers on Twitter, Facebook, Instagram, etc.” When Serzh Sargsyan swapped the presidency for the prime ministerial office, an impromptu movement was formed almost instantly via social media. It operated successfully outside the realm of the country’s political establishment and was highly dispersed. Authorities could not pinpoint the epicenter of the shockwaves shaking the establishment and were unable to get a grip on events.

No Management, No Problem

The movement rallied the 10-million-strong Armenian diaspora, without really trying. “Just as in the quantum world, interconnected yet unpredictable events are sparked in seemingly random places. The entire world is becoming more and more quantum. Individual voices can have a great influence on politics. Everything is changing and is changing with the speed of light. In five years, this will be a technologically different world, even more integrated and interconnected. Some would say that processes of globalisation have slowed down. Maybe globalisation has slowed down but it has turned into microglobalisation and that process is unstoppable.” Sarkissian admits that quantum politics still lacks the necessary management framework or protocol. This need not be a problem. Sarkissian posits that quantum politics is about the power of the individual on the street. “It channels the activity or the energy that individuals can contribute towards change,” he said. “It is also more about smaller units that possess huge energy, and can cause a big effect. “As a former physicist, I have the right to look at this as a quantum, not in a sense that I can directly apply the theory of quantum mechanics to human society, but as a method of thinking and logic, or a method of mathematics to predict what can happen in a human society. One thing is certain: political institutions, and established societal organisations, are becoming a bit less relevant as social networks, individual opinions, and strong ideas create an impact that continues to grow in size.

“For example, in Armenia during the revolution you didn't need an organisation to mobilise protesters, and close off a street or avenue. The only thing you needed was a smartphone with Facebook. Just send out the word and that street would be closed in no time flat, by people you had never met before. There was no top-to bottom organisation directing events. There was no hierarchy processing and dispatching orders. Individuals took the initiative, and groups formed spontaneously.

Interestingly, this did not result in chaos, but at the end of the day, the whole stochastic system was delivering whatever was needed.”

We live in interesting times, and for Sarkissian, that need not be a bad thing: “Technology has already thrown a spanner in the works and now promises to deliver the Fourth Industrial Revolution. “All of that is not mechanical, or preordained, but will have a huge impact on the way we think, act, and manage how we are governed. However, we cannot yet see the whole picture, because it is all new and global too. The first phase of globalisation unfolded along classic lines with leaders and institutionalised structures such as investment banks pointing the way and telling us to work hard in order to join organisations such as the WTO.

“Being part of a globalising world actually implies hard work. But look what is happening today: young people don’t want to work at an investment bank, but at an exciting start-up –with the hope that they become the next internet billionaires by creating something as disruptive and revolutionary as Facebook or Google. Others want to be a part of the movement towards sustainability and work for a cleaner world.”

The Trouble with Planning

Sarkissian says governments need to adjust and stop planning things. “Could I imagine, living in the Soviet Union as a scientist and professor of theoretical physics, that one day this almighty superpower would collapse? It looked impossible.

“The strength of the Communist Party, the KGB and everything… well, it would take a hundred years or so. And then it was over, just like that. Then could I imagine that my country would become independent? Could I imagine that I would be given the privilege of serving my country, first as a diplomat and prime minister, and then a president?

“No, I most certainly could not. Today, we are standing at the crossroad of the history of civilizations. It’s a crossroad where the old paradigms, old ways of looking at human society, or classical ways of handling global risks are not effective enough. This is a new era, the era of quantum risks, quantum security and quantum politics.”

In interesting times, amazing thing can and will happen. Just so is with Armenia. The revolution changed all that ushering in a new age that brings hope as well as a renewed sense of purpose.

Armenia is an ancient country, and an early outpost of civilization with its capital of Yerevan, which is 2,800 years old. Much later, Armenia became the first country in the world to adopt Christianity as its official religion – in the year 301. Surviving invasions, occupations and genocide, the nation never lost its will. Independent since 1991, Armenia has shaken off its overlords to gain control of its destiny.

Armenia finds itself yet again on a crossroad. Though Sarkissian has a clear vision on how to carry his nation over the threshold of modernity, he acknowledges that in the new reality – shaped by unpredictable quantum politics – anything might happen.

But by refusing to fixate on any imagined future, he might accomplish his task by focusing on the relevant drivers. Though the result will probably look nothing like the vistas painted now, Sarkissian remains confident that the dynamics of Armenian society, now unleashed in full, will shape a tomorrow better than today.

