# Daniel Yu on Export Manufacturing & Labor Mobility

An episode of [The Africa Urban Lab Podcast](https://invisiblenetwork.ai/podcast/1886680160), 26 Aug 2026, 1 h 27 min.

Audio: https://www.buzzsprout.com/2604291/episodes/19691846-daniel-yu-on-export-manufacturing-labor-mobility.mp3

Our guest is Daniel Yu — Founding Partner of the Africa Jobs Fund and Founder of Wasoko. We discuss the Africa Jobs Fund's two main areas of focus, in particular export manufacturing and international labor mobility. We also discuss economic growth more broadly, urbanization, and the drivers of structural transformation.

## Transcript

[0:00] Speaker: Today, I speak with Daniel Yu.
[0:02] Speaker: Daniel is founding partner of the newly launched Africa Jobs a fund housed at Renaissance Philanthropy.
[0:08] Speaker: He's the founder and former CEO of Wasoko, Africa's largest B2B e-commerce company, serving over 150,000 businesses across the continent, with 2,000 staff and 145 million raised.
[0:22] Speaker: While at Wasoko, Daniel led Africa's largest tech merger when Wasoko merged with Maxab in 2024.
[0:29] Speaker: He's also a board member here at the Africa Urban Lab.
[0:33] Speaker: I speak with Daniel today about job creation, about scaling firms, international labor mobility, cities, and economic among many, many other things.
[0:42] Speaker: I hope you enjoy the show.
[0:44] Speaker: Daniel Yu, welcome to the podcast.
[0:49] Speaker 1: Thank you.
[0:49] Speaker 1: Fantastic to be here.
[0:51] Speaker: Okay, so I wanted to cover a few different areas today.
[0:55] Speaker: I wanted to cover sort of your Wasoko days and time as a tech founder, then your time, you know, immediately after Wasoko you were figuring out the next chapter of your life and your And then I think spending the broader chunk of the podcast on this, you know, this next chapter, the new thing, the Africa Fund, and sort of the thinking and reasoning behind it and mission and goals.
[1:20] Speaker: But before getting into all of that, I think it's important know a little, like a little more about Daniel as a And um, you know, my experience of you is you're a humble So Daniel is not going to say any of these things as blunt as I'm about to say them.
[1:37] Speaker: But he's one of the more impressive um like learners I've encountered.
[1:42] Speaker: So Daniel knows eight languages.
[1:44] Speaker: Uh, I believe you were like a ranked chess player at some point in your life.
[1:49] Speaker: Um, you know, classical piano to a very high level.
[1:54] Speaker: You're you're one of the more knowledgeable people in various spaces in the effective altruist um movement that I know of.
[2:00] Speaker: You know, uh, on top of all this, you completed the biggest tech merger in African history.
[2:05] Speaker: Uh, most of this done before you were 30, right?
[2:08] Speaker: I think everything except the merger.
[2:09] Speaker: So, you know, my first question, Daniel, is what is your to learning new things that sort of sets you apart on this Like, do you have a philosophy of learning?
[2:24] Speaker 1: My philosophy of learning I think is fundamentally personal interest-based.
[2:28] Speaker 1: Uh, and so I am just, I think, very good at digging in on that I find curious and fascinating to myself.
[2:41] Speaker 1: I've I've never um waited for any kind of permission to do so.
[2:47] Speaker 1: I also haven't necessarily felt that it needs to informal structures uh uh as well, um, uh, which I think kind of makes sense given that I also uh didn't even finish my degree.
[3:02] Speaker 1: Um and yeah, I think also have been very much driven by learning as well, right?
[3:09] Speaker 1: There's this kind of strong sense of learning by doing you know, the the the most influential and and and learning opportunities also come from just kind of putting in these unknown, unknown positions where it's just like, you know, what are you gonna find out?
[3:27] Speaker 1: Um what does the journey ultimately look like?
[3:30] Speaker 1: Uh uh I would not have been able to say uh you know when I in university or even necessarily 10 years ago that I'd be what I'd be doing now.
[3:40] Speaker 1: Um and so I think that there's a lot of this um just kind process of of exploration, whereas you go down uh uh new roads appear, and you just kind of continue branching until you find yourself in these fascinating places.
[3:54] Speaker: Now, okay, so so to to Wasoko, right?
[3:56] Speaker: First, maybe um just explain for listeners like I'm the African tech scene and Wasoko.
[4:02] Speaker: Um you want to explain the like founding story of Wasoko?
[4:05] Speaker: How did it how did it come to be?
[4:08] Speaker 1: Yeah, I think I think the founding story of of Wasoko is maybe a good illustration of this kind of going down roads, not where you're gonna end up, and then you know, just uh, you know, uh, you know, to to to the extreme.
[4:20] Speaker 1: And so um, you know, the the origin story is I was doing an exchange program learning Arabic in Jordan.
[4:29] Speaker 1: Um I had a uh it was a summer exchange program.
[4:32] Speaker 1: At the end of that, I had time, extra time before my my restarted um uh back in the US.
[4:41] Speaker 1: And so I took that extra time uh to go uh explore the Sinai Peninsula, um uh where while I was there, I was in a and got to know some of the local shops around and realized how difficult running a business was in that particular um, recognized that they had no um digital tools, you know, uh platforms uh that that they could use, and also having um uh software development skills and and and strong interest, um, thought that there could be an opportunity to build out something that could be helpful to these uh small business So um that was the genesis of the idea.
[5:24] Speaker 1: Um that then became a business plan um that I pitched uh at the University of Chicago, uh, ended up winning uh small prize money for the idea, uh, took that as uh uh a uh to uh drop out of school and and and you know see idea could take me through the process of building out a kind of pilot system there, and then cold emailing a of different uh consumer brands across emerging markets, uh, got interest uh from a few brands based in Kenya, uh got on some calls with them and uh you know, got them excited enough where they said, look, if you come out to Kenya, uh we'd be we'd be open to launching a pilot together.
[6:10] Speaker 1: Uh two weeks after that, got in a plane, showed up in um, got this pilot up and running.
[6:16] Speaker 1: Um turns out that the kind of original envisioned concept, was just a pure software play, where I'd be licensing the to kind of help ordering to connect the shops to these you know, that wasn't sufficient.
[6:29] Speaker 1: Um so we we ended up expanding the model so that we were just solving the kind of ordering the data signal problem, also the full logistics and delivery um uh gaps as well.
[6:40] Speaker 1: And uh that basically then evolved into the full model that that became Wasoko, the the B2B e-commerce company um, you know, supplying mom and pop stop uh shops uh across
[6:52] Speaker: Okay, so and then and then um you know, fast forward 10 years.
[6:55] Speaker: And then uh you did the the merger with uh Max App and stepped aside from day-to-day management of of Wasoko.
[7:04] Speaker: Um at that time, I remember you were you were looking at what the next chapter could look like, right?
[7:12] Speaker: And I guess um this answer might be a little similar to your of learning that that you spoke about at the beginning.
[7:18] Speaker: But um during this transition phase, like you and I, spoke, we had a conversation, and it struck me like like more than most to approach this phase very, very like intentionally taking a bunch of a chunk of time, having a bunch of conversations with a bunch of people uh to winnow down what the like highest leverage next career step could look for you.
[7:44] Speaker: So like can you just go over this?
[7:46] Speaker: Um, like in your head, how how did you model this transition What were the what were the margins that you were optimizing on during this period?
[7:53] Speaker: And I guess you know, from this, what were the the lessons for like yourself and that others can take maybe when they're thinking through big career transitions?
[8:05] Speaker 1: My approach definitely was deliberate, though, though the the destination was was was not known, you know, as I into it and and as I had stepped back from my full-time role.
[8:19] Speaker 1: I think there were a number of interests as well as that I was working through.
[8:25] Speaker 1: And so, you know, there were some uh you know definite on the personal side, you know, after 11 years of being a uh startup founder, um, you know, I knew I wanted something that would give me a little bit more personal have the same kind of 24-7 demands that that I was seeing, know, I just just got married and so you know, wanted to of move towards having a more stable family life.
[8:48] Speaker 1: Uh and uh and so there was this kind of question of you what is the what is the level at which I want to kind of and and and contribute my role, my skills.
[9:01] Speaker 1: Um and so you know, if you think about the spectrum of at the direct operating level as a startup, you know, in um in the trenches, you know, build building something from um, and then thinking kind of up the various layers where you know you're kind of further and further from the from direct action, but maybe you can have more of these meta um uh level influences on uh ecosystems overall.
[9:24] Speaker 1: Um, you know, there was kind of a question of what level to play there.
[9:27] Speaker 1: And then I think the the other dimension was um you know, specific areas to work through.
[9:33] Speaker 1: And so on on that particular question, I had a number I think kind of decision tree uh forks that that I was through.
[9:45] Speaker 1: Um so of course, Wasoko was um uh a fully commercial entity, you know, looking to kind of maximize its growth and um and and its financial performance, um, you know, albeit know, I think certainly with um you know strong ultimate effects in terms of the thousands of people that we were and and you know the small business ecosystem that that um that that was our customer base.
