Democratised Disruptive Innovation- What could it mean for the individual? Hirander Misra

Finance, My Blog

To learn lessons for the future we have to look at the past.

A few thousand years ago, when money never existed, a transaction happened only by exchanging agreed commodities by barter. E.g. Panchgani in Maharashtra where I recently held a TEDx talk on the subject I am writing about now is famous for strawberries – if you had strawberries and someone had cows to produce cream you could exchange a given amount of milk for a given amount of strawberries based on a discussion to determine the value of each and you both now could happily eat strawberries and cream. Life was simple and easy to understand.

A few centuries ago, with an inception of globalisation and increase in population the trade happened by exchanging commodities with rare materials like gold and silver.

Moneylenders in the past filled the gaps left by banks and still exist today. The Venetians were key players in the 1300s. For example moneylenders keep your gold and lend you money and charge you interest but if you did not pay it back they keep your gold

Around 16thcentury, the current banking system started evolving. Banks started to print paper currency. They were printed on the basis of gold reserve but from 1973 this backing by gold was removed as part of the Breton Woods Agreement as backing by gold was expensive. From then on faith in currency is based on trust. This is not different to Bitcoin, a virtual currency today, whose value is based on expectations and hence trust.

At the time of the 16th century exchanges also came into being. An exchange is a central meeting place for buyers and sellers and came because in era before computers more buying and selling could be conducted in a concentrated location. This was really the start of the evolution of an exchange and money as we understand it. In 1602 a central place for buyers and sellers to trade with each other was established in Amsterdam which became known as Amsterdam Stock Exchange albeit the Belgians claim the first exchange since 1531.

From the 1990’s stock markets become more electronic gradually in the most part replacing trading that was done on the open outcry floor of a stock exchange to computer based trading. Then the financial crisis happened in 2018 and many individuals and companies were impacted by the reckless greed of a few.

This financial system has made individuals reliant on middlemen be it a bank or a broker and even in cases, exchanges with dominant position. Financial markets have became complex to understand and expensive in many cases with a never ending era of products available to the unassuming consumer. The system the rough the centuries has become unfairly priced and complex. For example you may only receive 50% of the value of your gold as a loan and 20 percent interest may be paid for it. Is it fair?

Banks do the same with assets but one can argue in this era of technology the value of the services provided is too expensive relative to the overhead to deliver those services. Greed has led to a complex financial system that few understand with lots of vested interest. Every day people are exploited by the system and I am not saying the system is not needed but it needs to change. How can we bring fair level playing field to eradicate disparity – but also with social reform, which is impactful and sustainable? This niggling thought really hit home to me in 2008 when I was COO of an innovative electronic stock exchange called Chi-X Europe, which I had co-founded. Lehman one of our clients went bust in front of my very eyes and Fortis Bank our clearing bank nearly went the same way until the Dutch Government bailed it out. Global financial meltdown ensued. I realised that the system was flawed and there must be a better way. Yes the system had to exist with better controls but it had to reach back to grass roots level as it had become so far removed from reality.

We at GMEX Group have personal experience of this as a company. In 2015 we started working with the Agricultural Commodity Exchange for Africa (ACE) in Malawi after a fortuitous meeting with Kristian Shach Moller in a hotel bar at a conference in Switzerland. This exchange, which deals with grains and pulses but was struggling to reach the end smallholder farmer that it was set up to facilitate in a meaningful way as only 5% of its activity was farmers selling their crop direct to market. Middleman which at the time added no value were giving smallholder farmers 10% of what their commodity was worth and the banks despite having the commodity as security much like a money lender keeps gold still lent at 30-40% interest rates and that too to only 60% of the value. The farmer took all the risk but was left struggling to feed his or her family. By introducing prices on their mobile phones to farmers and educating them as well as making the banks compete online to lend in addition to brining in cheaper finance through mobile/ electronic banking coupled with making the exchange more accessible for them to sell their produce directly, in one year in 2016 the incomes of 47,000 smallholder farmers went up 31%. $10mn worth of finance was provided and that would have been $110mn if there had been better access to finance. This would have then benefitted nearly 500,000 smallholder farmers.

