Prepared by

D A C O  --  DAvies COnsulting GmbH

  Postfach 60 03 22

D-81203 Munich, Germany

Tel:  [+49] (89) 759 400 81

Fax:  [+49] (89) 759 400 82

on behalf of an

I D T  --  International Development Trust

(in formation)

15 September 1997

© Davies Consulting GmbH 1997

Table of Contents

Chapter 1  Executive Summary

This project focuses upon poor families living in cities and villages who are not able to earn enough income to support themselves but are in principle willing to work.  They typically do not have appropriate education and skills for urban jobs.  It is impractical to create appropriate jobs for them; retrain or train them for other jobs; or provide social aid for them -- primarily because funds are not available to do so but for many other reasons as well.  They contribute no tax income to local governments but do place a financial burden upon local governments in providing medical and other services for them.

The strategies applied here for solving this problem are unconventional in the following ways:

• These people will be given feasible options for relocating to a small "farm" in the country that they can operate themselves on a classical entrepreneurial basis.

• Very few "jobs" will be created for these people -- rather they will be encouraged to become entrepreneurs, accepting responsibility for their own economic survival, and they will be given feasible options for succeeding as entrepreneurs.

• These people will be brought back into contact with their agricultural roots, to get a fresh start living in equilibrium with nature, rather than trying to survive in a complex urban environment where they are not coping.

• These people will be given a variety of appropriate educational opportunities, but mainly on the basis of low-cost self-education according to their own motivation, rather than expensive formal schools.

• As these people become economically self-sufficient, they will be encouraged to save a substantial fraction of their new incomes, that they can then use as capital as entrepreneurs to expand their activities and increase their incomes, without being dependent upon others to create jobs for them.

• As these people become economically self-sufficient in their new environment and achieve appropriate education and skills, they will have options for obtaining jobs in cities and villages first, before actually returning there.

• Children in these poor families will be taught and encouraged to educate themselves and will be given opportunities to do so, so that they can eventually re-enter the formal educational system at the levels of their peers.

In summary, this set of strategies recycles families that are no longer functional, makes them functional again, and gives them diverse opportunities for pursuing various careers with an emphasis upon entrepreneurism themselves rather than dependence upon others for creating jobs for them.

From the perspective of local governments, non-productive people who are now a financial drain upon their governments become productive tax payers -- contributing positively to economic growth and well-being of the economy as a whole.

For the implementation of these strategies, one or two "Agri-Cities" are created on each of the major rivers on the Horn of Africa.  Each Agri-City is a compact set of "villages" with 320 families each, surrounded by 320 small plots of land that each family can farm independently by itself.  Water from the river is used for irrigation in order to minimize the sizes of these plots of land that are sufficient to generate basic food for survival plus an excess that they can sell for cash.

Each such Agri-City

• will have a front on the river of about 10 kilometers and will extend about 15 kilometers deep from the river,

• will have a total of about 55,000 families averaging about 6 per family, for a total population of about 330,000 people per Agri-City as a maximum,

• will be built modularly in small phases of about 5% to 10% of total capacity each over a period of at least 5 years, and

• new Agri-Cities will be founded rather than to expand beyond the original planned maximum sizes when Agri-Cities are completely developed.

Within 5 to 10 years, as many as 2% of the total population on the Horn of Africa could be living in such small compact Agri-Cities.  Since most people are being "re-cycled" through these Agri-Cities and then going elsewhere; after 10 or 15 years, as many as 10% of the total population may have lived for a period of time in such an Agri-City.

The main production within such Agri-Cities will be fresh vegetables and fruits -- for efficient use of both land and water for irrigation.  Initially, these products will be transported to and marketed in nearby cities and villages.  When the production exceeds local demand, the excess production will be exported by air freight and refrigerated containers by land and sea -- mainly to the nearby Arabian Peninsula.

Because this main production is not dependent upon local rainfall, it provides a buffer for the local economy in periods of drought.  Less of the production will be exported and more will be consumed locally.  The nearby market on the Arabian Peninsula can easily adapt to a temporary reduction of imports from the Horn of Africa by substituting slightly more-expensive imports from more distant sources.

Other local production within such Agri-Cities will be both in the direction of

• internal self-sufficiency and

• products for export from these Agri-Cities

and in both cases, emphasis will be upon providing useful work experience and on-the-job training in a variety of professions that will enable these people to find similar jobs elsewhere later.

As examples of internal self-sufficiency, residents of Agri-Cities will be employed part-time as construction workers for building the Agri-City and for manufacturing furniture used within the Agri-City.  Some high-tech jobs will also be available, such as for manufacturing and assembling custom-designed TV tuners for use in the local cable-TV educational system (meeting a local market of 1 tuner for each of the 55,000 families ultimately living in an Agri-City plus some for export) and computer programming services mainly for export.

Socially, this project is designed quite differently from many socialist-inspired projects in the past -- primarily because of the emphasis upon individualism rather than collectivism and upon entrepreneurial responsibility rather than depending upon social allocation of the production by others.