[10:09] Speaker 1: Um but you know, I wouldn't say that it was a direct maximizing organization uh itself, uh in the sense of uh uh if you compare it to, I don't know, the you know, GiveWell's top you know charity list.
[10:22] Speaker 1: Um, you know, we were not optimizing our core KPI uh was not uh uh disable uh disability adjusted life years or uh consumption years or something like that.
[10:32] Speaker 1: Um it was shareholder return.
[10:35] Speaker 1: And so, you know, for me, there was this question of okay, do I um continue in you know kind of pure private sector maximization kinds of work?
[10:44] Speaker 1: Um, you know, start another company or or perhaps join join uh another company there, um, you know, or um do I go the more kind of direct impact options optimization route, which was uh something that, you know, for for several um had felt uh more and more um uh imperative for me uh in of you know, I I really, I think in in the final years of of kind of growing and leading to Wisoko, you know, felt um there was more that I could be contributing on this direct social value dimension that I just didn't have capacity for because you know I was the CEO of a large company.
[11:25] Speaker 1: So in that initial period, I think that that first I uh you know, uh despite uh um you know the the the kind of strong attractiveness and even kind of concrete opportunities that came up to go join uh you know the AI boom and you know people who uh are are doing exciting things in the uh in Valley and uh you know uh making a lot of money doing it, um, you know, I decided, look, um, you know, my of going and uh you know taking uh a seat on on one of those buses is you know not very high.
[12:06] Speaker 1: There are you know thousands of people uh who are who are joining the uh uh the AI gold rush over there and you people who I think are a lot um you know smarter, sharper me in in many ways.
[12:18] Speaker 1: And so, you know, for me to go uh take one of those jobs, um, you know, I think that the counterfactual contribution uh be relatively limited.
[12:27] Speaker 1: However, you know, if I think about where I could apply my set of experiences, you know, having built this large tech company across many markets in Africa, um, you know, out a lot of complicated operations along the way, and about how that experience could be applied towards a impact maximizing mission, um, that really started to to me as you know a much more kind of actually unique um uh position to occupy.
[12:57] Speaker 1: Um so I think that was the first big you know branch on the decision decision tree to to confirm.
[13:04] Speaker 1: And then once I went down the kind of uh impact maximizing I think then it was this kind of question of structure.
[13:09] Speaker 1: So do I do I you know start a direct um operating org uh something in particular?
[13:15] Speaker 1: Um uh do I go different levels there?
[13:19] Speaker 1: And then also like what are the specific cause areas, what the specific uh things that that that I want to tackle and And um, this is something that I'd spent a good amount of time reflecting on just over my my um decade or so living uh you know in Sub-Saharan Africa, which you know really kind down to like what is the root cause challenge and problem Um and you know, my contention is that you know, whether care about health outcomes, um, you know, education, what have you, this is really all downstream of people very poor and not having the basic resources to invest uh in these areas for themselves and their families.
[14:01] Speaker 1: And why are they very poor?
[14:03] Speaker 1: They are very poor because they do not have productive opportunities.
[14:07] Speaker 1: Um and then you get asked the question, okay, like how do we create more of these productive work opportunities?
[14:13] Speaker 1: And I think that then kind of leads to these very questions of, especially if we're looking at scale, you know, given the size of the challenge of hundreds of millions of who are still really um you know stuck at the at the lower of the income curves, um, you know, what can lift hundreds of millions of people out of poverty?
[14:29] Speaker 1: Um you know, there's actually relatively few areas that been empirically shown to have done this uh you know over the the course of human history.
[14:37] Speaker 1: And so that's really what led to the two areas that were of interest for me.
[14:42] Speaker 1: So first is export manufacturing.
[14:43] Speaker 1: Um uh and this is not just uh you know what hundreds of of people uh in Asia have been lifted out of poverty through over the past uh uh several decades, but you can go all way back to the Industrial Revolution in England in Uh also that's what shifted people out of subsistence there, you know, into uh into more productive work.
[15:04] Speaker 1: Um and then the other uh other area is international labor Um and so of course, once again, you know, hundreds of of people have uh uh you know benefited from uh moving for opportunities for themselves and their families.
[15:19] Speaker 1: Um and you know, the gains to doing so today are actually bigger than they've ever been before, simply because the between countries in terms of income opportunities is higher.
[15:31] Speaker 1: So these areas really started to um, you know, they they have been um things that I've already been working in, in small part, but you know, as I then had the time and and realized, yes, I think working more in this direction is way to go, um, I was able to uh you know start experimenting and kind of seeing, okay, you know, do I want to work directly and kind of help organizations?
[15:57] Speaker 1: So I was you know do doing a little bit of direct work um a few different organizations, you know, advisory that make sense?
[16:06] Speaker 1: Investing uh in organizations was also something was doing some some um some level of.
[16:14] Speaker 1: And so all of this gave me uh a good kind of opportunity to kind of try before I buy in in my next career chapter.
[16:22] Speaker 1: Um and I think ultimately that came um together quite nicely for me when I realized that yes, being at this um uh builder level where I'm hands-on helping you know brand new organizations um uh that are pioneering in specific spaces, that has the highest catalytic feel to it, um, while also think kind of meeting um my other needs in in terms of of um you know personal uh uh life and and and work structures.
[17:00] Speaker 1: Um and I was you know very fortunate, lucky to um uh catch with with uh some of my friends at Renaissance Philanthropy, um, who in fact have uh kind of focused their whole thesis how to bring more um uh philanthropic uh innovation funds uh to life uh and and uh back uh you know strong fund to to kind of actually execute these theses.
[17:24] Speaker 1: Um and so you know, great timing there uh to kind of bring things that I was already working on and thinking about uh to then formalize this as a larger platform that I have now as the Africa Jobs Fund.
[17:38] Speaker: Awesome.
[17:38] Speaker: So so that brings us to yeah, the the recent launch of the Jobs Fund.
[17:42] Speaker: Um so you you kind of explained very briefly here sort of two main things uh being export manufacturing and labor mobility.
[17:51] Speaker: But do you do you just want to kind of quickly um first like the mission?
[17:55] Speaker: Because at the the end of this is sort of like uh kind of doublings, right?
[17:59] Speaker: So um explain explain that in the thesis that leads from these two things to the income doublings, and then maybe run the thinking.
[18:06] Speaker: Like I know these numbers are available on your website, but for listeners, run through sort of the the numbers that you're aiming to hit at the African Jobs Fund.
[18:17] Speaker 1: So if we think about, you know, what is the problem that we're trying to solve here?
[18:21] Speaker 1: Um, and you know, the core root cause issue being poverty, of income.
[18:26] Speaker 1: Um so what we want to do is we want to try to figure out how we can increase as much as possible the lifetime earnings of African workers.
[18:34] Speaker 1: Um and the idea with um uh doubled uh consumption, so of incomes, uh measuring that as opposed to just the absolute increase is because of uh marginal decreases in in utility um uh uh over time, right?
[18:52] Speaker 1: So, you know, a worker who is uh let's say earning $100 a right now versus another worker who's wearing uh who's$1,000 a month, um, you know, if we can increase the $100 a month worker's income to$600 a month, um, uh the plus $500, that's going to be a lot more impactful uh for that person, for their family, um, than that worker who's at $1,000 raised to $1,500, even though the absolute gain is the same on both sides.
[19:18] Speaker 1: Um so you really look at that logarithmic effect from that, from that base of whatever the current uh worker's So for us, uh, you know, how we are then maximizing it, um, you know, this this kind of logarithmic uh lifetime earnings increase is by really looking at these two different And you know, ultimately it's the same, it's the same metric that we're we're optimizing for here, but the the are somewhat different.
[19:45] Speaker 1: So in the labor mobility case, um uh to give an example of know one of the first investments we're making on the uh, you can take a um a hotel worker uh in Kenya um who is on average something like$200 a month right now.
[20:03] Speaker 1: And turns out that there's huge uh labor shortages in industry in Italy, and you know, they need tons of hotel there.
[20:11] Speaker 1: And so if we can get that uh hotel work in Kenya uh to go work and do the same job at a hotel in Italy, now their their income can jump to 2,000 euros per month.
[20:22] Speaker 1: So they're literally over 10x uh uh difference there.
[20:25] Speaker 1: And and this is something that's um uh you know a massive um, not just for the worker.
[20:30] Speaker 1: Um uh so you could say in terms of doublings, you know, they've they've increased by 10x, which is you know, roughly three doublings, if you think two to four to eight.
[20:40] Speaker 1: Um but then we also expect that a good chunk of those maybe something like 15%, will actually be remitted by that worker back home.
[20:50] Speaker 1: Um and so if we say, you know, roughly $300 is is being spent uh sent to the worker's family back home, let's say they five family members, um, you know, each one of those family members is maybe subsisting off of $60 per month in right now, um, you know, that uh uh $300 is set back, you could literally double the consumption then of each one of family members.