This lead us to realise that technology instead of being exclusive could become more inclusive and transparent. More income leads to social welfare, women’s empowerment, children’s nutrition as we saw in Malawi. Value add now can move from being farmers growing tomatoes to produce tomato paste (add value) and then have demand for financial services personally like mortgages and loans that are priced right. The unbanked start to become banked.

We further realised that this issue was prevalent across all other parts of Sub-Saharan Africa as well as Latin America and South East Asia. Take coffee as an example, we in a fancy coffee shop were paying £2.50 a cup yet the end farmer was lucky if he got £0.10. As such positive change in a sustainable manner where we made people reliant on commercial enterprise not charity hand outs could lead to a massive positive impact on a global scale

This led to the creation in 2017 of a dedicated initiative by us to facilitate this called FinComEco (Financial and Commodities Ecosystem). This has led to engagement in 21 African countries as well as 3 outside the continent but with lots of work to be done to fully convince governments and stakeholders in many of these to not only do this but also do it in a proper fashion involving all key areas fully linking farming to the end value chain of demand. A middleman for agriculture still has a role to play much like they do in financial services but it was those who could add value be it by making the smallholder farmer bigger and influential by grouping/ aggregating production or offering convenience such as transport to get it from the farm gate to the warehouse were the ones which would now prevail in this new world. The farmers in the case of ACE can now choose how they sell, when and how they got a fair loan to buy fertiliser and seeds when they needed it at the outset. The exchange now enabled by technology is at the heart of that to ensure that technology is used for good. This is applicable to many different sectors and we are also now starting to do the same through a separate India based initiative we announced in December 2017 for rag pickers and others who generate waste to creating an exchange for waste such as cow dung, etc to bring valuable incomes to those who need them most. Not to also mention the positive environmental impact this will have. This also supports the Indian Government’s Clean Ganga and Swach Bharat initiatives but is not just an India problem it is a global one as rich and poor countries all produce waste and most of it ends up in our oceans destroying marine life.

Malawi-image

Ultimately billions people can benefit if these types of initiatives are rolled out more widely leading to positive change by other organisations be they public or private. Corporate Social Responsibility is not just about meeting targets for CSR budget spend any which way as it has to be more than that. Equally executives at development finance institutions have to galvanise their organisation as many are acting like private equity houses and not looking at a 10 year view for sustainable socio economic reform no matter what the PR ad rhetoric lends us to believe. The number of times we have knocked on such doors and been told that we should come back when we have a track record and profitable on such ventures for funding so we can scale further and that we should be three years old as an enterprise. If that was the case why would we need them at that stage? We are not the only ones that face this predicament.

We as the individual are the ones that have to drive this change. So it’s no surprise that we find ourselves in an era “Democratised Disruptive Innovation” (DDI as I term it) enabled by technology, where 1 month is like living 10 months in terms of opportunity and development and it is not inconceivable that in 5 years time organisations not only such as Google could be a bank and banks as we know it would be different as even we individuals could lend and borrow more and more from each other as we have seen with some tech initiatives with peer to peer lending emerging. In the last few weeks two large company CEOs have approached me that are successful as they reflected over the holiday period and said we make lots of money now but we can see that either we change or someone eats our lunch. Look at what digital cameras did to Kodak which is a shadow of its former self.

Now we can trade with each other direct by technology whereas in the past you had to be in local area and Now national and international. Anyone will be able to trade with anyone with transparent in an open manner with more consideration to just financial services. We are in an era of “Anyone to Anyone trading .“ The intermediary (middleman) is now technology and this means massive opportunities not only for companies like Google who can from nothing in 20 years to become a giant worth about $700bn USD but also for us as the individual as anything is possible. I am not saying that there is not a need for a middleman, but this match making is needed at a better price and continually needs to evolve.