A Stable Revolution: Armenia Takes Charge of Its Future

The Velvet Revolution which rocked Armenia softly yet decisively in the Spring of last year has not only changed the political direction of the country but also shifted its economic gears.

Though the previous government had already prepared and unveiled a comprehensive reform agenda and development programme as first steps towards securing the backing of the International Monetary Fund (IMF), the new administration of acting prime minister Nikol Pashinyan proposes a broader approach that includes a thorough redesign of political and economic structures with a view to ensuring transparency, accountability, and the rule of law.
Interestingly, the prime minister’s political movement, Yelk (Way Out), refuses to upset the constitutional order and works within the framework of parliamentary democracy to effect change. The idea is to use the system to combat its abuse.

During a conference last November in Yerevan on the Current Challenges And Strategic Direction Of Armenia’s Economic Development, the acting prime minister underlined the importance of constitutionalism. “Everyone was saying that this is a political issue and that we should talk about the economy,” he said. “We were saying that the most important thing for the economy is legitimacy, the equality of all before the law, and the formation of an environment of justice.”

Pashinyan aims for nothing less than a national consensus whereby Armenians assume role and responsibility for finding ways to address societal issues. He is adamant that government no longer controls all levers and provides all solutions. “This is what we used to have, and it is nonsense. Government cannot and should not micro-manage the economy or, indeed, our society. If it does and fails to deliver results, people will obviously blame government and want to see it gone.”

Pashinyan noted that political behavior has changed, with people previously uninterested in the running of the country suddenly discussing the nation’s future. The genie of civic engagement is out of the bottle. “The political revolution has already taken place and cannot be turned back,” he said. “We now need to change economic behavior in order to have an economic revolution.”

The first order of business has been to end government patronage of Armenia’s oligarchs. Pashinyan is adamant that their influence and power have already been curtailed. “The people are still here but their power has been taken away.” But Pashinyan is careful not to step on too many toes at once, keeping Moscow appraised of his intentions and ensuring that the revolution, and the new government that took power in its wake, are not interested in changing the precarious geopolitical balance in the Caucasus.

Armenia is also reluctant to move away from the Eurasian Union, which ties together the economies of Russia and four former Soviet republics (Belarus, Kazakhstan, Kyrgyzstan, and Armenia). Even though the country identifies culturally with Europe via its predominant religion, language, and diaspora, the acting prime minister has indicated that the government for the moment doesn’t wish to move much further than the Armenia-EU Comprehensive and Enhanced Partnership Agreement (CEPA), ratified by the parliament in Yerevan last April. The deal includes elements of a free trade agreement and removes all tariffs and quotas from a list of over 6,500 products. Though negotiated and delivered by the previous government, the partnership is expected to help the current administration by demanding the implementation of a strong legal framework that ensures the stability and predictability that businesses and investors demand.

According to Pashinyan, the moment is now. “Today, economic development is mainly associated with the development of human capital. Human and intellectual capital is our greatest value, and everything must begin from here. Our goal is to ensure our citizens’ freedom, happiness, and prosperity, and that is a political issue that we must address together.”

Investors may want to take note. Armenia is not so much in flux as laying the groundwork for a modern society geared for sustainable growth. It insists that rules are clearly spelled out, and actually followed. A nation that draws these conclusions, and acts upon them without any outside prodding is one that seems determined to pull itself up by the proverbial bootstraps.


AIM Startup 2019 Unveils Summit Agenda

The National Program for Small and Medium Sized Enterprises and Projects of the Ministry of Economy, held a press conference for the launch of AIM Starup 2019 with the theme “Harnessing Global Digitization to Empower Startups and SMEs” which will be held on 8-10 April 2019 at the Dubai World Trade Centre.

The speakers shed light on the plans and initiatives of the National Program for SMEs and Projects for 2019, which will seek to attract more startups and SMEs to explore investment opportunities that abound in the UAE in various in various fields and sectors.

During the press conference, the agenda for AIM Startup 2019 was also reviewed. The event anticipates the participation of more than 500 startups and SMEs, and over 20,000 visitors, allowing more startups and SMEs to present their ideas to a bigger audience at the forum.