[21:14] Speaker 1: So you can end up with five doublings just from those members combined with the three doublings that's already for that worker directly.
[21:22] Speaker 1: So the point being that like the spillover effects, or the the direct order effects of of um you know mobility can be enormous, both for the worker as well as for um the um the family uh back home.
[21:37] Speaker 1: But there's even these broader spillover effects, too, it turns out that actually building up your diaspora helpful for the origin country as a whole.
[21:46] Speaker 1: So you can look at lots of these examples.
[21:48] Speaker 1: Um, uh, you know, take India and the huge successful that uh has been built up overseas in the US and UK and many other countries, um, and it's very clear.
[21:59] Speaker 1: That a lot of the economic and industrial development, look at the tech sector, for example, in India, is a direct result of having a successful diaspora that's been in these high income countries.
[22:09] Speaker 1: And so overall, if you can build up these diaspora, you a lot of these other benefits that can eventually accrue just these direct order effects of money earned and money back home.
[22:19] Speaker 1: So that's that's the labor mobility side.
[22:22] Speaker 1: In export manufacturing, um, you also, of course, have direct job creation.
[22:26] Speaker 1: Um, so you know, workers uh or or people who are getting higher paying jobs than they would otherwise have.
[22:34] Speaker 1: Um, you know, most likely if you're doing something in manufacturing, uh, something like a garments factory or some kind of agro processing um uh uh type of you know, these are workers who otherwise would not have employment.
[22:47] Speaker 1: Um, so so uh you're definitely kind of increasing income well as you know, stability of income there.
[22:52] Speaker 1: Um it's not gonna be the kind of 10x gains that you see from an international shift, but the amount of employment that be generated, especially by these entry-level labor-intensive manufacturing businesses, can be very high.
[23:04] Speaker 1: So you can see literally thousands of workers um, you know, in a single firm uh you know, for something like a t-shirt And so that that's very powerful because yes, you're you're you're providing direct employment um to those workers, but you're also generating this broader set of capabilities in ecosystem in terms of uh uh tapping into global market demand that can then be expanded further.
[23:31] Speaker 1: So the the benefit of selling your t-shirts to a global is that you are not limited by the purchasing power of low-income country market.
[23:42] Speaker 1: Um so, in theory, if uh you're producing those t-shirts very well, um uh you know, you can find other buyers in the global market who can expand your sales um you know up uh to a major supplier in the global t-shirt market, which is you know, billions of dollars uh in sales per year, which of you know one firm can never exhaust in and of itself.
[24:05] Speaker 1: And so this is the the opportunity to kind of really scale employment in ways that ultimately no other uh entry-level have demonstrated they they can do.
[24:19] Speaker 1: And so uh and I think that the broader point here as well that if you know we're really looking to help countries at lower end of the incomes and GDP converge with higher income countries, you know, the only way to do that is through with the global economy.
[24:38] Speaker 1: And so that integration is going to be how can you connect people and how can you connect your goods to the global Um so I think even though labor mobility and expo might look quite different, they're they're they're the same mechanism.
[24:54] Speaker 1: And that core metric of increased incomes is ultimately what we're measuring to to maximize um the benefit of uh of the and the strategies that we're pursuing.
[25:06] Speaker: Okay, awesome.
[25:06] Speaker: So that's that's good level setting at the beginning here.
[25:09] Speaker: So listeners kind of understand the the mission of the Jobs Fund, the the two main areas you're interested in.
[25:16] Speaker: So let's dive into some questions about the fund and maybe start with export manufacturing.
[25:20] Speaker: Um so so first, in your you wrote an essay in in the magazine in development.
[25:25] Speaker: It's called Exporters Without Borders, highly recommended, a great essay.
[25:28] Speaker: Um you wrote the following, and I'm gonna quote here.
[25:32] Speaker: So you said, um, my experience at Wisoko is just one in a larger argument.
[25:37] Speaker: Uh scale up entrepreneurship that is moving from to managing increasing complexity and growth, is not merely business strategy.
[25:47] Speaker: It's the most powerful engine of mass job creation and reduction ever built.
[25:52] Speaker: End quote.
[25:53] Speaker: Which I uh very much agree with.
[25:56] Speaker: Um now from my vantage point, there's there's like a of, oftentimes a missing layer of middle managers that can uh efficiently sort of manage larger firms in in low-income even times like medium, medium-sized firms.
[26:13] Speaker: And you know, there's there's been some studies on skills of firms in developing countries.
[26:19] Speaker: I think I think that one of the more famous ones is Nick Bloom and co-author study on providing management consulting to firms is a is a good example.
[26:28] Speaker: Um, basically found large and persistent effects to basically like management training and and teaching management skills.
[26:35] Speaker: So, to to what extent are you thinking, you and Ben thinking management training as part of your fund's complementary set of offerings, let's call it, in order to alleviate this issue of sort of this missing layer of middle managers in in a lot of countries?
[26:56] Speaker 1: It's a great gap to point out that I very much relate with.
[27:00] Speaker 1: Um I I would I would actually say that in my years Osoko, that that middle management layer also kind of felt the most difficult to really um hire for, especially kind bringing in externally.
[27:11] Speaker 1: And so I would say uh, you know, the majority of our you successful middle managers over the years actually bottom up in terms of people that came at the entry level, skills and were kind of nurtured and supported to get to level.
[27:24] Speaker 1: Um I think that you know ultimately that is going to be the mechanism by which you create a successful um you know management layer.
[27:37] Speaker 1: Uh, it's people who kind of demonstrate the entry level that they're capable and then get the kind of nurturing from more experienced people as a firm grows uh to kind of step up and take more responsibility.
[27:48] Speaker 1: I think the biggest bottleneck is that you simply don't enough of these scale-up firms.
[27:52] Speaker 1: Um as a result of basically not having ecosystems growth is a standard practice, you know, instead in most these low-income economies, you have this extremely um distribution of firms within the economy where uh you have this huge mass of small and micro enterprises, um, and then you have a few kind of very large dominant firms, and then know, not a whole lot in the middle.
[28:23] Speaker 1: Um, and I think it's it's because um you know a variety of um you know really kind of skew and almost uh punish having a mid-sized firm where where it's almost kind of the worst both worlds where you face all of the uh you know, as a as as a mid-sized formal firm, you face all the costs uh and the difficulties of being a formally run firm under the tax regime, the labor regimes, the um the official country you're in, um, while not actually gaining the of um uh you know having influence and access to capital and and you know branding to kind of get top talent.
[29:05] Speaker 1: Um and so this kind of question of you know, how do we how we increase the the volume of firms that are kind of these life cycles and that are kind of built to scale?
[29:17] Speaker 1: Um and and firms that are that are started with the intention of going up these full curves as opposed to kind of you starting small to stay small, I think that that's one of um the most important bottleneck challenges, you know, it comes to to building out um these layers of talent.
[29:36] Speaker 1: Because at the end of the day, you know, you can set up institutes, you can you know have you know lots of uh you educational programs, whatnot.
[29:43] Speaker 1: But I think the only thing that makes a good manager is who actually gains management experience.
[29:48] Speaker 1: And the only way to do that is to just increase the volume firms in in the economy.
[29:52] Speaker 1: And you know, in order to do that, um, you know, we need to have the the enabling business environments plus um the talent and operators who are intentionally kind of building to scale.
[30:05] Speaker: Yeah.
[30:05] Speaker: Yeah, I I I broadly agree.
[30:07] Speaker: I bring so I bring this up because I listened to is um Bill He set up the some of the early pioneer textile and apparel in China, and then later helped uh set up some of the first in in Ethiopia and the Hawassa Industrial Park.
[30:23] Speaker: Yeah, you and I sat there at the Gross Summit in Morocco to that was like the best panel uh at the summit, in my um talking about his experiences setting up the firms in Hawasa's industrial park.
[30:36] Speaker: So he was on Oliver Hanney's uh Voxdev podcast recently.
[30:39] Speaker: Uh and so I bring this up because he specifically mentioned in in China, one of the first things he did when he he set up the pioneer apparel forms there was um set up the, and I believe were on-the-job training programs.
[30:53] Speaker: So there wasn't like he set up a training institute, but like on-the-job training programs in like I think it was six different areas relevant to managing and running a factory and and industrial production efficiently.
[31:05] Speaker: Um and so that's that's where that's where that comes from.
[31:09] Speaker: Um but it does it doesn't sound like you're opposed, you're opposed to like, okay, you learn on the job, you don't learn sort of going through some textbooks in an institute.
[31:17] Speaker 1: Completely, completely.
[31:18] Speaker 1: And I mean, I I do think there are, you know, one of the that that strikes me is um I do think that there are better and worse ways to do talent identification or, you know, of identifying high potential workers and future Um, you know, maybe that's an area where um, you know, a more could be done to advise firms or or leaders of firms here's how you can identify your top talent.
[31:49] Speaker 1: And then you can know who to invest in, who to identify, and who to kind of like raise up.
[31:52] Speaker 1: Um, you know, I think too often, um, you know, especially if I just think about um, you know, firms at that kind of level that are, you know, run by um, you know, operators the countries, like, you know, the what drives the management decisions and the identification of talent is not a process, right?
