Monday, January 28, 2008

Globalization, Outsourcing and Mali

I know, those three words don’t necessarily fit in the same sentence, or do they? You probably don’t know enough about Mali to understand that under normal circumstances, these three ideas are just crazy together. However, I’ve recently come to realize that it’s not that crazy of a notion.

I’ve just read The World is Flat by Thomas Friedman which is a ‘brief history of the 21st century.’ It was written in 2005, so I’m a little behind the times, but it’s an amazing book. It talks about how with the spread of globalization that countries are becoming more open and more likely to trade with one another or outsource or offshore and that with the borders being opened, the world it becoming more flat. Now, not only does Friedman have a great writing style that kept me hooked through all 470 pages, he also brings up good points about why India and China are on the rise but African countries are not. India and China have stable economies and they have something to offer – intelligence, services and cheap labor. The same isn’t true all throughout Africa, especially not Mali. I learned the other day from the American Ambassador here that Mali has the 3rd highest energy costs in all of Africa. That’s 3rd out of 54 countries. And after talking to Malians, I learned that energy costs are only going to go up. It’s crazy. How can Mali even think about supporting manufacturing or international exporting and therefore development if the cost of a running some sort of manufacturing plant will be ridiculously expensive? They can’t and that’s not fair. Now, I’m not saying that Mali is by any means to start a project like this, but it’s just an example.

But, I do want to talk about the ‘outsourcing’ that does occur here. Now, I don’t know the official Webster’s definition of outsourcing, and for that matter I don’t even know if it necessarily has to be an international thing, but for the sake of me talking right now, I’m going to use my own definition, and by that I mean through example. Let’s take Farafina Tigne, Peace Corps Baba’s shop, for example. When I first got there and saw all of the amazing jewelry inside, I was like, “Wow, Baba makes all of this?” Over the next several months, we were too busy with Hallmark for me to get a good grasp of the business transactions taking place. But recently I’ve noticed that outsourcing does take place. Recently Baba Fima created a new necklace made with black and clear glass beads and an ebony pendant in the middle. It’s really pretty, but it took him the better part of the day to string one necklace – it did have 6 or 8 strands of beads. So, instead he told me that he’d drop off all of the materials for someone in market in Mopti who would string all of them. Then I got curious and asked the price. I was astonished to find out that he would pay 250 CFA – less than $.50 – to make this necklace. Granted, he’s already paid for all of the materials, but $.50 to make a necklace? What’s better is that his friend could make 50 in one day, giving him a net profit of 12,500 CFA – about $30. For someone to earn $30 here in one day is amazing. It’s not common and when it does happen, they’ve normally worked hard for it. So, this is my idea of Malian outsourcing. Baba Fima knows that it’ll take him 5 times as long to make all of these necklaces and therefore outsources them to someone who can do it better. In the end, he’ll still sell these necklaces for 5.000 or 6.000 CFA and make a good profit, but he’s being a smart businessman. While his 50 necklaces are being strung, he can focus on other work and double his profit. Well, then I started to think about everything in Baba’s shop. We do the finishing touches on a lot of things like adding the ear wires to earrings, or artistically stringing necklaces. But, there’s a lot that we outsource to our partners also – like Peulh earrings, Tuareg metal work, and bogolan. This is a stretch, but we’re a mini Dell of Mali, and I couldn’t be happier about it.

Who says Mali isn’t ready for globalization and outsourcing?