In this regard, Dr. Adeeb Al-Afifi, Director of the National Program for SMEs and Projects, said, “AIM Startup represents this year’s emerging companies in Dubai in a forum that links investment opportunities and investors from around the world. This is a platform where we can showcase the economic developments the UAE has achieved, as well as its economic diversification, which has opened the door even wider for a range of investment opportunities, making it a top destination for investment.”

Al-Afifi also added, “UAE continues its efforts to consolidate its economic position that has made it an ideal global investment destination, and through initiatives such as this forum, UAE strengthens its partnerships and linkages with entrepreneurs and innovators within its SME sector, which plays an important role in the national economy of the UAE.

Al-Afifi also disclosed that the number of registered SMEs has reached 98% of the total registered companies, and 89% of which are into trade and service sector, accounting to 49% contribution to UAE’s non-oil GDP, a fine reflection of the country’s attraction of investment. The total number of SMEs in the country as a whole, and specifically those registered in Dubai, is increasing.

“AIM Startup 2019 is a great opportunity for investment entities and investors from around the world.”

- Adib Al-Afifi

Dawood Al Shezawi, Chairman of the Organizing Committee of AIM Startup also stressed that the UAE has had a timely recognition of the contribution of SMEs to the nation’s GDP, in addition to the size of job opportunities offered by these companies, prompting the government to support projects, investment opportunities, and the development of tools in order to strengthen their capacity on innovation and experimentation, which are fundamental for structural change, through the emergence of SMEs which are equipped with competence and ambition.

“The UAE has provided the ideal environment for SMEs with facilities and incentives, and has developed a number of flexible laws and regulations to make their activity more vibrant, resulting in increased low-capital investments in low-cost businesses. On the competitiveness of SMEs to develop their structures and products through innovation, it allows them to offer quality products and enables them to impose their presence in the markets.”

The Chairman of the Organizing Committee has announced the nomination of 41 startups selected during a roadshow pitch competition held in the region. The selected startups now have the opportunity to come to Dubai with waived registration fee to participate in the final pitch competition in April. Among best innovative minds in entrepreneurship will emerge one winner of the annual competition and will receive $50,000 seed money to support their project.

Winning startups from Hashemite Kingdom of Jordan are Darajtee, 360 Moms, Tarteeb, Takalam, Akyas; from State of Kuwait were Wakoo, E-pill Box, Go Diving, Ideabot, Diabetic Wound Detector; from Oman are Telpay, Zayr, Adeeb Kids, PocketCarage, Fastmovers; from Lebanon are Formidable Industries, Groovy Antoid, Neotic, Lemonade Fashion, Lexyom, Augmental; from Riyadh are Mutamer, Pick Logistics, Maya Clinics, Vigorous Antelope; from Jeddah are Firnas Aero, Bab Makkah, Men wall, Tagit Games, Passioneurs; and from Egypt are Garment IO, Epic VR, WideBot, ZeroPrime Can Waste, and VoXera.

According to Global report, a total of 366 investments were made in startups based in MENA last year, with investment funding of $893 million. The same report also stated that the UAE remains the most active ecosystem, accounting for 30% of all deals and 70% of total funding. Thus, through initiatives such as AIM Startup, SMEs and startups are looking to an even more attractive ecosystem to help the region in achieving the level of investments at par with European or American ecosystem.

The importance of SME sector in the UAE has been formalized under the Federal Law No. 2 of the year 2014, with the establishment of the National Program for SMEs and Projects. Under the umbrella of the Ministry of Economy, it aims to empower entrepreneurs and to develop a general strategy and guidelines aimed at providing the necessary expertise and technical as well as administrative support in various fields in order to promote and develop SMEs. It is also mandated to prepare periodic evaluation as well as to coordinate with federal and local government agencies and the private sector to market enterprising products within the country and internationally.

AIM Startup will host its third edition this year. The annual event has over the years been counting on the continued support of the public and private sector to provide much needed tools in learning and networking platforms for investors and entrepreneurs. On the national level, the support comes from National Program for SMEs and Projects, Sheraa, Sharjah Business Women Council, Khalifa Fund, Dubai South, Wamda, Abu Dhabi Global Market, and many more. From the international level, AIM Startup is highly supported by BIAC, Wadi Makkah, Monshaat, Mohammed bin Salman College and in partnership with Korean Trade Association, Indian SME Chamber, Switzerland’s Solar Impulse Foundation, and Brazil’s Mango Venture.