[32:09] Speaker 1: It's you know, family members, you know, people within you kind of um these, these, these more kind of social networks, um, as opposed to people with with um you know demonstrated talent.
[32:19] Speaker 1: And so it would be interesting.
[32:20] Speaker 1: I I would love to see studies of uh, you know, if if if if are talking about how we can kind of support the development of a middle management layer or how kind of firms could of you know what happens when you um potentially get involved in the selection and training and promotion of middle um, you know, on a meritocratic basis as opposed to on some kind of social uh uh tie uh basis and you know, be to see what the outcomes of firms are based on that.
[32:48] Speaker: Yeah.
[32:48] Speaker: Yeah.
[32:49] Speaker: Um and I I didn't think of asking, but like just kind of you um so do you expect, I don't know if you thought about but like do you expect um, right?
[33:01] Speaker: You guys are you're going for large firms, so you're going for large export manufacturing firms.
[33:06] Speaker: Um, almost by diff definition, in order to export, you to be large, right?
[33:10] Speaker: Um do you foresee that in these in the philanthropic world or the global development world, you guys could run up against like SME crowd that's like rah-rah, SME, and and um and these small firms?
[33:26] Speaker: And like have you thought about like other than just the like have you thought about sort of you know, what's the least resistant path to like win win some of these guys Because I imagine like there that crowd exists.
[33:37] Speaker: I, you know, I know some of them.
[33:39] Speaker: Um so you know, what are some things that you're you're doing to try and I guess win them over?
[33:44] Speaker: Do you care what they think?
[33:47] Speaker 1: I I don't think I'm uh you know in in fundamental uh uh opposition to to the crowd, at least from their I I agree that, you know, you know, my strategy is certainly not to um say, oh, we need to have some you know um strategy for how we're helping you know all the small across sub Saharan Africa.
[34:10] Speaker 1: Um you know, I think I think my very explicit approach is we need to find the businesses um in X4 manufacturing labor mobility that they might be small today.
[34:21] Speaker 1: They might not even exist today.
[34:22] Speaker 1: We might be involved in helping to set these things up from day one, um, but then you know they need to be things that do scale up and grow and become the large successful that are actually generating employment at scale.
[34:33] Speaker 1: Um so you know, I think in in my experience, uh also having uh run a business whose entire model was to support small across Africa before, I think I think it's about kind of okay, um within the audience of small enterprises that program might be supporting, um, are there have this scale-up potential?
[35:01] Speaker 1: And like that's really where you should be doubling down kind of saying, you know, rather than I, you know, I think often than not, you know, a lot of these programs, they kind of look at the whole basket and they kind of say, okay, know, how can we help this whole basket of small um uh you know increase their um their their revenues or something you know by 10% or whatnot.
[35:24] Speaker 1: And you know, that would be that would be a huge success if we do that.
[35:26] Speaker 1: I I think the much, much more powerful transformative uh would be to say, okay, we've got you know a bunch of these businesses.
[35:34] Speaker 1: Like if we can get five of them to not increase by 10%, but increase by a thousand percent, like that, that that's what you want to go for.
[35:43] Speaker 1: Because if you can get, if you can identify which founders, which entrepreneurs can can actually really, really scale up the the spillover effects of driving um uh these leading firms at scale that can kind of show and and actually build out um all these layers of of talent and capability that that can happen in these scale-up firms.
[36:10] Speaker 1: You can have you can have a thousand um you know small and if we increase them each by 10% in the revenues, we will have done nothing to build out the middle management that you mentioned, because none of them still need They're all fundamentally the same size, just you know, a bit bigger.
[36:25] Speaker 1: Um but if you can actually get uh you know a few of to grow by the the 10x or 100x, um, that's when you're really kind of bringing new capabilities into the economy.
[36:34] Speaker 1: Um I think that that that starts to give the structural that I think is is really required here.
[36:40] Speaker: Okay.
[36:40] Speaker: Um another question on your your exporters without borders So Lauren Gilbert, she's the the editor of of In Development.
[36:49] Speaker: Um I think it was literally today.
[36:52] Speaker: She just published a few quote-unquote letters to the and one of the letters was about your uh essay.
[36:57] Speaker: So I wanted to give uh I'll read the letter and give you a to respond.
[37:01] Speaker: So it says there's several nice things at the beginning, but not gonna read those.
[37:05] Speaker: And then it turns to uh some some pushback.
[37:08] Speaker: So I'm quoting here the the article, so Daniel's essay, uh, the article does not contend with the challenge that manufacturing businesses require significant investment in goods, for example, electricity, telecom connectivity, uh, national standards bureaus, among others.
[37:28] Speaker: Um you can overcome supply chain and labor market challenges sheer grit, perhaps.
[37:34] Speaker: But how should budding entrepreneurs think about how to get to provide these public goods?
[37:41] Speaker: End quote.
[37:42] Speaker: So feel free to respond.
[37:43] Speaker: And, you know, no need to restrict yourself to just the the Jobs Fund.
[37:48] Speaker: Um, just because I, you know, I've been with you in a room government officials here in Zanzibar while while you were CEO of Wissoko trying to pull in better policies and better, public goods.
[37:57] Speaker: So so uh go for it.
[38:00] Speaker 1: My uh sense on that is so I absolutely agree.
[38:03] Speaker 1: I mean, you know, fundamentally, entrepreneurs um they exist in vacuums.
[38:10] Speaker 1: You know, they they need all of this public goods in order to ultimately make their businesses work, right?
[38:17] Speaker 1: And so but by no means am I saying, you know, entrepreneurs can do this load.
[38:20] Speaker 1: Um I think when it comes to this kind of question of very we need to um be able to drive um you know government focus and prioritization of uh key public good provision in order to unlock business growth and potential.
[38:40] Speaker 1: My take is that it is the business owners and operators who are the ones who are best positioned to push and advocate for that.
[38:47] Speaker 1: So, you know, more often than not, when I've encountered that have to do with dealing with these challenges of, you know, there's we want to do some you know, reform to the the the operating environment, you know, policies, you for um, you know, a given country or given place.
[39:10] Speaker 1: You know, it's kind of done by this, this, this outside in consulting group, or you know, it could be a multilateral, know, World Bank, whatever.
[39:19] Speaker 1: And the reality is that the the the stake and the seat at table that those kinds of actors have in the political economy is quite limited.
[39:30] Speaker 1: Um, you know, uh of course, you know, they can have and uh you know the the ministers or whoever you know can their heads and say, yes, yeah, sounds good.
[39:39] Speaker 1: Yeah, yeah, we'll take this under consideration, and yes, agree, these are good ideas, blah, blah.
[39:43] Speaker 1: But like, you know, I don't actually believe in a lot of um uh you know kind of uh observers in their ability to meaningfully influence and get these kinds of things done.
[39:59] Speaker 1: However, if you are an actual business, an actual employer the ecosystem who has workers, pays its taxes, you know, embedded in that local context, your ability to um raise voice uh to be a kind of recurring thorn in someone's side when there are issues on things is is much, much greater.
[40:25] Speaker 1: And so, you know, for me, this is part of the Africa Jobs Fund thesis as well, which is you know, we know that the um, the public goods conditions are not optimal in the in which we're backing the business.
[40:39] Speaker 1: That that is precisely the point why we are backing to be built in this, in these places.
[40:43] Speaker 1: Um the the best vehicle for advocating for those is going to be these pioneer entrepreneurs who are facing challenges every day, um uh, you know, willingly accepting challenging missions to build these kinds of businesses, and then in the process of doing so, you know, advocating uh building the coalitions locally within the political context in which they exist to improve these conditions over time.
[41:15] Speaker 1: Um and so I think I see it as part of these entrepreneurs' the the founders that we're backing within our portfolio, to be part of these larger um uh initiatives of overall um public goods provision.
[41:32] Speaker 1: And hopefully, if they successfully blaze the path to that uh their business models are viable and to improving general conditions, that can result in many more of those of businesses being crowded in and entire sectors taking which is really that's the that's the ultimate goal and of Africa Jobs Fund, where it's not just the companies we back directly, but it's all the copycats and and all the other people who have been inspired to do the same that come in uh on the back of on the back of the portfolio as well.
[42:09] Speaker: Yeah.
[42:09] Speaker: So like the pioneer firm is like providing the whole point is they're they're gonna pull in and therefore provide a bunch of public goods by virtue of just starting to exist and and to pull in those public goods in order to scale and continue to exist.
[42:23] Speaker: Yeah, and I you know I mentioned um uh Oliver Hanney's episode with the uh Bill McRaeith of of setting up these pioneer apparel firms in China and then and then elsewhere including Ethiopia.
[42:35] Speaker: Um he specifically called this out.
[42:38] Speaker: He's like, like Oliver, I think, asked about policies and and he's like, listen, like there was no policy.
[42:43] Speaker: Uh we started the industry, and then the industry came and to govern government, and to China's credit, he said local and China were amazing at like, what's your problem?