We have come back full circle to the new age of barter between all of us but with online convenience to coexist with the current exchange and financial services ecosystem but technological enabled change is making it more practical, more efficient and more accessible. So we can now all embrace change and use it to empower ourselves in any manner we choose, when we choose. Whether change is the only constant (the overall theme of TEDx Panchgani) or there needs to be constant change in the way you do things is now for you to decide how best to democratise.

-Hirander Misra

CEO, GMEX

http://www.gmex-group.com/

NINEISMINE and yours 2. by: Steve Rocha.

Inspiration, Motivation

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They say that children are future of India,of the US of Iraq, of China.

What a myth!!

The NINEISMINE campaign believes that children are not citizens of tomorrow but that they are citizens of today. they are tax payers of today. They are trend setters of today!! Secondly they do not believe that they are merely citizens of this or that country but that they are citizens of a Global Earth community that dreams beyond borders.

The NINEISMINE campaign is an initiative of for and by children who set out to MAKE POVERTY HISTORY while they ensure the fulfillment of the United Nations Sustainable Development Goals. (Like www.facebook.com/9ism9)

It dreams of a world where children will enjoy at least one Child right i.e. Article 2 of the UN Convention on Children. It states all children should enjoy all Rights! And until that day they are aware that they don’t have the luxury to engage in Baby-talk. They believe that it is important for them to speak now to secure their future and the billions of their peers in vulnerable situations.

The Campaign was started by children in response to Nelson Mandela’s appeal to ordinary citizen’s to keep their local politicians accountable to UN Goals to end poverty … sustain-ably.

The campaign also emphasizes that children have the right to be seen and heard and in through their own unique and child friendly mediums. Hence invites young people to use dance, art, poetry, mobile-apps, technology, circus art .. basically anything!! And thus even as they have fun they are part of a EPOCH moment when the world could consign Poverty to museums and our libraries.

This year the NINE IS MINE will be in Denmark, New York and Geneva and ofcourse In India. We need the support of young people from across the world to join our Drum Out Poverty Exercise by sending us a short video of them drumming with a caption of what they would like to Drum out. Send us these clippings at 999coordinates999@gmail.com

They are also conscious that it is not the rich that can or should speak for the poor and the vulnerable but that it is their responsibility to provide their marginalized peers with opportunities to speak for themselves.

They say that helping another will not change the world but it could change the world for the other person and more so for you. And we agree.

However NINEISMINE believes that if we do our bit we can also change the world. Register at www.nineismine.in For more info write to 999coordianates999@gmail.com

Steve Rocha – Campaign Convener NINEISMINE.in

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P.S. NINEISMINE gets its name from the promise by India to its children that it would dedicate 6% fro education and 3% for health by 2009. Till now India invests only about 1% on Health and about 3% on Education.

The your’s 2 in the title refers to the fact that WHO recommends an additional 2% (i.e.a minimum of 5% for Health)

Sojourner’s Struggle. by: Dennis Hrangchal. Manipur, India.

Inspiration, Motivation, My Blog, Uncategorized

altAhQQG-ZBEkUlkTP4KuwFRM8rkWHKkkxRnBrPsQYZTBdI   Dennis Lallienzuol  Hrangchal.

Sojourner’s Struggle.

I am a free child bound in chains,
I was marked with a taboo.
Imprisoning me into the dungeon of fear and loneliness;
Where enemies crawl like the shadows of the dark.
A fathom that behold me
I was just a struggling sojourner.
Into memory lanes I searched myself,
Where people hizzed deceitful words that ached;
I was framed into the hall of shame.
Living in shades, I wondered
There are three shades of myself,
The third shade the scariest,
The shade that I kept to myself.
But there is a flame filled with indomitable spirit,
Reaching out as free as I will.
Living without envies and enemies
Living with steps well understood.
I shall break these chains of silence,
I shall break the alters of mankind’s orthodoxy;
Rubbing away the dunes of hatred and deceit,
Blowing down the phobic pillars strengthened by false conservation;
Killing the feudal thoughts.
And, I shall roam as a child,
Free as the wind.
I shall roam to the last of myself enduring my ideals,
Leaving behind the snide remarks.
As free I will be, and I shall see
My dearest Sojourning life the way I dreamt of.