[42:54] Speaker: How can I help?
[42:55] Speaker: Um, and industry would go to local government and say, these all my issues, and then they'd sort of try and move uh and earth, some better than others, to uh to remove those to to scaling the the uh apparel sector and and others.
[43:08] Speaker: Um okay, so just just moving on.
[43:11] Speaker: So so Scott Alexander he had he had an essay back in um 2024.
[43:15] Speaker: It's titled uh Does Capitalism Beat Charity?
[43:19] Speaker: question mark, where he he basically makes a similar argument as as you did in your in-dev uh essay.
[43:25] Speaker: Um but I bring it up because he ended the um blog post this bit, which I thought was interesting, and I'll quote him here.
[43:33] Speaker: He said, I'm willing to believe that some capitalist uh whether these are development aid think tanks or in developing world projects, could potentially be usual charities.
[43:46] Speaker: The reason I'm not donating to these is that nobody's done the hard work of identifying these and calculating their expected value.
[43:53] Speaker: And I don't feel qualified to do that work myself.
[43:56] Speaker: End quote.
[43:57] Speaker: So easy question, Daniel.
[43:59] Speaker: Have you sent Scull Alexander your expected value
[44:04] Speaker 1: I have not, but but but it sounds like I I absolutely Yeah, I I I think it's just um you know abundantly clear um from the calculations that we have done and you know uh everyone to go on the website.
[44:20] Speaker 1: I think it's afcajobsfund.com slash impact um and at it yourself.
[44:25] Speaker 1: But you know, it turns out that you know you can have you use money in different ways.
[44:33] Speaker 1: And so when you when you look at the traditional um give well style guides and the the kinds of uh of organizations that have scored and evaluated for the per dollar impact effects um um that that that they deliver, um all of those um fit this one-way money structure where it says, okay, we we we we give them a grant of uh you know $1,000 and you this is what they do with it.
[45:08] Speaker 1: Uh they spend it and then this is the effect.
[45:10] Speaker 1: You know, this is not how money works in the real world.
[45:14] Speaker 1: Most money has some form of recyclability and is actually of redeployed in different ways in order to create a mutual system.
[45:25] Speaker 1: And so not only looking at um interventions that are zero on the dollar um is just a very arbitrary constraint to place on how we can think about maximizing impact on whatever metric you're talking about.
[45:39] Speaker 1: Could be health for for dollies, or in our case, these these uh DC wise double consumption years.
[45:45] Speaker 1: So, you know, when it when I think about um how you know want to maximize our our per dollar um uh impact that that we're delivering, you know, if we take the example of um know this this Italian uh labor mobility business that we're we're we're helping incubate and and get started, um, they're going to be um you know uh recruiting workers in uh and then placing them in hotels in Italy.
[46:13] Speaker 1: The hotel in Italy is going to pay them 4,000 euros per The cost to actually um prepare the worker and send them uh is going to be at most 3,000 euros.
[46:28] Speaker 1: So every worker um is going to be netting a profit to this of roughly 1,000 euros.
[46:36] Speaker 1: Now, let's look at the financials for this worker.
[46:39] Speaker 1: We said before um they're gonna go from earning $200 a month to you know uh 2,000 uh euros uh a month.
[46:47] Speaker 1: So, you know, roughly speaking, uh, you know, they're gonna be going from something like uh you know $2,500 a uh to $25,000 a year.
[46:58] Speaker 1: Um if you think about that over the career of that worker, and these are you know young people, you know, usually in early 20s that were gonna be uh that that are the focused here, you know, if they're working for 40 years, even the the kind of baseline income increase uh that that they've experienced, um, you know, we're only talking about a dollars in increased career earnings.
[47:21] Speaker 1: So there's a million dollars in increased career know, while also getting paid a thousand euros to do that.
[47:28] Speaker 1: Right?
[47:28] Speaker 1: Like this just kind of breaks all of the traditional kind cost effectiveness calculations that assume you must when you're doing something good.
[47:37] Speaker 1: Um and and so I think that there's there's there's a kind of like a new methodology that needs to be thought in some of this.
[47:46] Speaker 1: You know, we're we're thinking about it a bit, we we haven't finished it.
[47:49] Speaker 1: But the point being that like, you know, when we're thinking about cost effectiveness, we really shouldn't just be limiting ourselves to this zero cents on the dollar thinking, right?
[47:57] Speaker 1: Um in fact, you know, uh it's my view that probably the most high-leverage stuff is going to be more in the 90 cents on dollar stuff, where it's things that um are likely uh viable eventually.
[48:12] Speaker 1: Um, but you know, in this particular stage right now, um, not yet.
[48:16] Speaker 1: And so they need some amount of subsidy today to kind of going or get through this initial phase.
[48:21] Speaker 1: Once they get through it, they can get the downstream capital to continue to scale up.
[48:25] Speaker 1: But you need to kind of cover this risk period now.
[48:28] Speaker 1: And if you do so, you can have enormous gains later that you know, nine out of 10 times kind of repay you back your maybe even more.
[48:35] Speaker 1: You know, sometimes they fail or sometimes they they pay you back less.
[48:38] Speaker 1: Um, but in expectation, that's gonna allow you to unlock way more activity and get you a far, far, far higher cost per dollar than just doing the zero cents on a dollar making stuff.
[48:50] Speaker 1: So I think this is part of um, you know, I think what we're helping to hopefully kind of open up as a as a space for to basically say, look, the vast majority of activity in the world is not done by 501c3 nonprofits.
[49:03] Speaker 1: Um, you know, it's in fact done by businesses, um, uh uh, that's where the vast majority of the capital in the world too.
[49:10] Speaker 1: And so if we can figure out the shape of things, I'm not about like double bottom line impact investment, you know, I think has has a number of challenges that that you know can be discussed separately.
[49:22] Speaker 1: I'm still talking about we're optimizing for the same whether it's you know, uh DCYs or DALI's, but we're just open to different shapes of of entities that can deliver that.
[49:33] Speaker 1: That's really where I think there's an expanded analysis world to be explored.
[49:39] Speaker: Now, I so I know you're aware that um Danny Roderick, he wrote an op-ed a few months ago in May called Um How I Became a Manufacturing Skeptic.
[49:50] Speaker: Basically, um he's now pretty convinced that manufacturing, has been this like amazing escalator for productivity and you know mass job creation in the East Asian and miracles, is is number one not generating nearly as many jobs as it as it once did, mainly because these jobs aren't uh he contends like low-skilled anymore as much as they and like as much as much as they once were.
[50:17] Speaker: And then kind of automation has also taken root.
[50:20] Speaker: And then number two, um, countries are reaching their peak of manufacturing at much lower, uh, much, much lower shares of the overall economy than has historically been the case.
[50:33] Speaker: So, you know, this essay, right, it comes out as as your your fund is is getting into export manufacturing.
[50:38] Speaker: So, on on what margins do you uh agree uh with and and on what margins do you disagree with um Danny Roderick on his sort manufacturing pessimism, you could you could call it in in world?
[50:52] Speaker 1: So I absolutely acknowledge that you know if you the data of what have been the the economic outcomes from later entrants to entry-level manufacturing versus like you know South Korea um you know 50, 60 years ago, um, you know, it it it clearly appears to be the case that seeing slower economic gains to joining the manufacturing um than some of those earlier uh countries saw.
[51:26] Speaker 1: At the same time, this is still the best option that that have.
[51:33] Speaker 1: Um, you know, I I think um, you know, when it comes to how we going to create the economic games and income growth, it still is going to have to come from integration with the economy.
[51:44] Speaker 1: Um, you know, I I know that, you know, uh Danny and um you I think a few other folks have kind of put put forward some of these thoughts on, you know, we're gonna have a services sector productivity revolution.
[51:55] Speaker 1: But you know, as someone who spent a decade building out a that was targeted at local services productivity I can tell you this is not going to be the way that we convergence with high-income countries.
[52:08] Speaker 1: It can be part of the story that we're kind of bringing in technological capabilities, more um efficient ways existing things in the economy.
[52:16] Speaker 1: But you know, fundamentally, I think this idea just kind of figure it out within your domestic economy uh rise up the income curve, you know, this has just not been supported by any convergence by any country through of the planet.
[52:34] Speaker 1: And I think it just kind of goes against the common sense of you know, when you have uh $100 trillion of high-income and uh high high productivity societies kind of doing with each other, this idea that you're not gonna try to do you can to integrate with that, um, and you're just gonna kind of try to figure out things in your own little sandbox, is just not how you know we're gonna create prosperity uh in the long term.
[52:59] Speaker 1: So while the while the ladder might be, might be a bit you know, the rungs might be a little bit further apart, you know, it you're not gonna get up it as quickly as you were 50 years ago or so, it's still the ladder you have.
[53:10] Speaker 1: The other point that I'll make is the global economy is so bigger than it was 50, 60 years ago.
[53:17] Speaker 1: So, you know, I think if you compare it um you know uh over that period, it's literally 10x bigger, right?
[53:23] Speaker 1: So, you know, there's there the global economy is so much and more diverse than it was back at that point, that there are so many more niches that are available too, you know, if you're talking about how to sell and integrate with the economy.
[53:36] Speaker 1: Um, you know, back uh for South Korea, you know, the the total adjustable market of garments and and and manufacturing or textiles, you know, if you compare that to spaces that even exist, um you know, you you can find, I think, very, significant opportunities that just wouldn't have even been fathomable at that at that point.
[53:59] Speaker 1: So to give an example, you know, we're we're looking at uh uh you know potentially doing guacamole exports uh from from East African countries now.
[54:08] Speaker 1: And like guacamole itself is like a multi-billion dollar industry, right?
[54:13] Speaker 1: Which was absolutely not the case 50 years ago.
[54:15] Speaker 1: And so there's like all of these just, you know, when one opens, you know, other doors uh uh uh are closing.
[54:23] Speaker 1: And you know, it the the but but overall the pie is getting much, much, much bigger.
[54:27] Speaker 1: And so, you know, for poor countries that are still kind lagging behind and have yet to get on the ladder, there are more ladders than ever before.
[54:35] Speaker 1: Um, and so I think it's just a matter of you know, figuring out what is the entry point so that you could start that capability of integration of the global economy.
[54:44] Speaker 1: And from there, um, you know, any individual sector might have the same accelerated effects of what we've seen before.
[54:51] Speaker 1: Um, but there are more to go through.
[54:53] Speaker 1: And so therefore, I think it is worth um trying and pioneering what can be possible.
[55:01] Speaker 1: Um, and as I said, there's there's just from my no better option otherwise.
[55:06] Speaker 1: So this is still where countries need to prioritize.
[55:09] Speaker: Okay, so just transitioning to some questions on international labor mobility now.
[55:14] Speaker: You you kind of briefly went over the case for it uh a earlier in the podcast.
[55:17] Speaker: But um how about we start you just explain the Africa Jobs like current opportunities around international labor mobility.
[55:25] Speaker: You've already spoken a couple times about the Italy um uh with the tourism sector there.
[55:31] Speaker: Um, but there's also another opportunity in Germany on So do you want to talk about this and sort of the type of you're looking for?
[55:40] Speaker 1: Yeah, so so really when we think about labor mobility and kinds of businesses that need to be built out in order to the full pathways, I would say broadly they're in, three different buckets.
[55:50] Speaker 1: Um, and I'll start with the first one because I think this perhaps the most underlooked, but the most important That's really about organizing the demand side.
[56:00] Speaker 1: So the most important, the binding constraint in actually workers from low-income countries to high-income countries getting a high-income country employer to actually extend specific job offer in order to bring that worker over.
[56:17] Speaker 1: And so what you need to do is you need to have someone who finding all of these companies, these businesses in countries or in a specific country, um, and building them and understanding what their needs are in terms of hiring.
[56:31] Speaker 1: Um, and once that's clearly defined, then you can make accessible to um uh partners kind of further up the find the right workers for those roles.
[56:42] Speaker 1: Um, so this kind of demand aggregation and organization is very important.
[56:46] Speaker 1: So you want to have recruiters in high-income countries are working with those businesses and organizing it.
[56:54] Speaker 1: On the training and preparation side, this of course is You know, many of these roles, you want people who have uh the languages up to certain levels in order to qualify, have specific skills or certifications.
[57:06] Speaker 1: So you need to have those kinds of training academies or at place.
[57:10] Speaker 1: Um, but that should once again kind of follow from uh clearly defined uh opportunities and and and jobs that that are to be done.
[57:18] Speaker 1: Um should not be done in isolation to just kind of um you train up people without having jobs and and identifiable uh in place to do so.
[57:26] Speaker 1: Um and then the third component is the financing So so um you know uh training and then ultimately going to work is is a big uh financial burden.
[57:38] Speaker 1: Uh and so um uh and because of the multitude of players and the costs, um, you know, you need to have the right of financing structures in place.
[57:49] Speaker 1: And you know, I think about this very much in the same way as you know, student financing and investing in uh degree uh or going to some kind of trade school or like that, which is you know, you're investing in your because you, uh, the individual person who hopefully is to get a higher paying job afterwards, um, are going to be who benefits the most.
[58:10] Speaker 1: And so having the right kinds of structures where workers um you know can receive financing so they don't have to pay out-of-pocket upfront expenses and uh only kind of start back later once they they have found success in higher-earning jobs, you know, in destination countries, building out kinds of cross-border multinational financing mechanisms work for that um is another bucket of things to be done.
[58:35] Speaker 1: Um so broadly speaking, these are the three areas um where looking for entrepreneurs uh to build businesses and provide services uh to unlock these labor mobility pathways.
[58:46] unknown: Okay.
[58:47] Speaker: Now, now if we look at the like the status quo or the uh like the default for an individual economic migrants, you journey that they go on, I guess currently without any help.
[59:01] Speaker: So, right, I'm I'm a migrant from let's say Nigeria and I to go get to Italy, usually that's like through Libya or or I'm a uh Syrian and I want to get to Germany.
[59:12] Speaker: Um so like first, what are the biggest frictions I as that migrant experience right now along that migrant journey?
[59:22] Speaker: And then um, I guess number two, are there are there current um organizations or companies like focused on addressing at least like some of those frictions that the you know average migrant from these places trying to get to Italy or Germany or elsewhere experience along that journey?
[59:44] Speaker 1: I I would draw a big distinction between the irregular routes that um you know often come up, and and I think referring to uh you know, where people are kind of finding own way um you know into higher income countries, you know, not through kind of organized channels and and versus um uh the types of businesses and the services that I very focused on, um, which is I would say the the and and regularized um uh migration channels.
[1:00:16] Speaker 1: And and I think, you know, in particular, if we just look obviously the the political feedback and backlash migration, I think it's very, very clear that you know, channels for um uh finding workers and uh placing them um the the labor economy um that has not uh been well by populations over the last 10 years.
[1:00:43] Speaker 1: Um at the same time, these labor shortages exist.
[1:00:45] Speaker 1: And um, you know, the the the private companies, the in these ecosystems, they they they desperately need these Um, you know, it's it's it's a funny uh you know kind of uh uh dirty secret.
[1:00:57] Speaker 1: But actually last year, um, you know, under the uh uh full of uh administration of the um you know the Trump um, more seasonal workers came in under temporary work to the US than ever before.
[1:01:13] Speaker 1: Um and it's because uh uh farms and and large agriculture um, you know, needed workers that were not available in US economy and actually successfully lobbied with the with Trump government um to make these pathways uh possible to in workers to fill these roles under organized programs that have existed before but were kind of expanded to be larger ever uh in this past year.
[1:01:39] Speaker 1: And so, you know, from my perspective, these kind of organized channels that are really private sector-led, um, so it's um individual businesses within the um destination economy are providing the political pressure and then also responsibility to identify um and recruit workers that of fill their particular needs.
[1:02:05] Speaker 1: This kind of organized migration channel is going to be the default way in which um workers from lower-income countries are going to come to higher-income countries going And I think this makes a lot of sense because these are who are coming in, because um workers could not found from them locally.
[1:02:22] Speaker 1: Um, they will also have jobs on day one.
[1:02:25] Speaker 1: They'll be paying taxes from day one, um, and uh whatever which governments might want to add in in order to kind of or or or or make um the profile of the workers you know, um, you know, more amenable to the uh to the citizen citizenry, um, like having certain language skills, having certain education, certifications, whatever, you know, are all reasonable things that you know individual governments um can you know decide alongside their employers to put in And then, you know, the the the training or the preparation infrastructure, um, you know, though that that layer of that I mentioned, that can then be built up to respond to demand, you know, once it's once it's set in place.
[1:03:02] Speaker 1: Um, but I think um the key thing is kind of this emphasis organized channels as opposed to the the more irregular, channels, which unfortunately uh have been what um I taken up a lot of oxygen in the room when when when most kind of think about migration.
[1:03:20] Speaker: Yeah.
[1:03:20] Speaker: I actually don't know the the you might know the numbers, like the numbers between these irregular channels and the regular Um, but you know, thinking thinking about this the right like oh, so you have a cost effectiveness analysis on your that you already alluded to.
[1:03:37] Speaker: Um I don't know if it includes this, but like to the you guys make the um the regular organized channels like one easier, uh, you know, less time intensive, less costly, kind of more guaranteed to kind of working out at the end of day with a job.
[1:03:58] Speaker: Um to the extent all that happens, you could actually be a lot of people away from pursuing these more dangerous, um uh um unorganized channels of migration.
[1:04:10] Speaker: Um and I don't know how that factors like that could factor in in terms of dailies, like you're you're not injured, or you know, some people have have have died.
[1:04:19] Speaker: I'm sure that's the like vast minority of cases.
[1:04:21] Speaker: But um have you have you thought about that, or is it is it of negligible in the grand grand scheme of things?
[1:04:27] Speaker 1: I have not uh factored in those those uh numbers in I have I'm not familiar with um whether there have been to analyze specifically that affects, you know, if you uh organized channels um uh the responsiveness of the of yeah, I mean I can come up with parallels, for example, you know, if you think about um other trades uh which have know high irregular or informal markets um and where maybe can introduce some regularization and some you know, usually you do see a shift uh between those two.
[1:05:10] Speaker 1: Um but um you know it'd be interesting to kind of see those effects over time.
[1:05:14] Speaker 1: Uh of course, you know, we would love uh to see, and I think it's just you know, the the ultimate long-term maximizing, utility maximizing arrangement is where you have that is politically stable and supported on all sides it's clear that um you know you look at examples where um migration does account for um uh uh a small minority in in countries um uh that that that that experience it.
[1:05:46] Speaker 1: But it it definitely kind of draws a disproportionate amount of attention.
[1:05:49] Speaker 1: Attention, yeah.
[1:05:50] Speaker 1: Uh and you know, I think unfortunately um has certainly had a backlash result in organized migration on certain Um, you know, really kind of being clamped down.
[1:06:02] Speaker 1: You think about student visa pathways in the US, for which, you know, I don't think anyone in the US has has kind of seen university students as being a source of Um, but you know, they have uh because of the the general of of of heavy hand uh and and and broad hammer of the US administration towards um you know migration pathways um you know been been been been kind of targeted and and and uh you know lives made a lot more difficult as a result of that.
[1:06:34] Speaker: Yeah.
[1:06:34] Speaker: But I imagine um, right, this would make yours and Ben's job, uh uh at least the job of the entrepreneurs you invest in a easier.
[1:07:02] Speaker: Are you or are you guys strictly just focusing on investing like entrepreneurial founders and leave the sort of side in this space up to other groups that are that are doing it currently?
[1:07:16] Speaker 1: I think we are not um completely opposed to uh backing or or getting involved in policy discussions where we think um you know there's there are tangible opportunities to the discussion in a direction where we can then see for more African workers benefiting.
[1:07:41] Speaker 1: Um at the same time, I think we we do see the kind of activity of the fund as backing businesses that are going to increase the actual kind of movement of workers under these pathways.
[1:07:57] Speaker 1: And so um, you know, once again, I think when you have that can take an opportunity and uh actually build it kind of show successful case studies and proof of concepts then be stakeholders and engaging um with uh policymakers, know, government officials.
[1:08:18] Speaker 1: That's what we're seeing today, by the way.
[1:08:20] Speaker 1: Um so in Italy, uh the Maloney administration, which is you know very conservative far-right party that was elected, know, in large part because of its uh views on wanting uh uh uh migration, especially the irregular kind, um it is under their administration the past year that made it much easier for uh Italian companies to do the recruitment and bring workers in.
[1:08:48] Speaker 1: Um uh they have introduced a new program, uh uh a in order to do that.
[1:08:54] Speaker 1: Um this pathway is still quite new.
[1:08:56] Speaker 1: And so the startup, the entrepreneur that we're backing is in fact engaging very closely with the policymakers to be the guinea pig and and and the actual uh one of the first operators to to kind of bring workers in under this.
[1:09:10] Speaker 1: And so there are these kind of very clear feedback loops in which kind of policy and and and practice are being linked you know, and being driven, you know, in this case by firm, by this entrepreneur.
[1:09:20] Speaker 1: I think that type of model is exactly what we want to see what we expect.
[1:09:25] Speaker 1: Um uh I think you know, whether to kind of get involved in the policymaking or shaping, um, I think really kind of on whether we've exhausted uh all of the uh existing openings in the policy landscape as things change, which as of right now, I think the good thing is we we are seeing more and more countries kind of move in this direction of having more organized pathway policies.
[1:09:49] Speaker 1: Um so my general sense is um you know we will see more and of these pathways open up, um, you know, perhaps even than we can kind of build companies and build services to meet them.
[1:10:02] Speaker 1: Um and so um, you know, if all goes well, then uh, you know, we can focus more on that rather than having to go further uh in the actual kind of policy debates itself.
[1:10:12] Speaker: Okay.
[1:10:12] Speaker: Um, now I'm gonna ask you to humor me, Daniel.
[1:10:15] Speaker: Uh I have a I have a pitch for uh I guess a kind of distinct for the two uh areas that that the fund focuses on.
[1:10:26] Speaker: And I want you to tell me your thoughts and like feel free to absolutely tear it apart.
[1:10:29] Speaker: Uh, but right, so as I was prepping for this podcast, it to me that these two areas that the fund is focusing on that been talking about, export manufacturing, labor mobility, are or can be viewed or framed as actually like complementary.
[1:10:45] Speaker: Um, so like, okay, why do I say that?
[1:10:48] Speaker: Um I think a lot of it comes down to uh or could come down timing, right?
[1:10:53] Speaker: So as we've already discussed, um economists like Danny and others, they've recently voiced right this manufacturing being able to deliver the mass numbers of jobs it used to during, for example, East Asia's rise.
[1:11:08] Speaker: Um, and Roderick and others, they then conclude that sort of need to be more attention to um, he calls it like policy for services or non-tradable services, right?
[1:11:20] Speaker: Um, that you kind of alluded to in when we were talking Roderick's recent op-ed.
[1:11:24] Speaker: Um but as you rightly said, right, the non-tradability of has like these huge downsides.
[1:11:31] Speaker: Mainly that's like because if if you're not uh traded and you're consumed locally, you cannot tap into these external or this global demand.
[1:11:42] Speaker: So you're by necessity like limited uh to domestic incomes and and domestic demand, which in low-income countries is by low.
[1:11:50] Speaker: Um but like so in a way, isn't your international labor work suggesting like, no, we can actually start to make what once purely non-tradable services, we can start to make them And and and this is like this is happening at a perfect time export manufacturing is ceasing to generate the same number of jobs as it once did.
[1:12:19] Speaker: And and so I think of like you, you know, you told the story of the um tourism people in Kenya moving to Italy.
[1:12:26] Speaker: But like I think in one of your essays, it was yours or Ben's essays, you talked about the Filipino nursing study is a example of this.
[1:12:33] Speaker: Like nursing services is ostensibly, on the face of it, a service.
[1:12:38] Speaker: But this newly open labor mobility pathway opened for Filipino nurses and basically made it a tradable service.
[1:12:45] Speaker: Um so I guess like opening up these new tradable service to higher productivity jobs, it couldn't happen at a complementary time when the allure and and like shine of export manufacturing jobs is declining.
[1:13:03] Speaker: So like I'm rambling now, but like that's the theory.
[1:13:06] Speaker: Um again, feel free to tear it apart.
[1:13:09] Speaker: Uh, what what are your thoughts?
[1:13:11] Speaker 1: I I completely agree.
[1:13:12] Speaker 1: I mean, I, you know, unlike Danny, I I I don't just kind buy, you know, at face value that because um you know the of climbing on on manufacturing ladders uh you know that oh, you know, that that's no longer a pathway or that's that should no longer be an area of focus, you know, for countries.
[1:13:31] Speaker 1: So so so to me, it's it's not an either-or or even you know, so much of a hedge, but it's like you do both.
[1:13:38] Speaker 1: And and I think um, you know, they both are integration with the global economy, which is how we are going to generate incomes for millions of African workers.
[1:13:50] Speaker 1: Um, and I think that, you know, in some sense, you could, you could, you can definitely come up with you know great in which um, you know, in one world, yeah, maybe um uh you the the manufacturing growth opportunities are fewer, but you know more um uh clear demand on non-tradeable services.
[1:14:09] Speaker 1: And so um, you know, that becomes more of the portfolio.
[1:14:11] Speaker 1: Um I can also see other scenarios in which for whatever um you know labor mobility is is is not growing as like to see, and you know, export manufacturing becomes of the focus.
[1:14:24] Speaker 1: So I think having both, you know, the having a single core metric that we're optimizing for, which is uh these consumption years, these uh lifetime uh earnings increases African workers, you know, allows us to pursue um uh you these different avenues for how we're creating prosperity workers um you know while still having the kind of coherent thesis and perhaps you know some uh internal you know, between these uh uh these these different focus
[1:14:56] Speaker: Yeah.
[1:14:56] Speaker: Um okay, so good.
[1:14:59] Speaker: My theory is not totally out to lunch.
[1:15:00] Speaker: Fantastic.
[1:15:01] Speaker: I'm glad to hear it.
[1:15:02] Speaker: Um so just moving on, I guess in addition to all this work, you're also, among uh other hats, a board member here at the Urban Lab.
[1:15:11] Speaker: Um to me this makes sense, right?
[1:15:13] Speaker: If your thesis at the Africa Jobs Fund is to like move a of people from low productivity to high productivity export manufacturing firms, important, uh international labor mobility important, but pretty much all the high jobs on the planet are are in cities, right?
[1:15:28] Speaker: Um so consistent kind of with the overall thesis.
[1:15:31] Speaker: Um now let me pose an argument uh to you and and again get and uh as always feel free to tear it apart ruthlessly.
[1:15:41] Speaker: Um here's the here's the argument.
[1:15:44] Speaker: So could it be that uh from an expected value perspective, there could be a bigger cost effectiveness argument to be made spurring rural to urban migration within countries rather international migration across countries?
[1:16:02] Speaker: And this is with the caveat that I have immense amounts of in in uh in this question.
[1:16:08] Speaker: So, like yes, um income differentials are uh not as great the countryside and the city within the same country, but still very large, right?
[1:16:20] Speaker: I think a recent review paper by um David Legakos suggests it's like on average across the developing world, income are like three times or or four times, sometimes four point times higher in cities than in rural areas.
[1:16:34] Speaker: Um, this is by no means the like 35x, I think, is what Ben uh said is the difference between um I think it was Malawi uh and German incomes that he wrote up in a recent Substack essay.
[1:16:47] Speaker: Um but it's not nothing, right?
[1:16:49] Speaker: It's roughly like an order of magnitude less.
[1:16:51] Speaker: Um and then where the where the expected value argument could run in in sort of the cities, the rural to urban migration favor is on the tractability side, right?
[1:17:02] Speaker: So rural to urban migration is sort of baked in.
[1:17:05] Speaker: Uh it's happening whether we do anything or not.
[1:17:07] Speaker: You know, in Africa, you know, between, depending on your 750 million to 900 million people will be moving uh to or being newly born in uh African cities.
[1:17:18] Speaker: Whereas um with mass migration through international it's likely to be, and then feel ready to push back, but in my head, it's like likely to be a little less tractable, number Uh so you'll like you'll need rich country policies to to be open to these economic migrants.
[1:17:35] Speaker: Um, and then number two, it's it's not likely to it's not to happen at the scale at which rural to urban migration is at least in Africa.
[1:17:46] Speaker: Um so uh yeah, I checked up the numbers briefly, for example, during the age of mass migration in the late 19th century, says something like 55 million to 60 million um Europeans Um so yeah, huge amounts of number, but not close to the 750 to 900 million estimated for Africa uh between now and 2050.
[1:18:05] Speaker: Um, anyways, you get the gist of the argument.
[1:18:08] Speaker: Uh what's your what's your response here?
[1:18:12] Speaker 1: Yeah, so I, you know, I I I definitely think that rural to migration and yeah, you know, building up more density in productivity or higher productivity areas um is uh the move and that it's it's absolutely happening, you know, we like it or not.
[1:18:28] Speaker 1: Um and uh so I think you know, on on the kind of strict basis of uh you know, if you're if you're targeting a migration and kind of thinking about you know what are the effects to be um you know domestically versus internationally, pointed out, you do have this order of magnitude difference in in the gains.
[1:18:51] Speaker 1: Um and so I think when it comes to having a individualized um uh intervention where you are targeting a specific cohort of people that you are then kind of stimulating or supporting to make these um uh these moves, um my uh like your cost and your your social return is you know always going to out, I think, far higher on the international side, if you're doing it on a cost neutral basis, right?
[1:19:24] Speaker 1: You're running some kind of you know profitable or business to do so, which is which is the focus of Africa Jobs Fund.
[1:19:30] Speaker 1: Um I think you know the other factor that I would want to kind of more data or evidence around is you know, if you have a direct intervention that was targeting um urban migration in a low-income country setting, um I confidence that for your target group, uh for your group that's receiving your intervention, they will receive benefits.
[1:19:58] Speaker 1: My question would be counterfactually whether you're improving kind of net benefits to that domestic society given that if you send a cohort of 50 young men from one to go into the city and to find, you know, work as day or whatever there, I'm sure that for those 50 young men, they will receive a net increase in income.
[1:20:22] Speaker 1: But would they not just be displacing 50 other young men who came in from a different village who are not part of the or of the intervention, uh, who are otherwise uh not being out of the queue to take those jobs today?
[1:20:36] Speaker 1: Um so you know, given that the kind of surplus of labor, know, the the the low-income countries do not actually uh entry-level labor shortages, unlike the high-income um, where counterfactually it seems quite you know, uh getting 50 Malawians to go uh work in in Italy is not somehow just uh uh you know displacing 50 um you know equally poor people uh such that the the net gain is is being zeroed out.
[1:21:08] Speaker 1: Um I think that would be my concern about kind of targeting interventions um for just kind of shifting or let's say um you know some of the the rural to urban migration in the domestic country context.
[1:21:20] Speaker 1: But I'm actually curious your take on that, whether you think uh that might be the wrong way to look at it.
[1:21:29] Speaker: I I mean so your your argument basically is your wor your is that um um uh with rural to urban migration, the folks kind of you know uh tapped into an intervention to spur additional rural to urban migration.
[1:21:49] Speaker: Um they would be uh in essence displacing uh sort of other folks um moving into the city.
[1:21:59] Speaker: Explain that, it's explain that bit again.
[1:22:02] Speaker 1: Yeah, I think I think given the reality of rural to urban is already happening at a significant rate in most low-income countries, but a targeted intervention to increase the of some subset does not necessarily lead to net overall gain for rural to urban migrants because you don't actually have a market failure right now in supply-demand matching, you definitely do have internationally, right?
[1:22:41] Speaker 1: Internationally, the the international mobility of people in the global economy is one of the most distorted and economic systems that exist because of the whole regime of and not being able to just go where demand is because of the borders and barriers between them.
[1:22:59] Speaker 1: Um those factors are usually not a constraint when it to domestic labor supply.
[1:23:05] Speaker 1: So my question, uh which I'm open to kind of understanding uh uh from people who maybe look at this more closely, is like, do we actually have a market failure to be overcome here now, you know, with with a um uh with specific interventions?
[1:23:22] Speaker 1: And um, you know, I know I know there have been um uh some some definitely interesting studies and been done in Bangladesh, uh, for example, that have looked at um uh at this type of of um of setup.
[1:23:38] Speaker 1: Um uh uh Mushvik Mubarak uh has uh has done this work.
[1:23:44] Speaker 1: Um uh and you know, for that group that has migrated, they um they have uh in fact kind of seen the benefits and you quite quite quite kind of cost effective.
[1:23:54] Speaker 1: My question is kind of on the whole, you know, in in in in in the whole ecosystem and equilibrium, how did that actually things?
[1:24:03] Speaker 1: Was this was this, you know, did they just kind of take the take the places of workers from other villages who were part of the study or not part of the intervention, who would have otherwise gotten those those those jobs?
[1:24:14] Speaker 1: Because at least to me on the outside, it doesn't seem like rural or kind of entry-level labor supply in cities kind of shortage right now.
[1:24:25] Speaker: Yeah, and I don't, I mean, I can't think of any, I tried to, as you were speaking, think of studies off the top of my head that got it like general equilibrium effects and and um and come to mind.
[1:24:37] Speaker: I've read, I've read, I've read most of Mubarak's stuff around the no-lean season stuff where like basically they give, I some combination of um information about like the job the city combined, I believe they pay their like bus fare their transit fare to the city, um, removing these types of and then randomly assign that intervention to a few Uh it significantly increases the likelihood, number they go to the city.
[1:25:04] Speaker: Um, and then that increases their wages.
[1:25:06] Speaker: And I think they're more likely to then go back in in in seasons, they're they're more likely to migrate to the city for urban work.
[1:25:14] Speaker: But I haven't seen like specific answers to the point you're about general equilibrium effects.
[1:25:19] Speaker: So yeah, I don't know.
[1:25:20] Speaker: I'll do a Google or Claude Claude search after after we're done and get back to you.
[1:25:25] Speaker: Um last question, sir, for people listening who uh may see as potential founders or or entrepreneurs.
[1:25:34] Speaker: Um, where can they go to learn more?
[1:25:38] Speaker 1: You can learn more at our website, uh, which is Uh we also have a great Substack, uh Africa Jobs Fund uh, which we would love for people to subscribe to.
[1:25:51] Speaker 1: And uh also follow us on LinkedIn, putting up uh lots of stuff every day about um the different organizations that backing, different initiatives that we have underway, as jobs um that we're creating, both for African workers well as for people who we want to come join uh the the building these transformative businesses uh to opportunities for the people who need them the most.
[1:26:16] Speaker: Great.
[1:26:16] Speaker: Daniel Yu, thank you so much for coming on the podcast.
[1:26:18] Speaker: It was an awesome conversation, and I am uh very to watch the progress of the Africa Jobs Fund.
[1:26:25] Speaker: So thank you so much.
[1:26:26] Speaker 1: Thank you.
[1:26:27] Speaker 1: Pleasure to be here.
[1:26:28] Speaker: Thanks for listening to the Africa Urban Lab podcast.
[1:26:31] Speaker: To listen to our other episodes, follow us on your favorite platform or subscribe to our YouTube channel.
[1:26:39] Speaker: And pretty pleased if you like the episode, share with your and your network.
[1:26:44] Speaker: It really, really helps grow the show.
[1:26:46] Speaker: We appreciate it and we appreciate you.
[1:26:49] Speaker: Thanks so much.

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