Individual families will be required to pay rent for the houses they live in and the plots of land that they farm -- as well as costs for utilities, tools, seeds, fertilizer, etc.  However, they will be granted a line of credit when starting, to cover a reasonable period of time until they can feed themselves from their first crops and until they earn enough cash from surplus production pay their operating expenses and repay their line of credit.  They will be encouraged to save income for use as capital for expanding their own entrepreneurial operations, in the Agri-City or elsewhere, without depending upon others to create jobs for them.

Each resident will receive a tamper-proof ID card with a photo on it.  Access to each Agri-City will be limited to residents and officially-registered visitors.  There will be no homeless people living in or begging in an Agri-City.  If a family does not make a reasonable effort to be successful as entrepreneurs and becoming economically self-sufficient, they will be required to leave -- since supporting such individuals is not the responsibility of such an Agri-City.  Conviction of a crime within an Agri-City, such as theft, will probably result in immediate eviction.

The goal is to achieve a very-high level of motivation for succeeding in an environment where all neighbors are also highly motivated to succeed.  The result should be peer pressure to perform rather than complacency.

This project is designed to be environmentally sound in the following ways:

• A significant fraction of the population, about 2%, is relocated from urban areas to the countryside, but on a very-small fraction of the rural landscape -- leaving the rest of the landscape untouched by this project.  Later, even poor rural residents could also be "recycled" through such Agri-Cities, thereby reducing the population per square kilometer in the countryside even further to reduce stress upon local ecological systems.

• A minimum amount of water is taken from rivers for irrigation purposes, by focusing upon high-value products concentrated on very small growing areas requiring less water per USD-worth of products than lower-value products growing on larger areas.

• No sewage or waste products are discharged into the river downstream.  Part of the water from irrigation flows into the ground water and indirectly flows back into the hydrological system of the river, after natural filtration and purification.

• Sites will be chosen near hydro-electric generators on these rivers, so that low-cost electrical energy will be available from short distances.  All cooking will be done with electricity, eliminating the traditional use of wood charcoal for cooking, which creates pressures for undesirable deforestation.

The first rough guesses indicate a cost of about 300 to 400 million USD for a complete Agri-City with about 300,000 residents, i.e. a cost of about 1,000 USD per resident in capital costs.  Depending upon the speed at which an Agri-City is to be expanded until completion, only about 1/3 of this sum would be required from external sources, as a combination of capital and credit, and the rest can be obtained by internal financing,  include both

• rental income for homes and plots of land and

• an active program encouraging residents to use their savings to buy their own home and plot of land, to avoid paying additional rent.

Each Agri-City is designed modularly, so that it can be constructed as a series of small phases, that will then be financially self-sustaining.  Large infrastructure components, such as for the water purification plant upstream from the site and the sewage-processing plant located downstream, will consist of about 16 modules each, whereby one module can be added at a time as needed to increase the capacity.

Each Agri-City can be organized as a separate corporation.  It can be designed for operating either

• at a loss, with subsidies, as a non-profit corporation, or

• at a profit, as a normal corporation financed by private investors.

The main difference is in the fees that will be charged for rent and sale of property.  The first option will re-settle the largest number of people faster, if funds are available for full funding early.  The second option will re-settle the largest number of people slower, if funds are not available from the public sector.  For the second option to succeed, it will be necessary to operate pilot projects long enough that they become profitable, before seeking private investors for expansion.

As complementary projects, this project could complement urban renewal projects.  Poor families living at below-subsistence level in slums can be moved temporarily for 1 or 2 years to an Agri-City while their slum is cleared and redeveloped with middle-class homes.  With their new education, skills, experience, and motivation; many of these poor people can then find jobs in the same city and some may even be able to move back into the same area where they lived before -- but now being able to support themselves with much-higher average incomes.

If several Agri-Cities are developed in parallel, each slowly, there would be a reserve capacity whereby each Agri-City could be quickly expanded to accommodate several 10 thousands of people each.  In an drought emergency, over 100,000 people could be relocated within a few months in these Agri-Cities, by simply expanding the rate of development for all such Agri-Cities in parallel.  This would reduce the number of people living in drought-stricken areas, at least temporarily, thereby allowing the local ecology to recover.

Should quarantine conditions be required to stop the spread of a contagious disease, one Agri-City or large sections of Agri-Cities could potentially be used for relocated infected individuals.  Such diseases might potentially include AIDS and tuberculosis.

As potential areas of symbiosis within the International Development Trust,

• the Economics Department within the HoA Institute of Advanced Technology could develop economic models for such Agri-Cities,

• the Electronic-Communications Department and the Multi-Media Department within the HoA IAT could design and develop the technology for the high-resolution cable TV system that provides educational programming within Agri-Cities,

• the HoA Education Trust will be developing multi-media educational materials that can be tested and used extensively within Agri-Cities, and

• the Hoa ET can also provide scholarships to assist getting gifted teen-agers from families in an Agri-City back into the formal education system at their peer-age level.

This project is not directly focused upon the two main goals of the International Development Trust (of creating a "Silicon Valley" south of Addis Ababa and converting the whole Horn of Africa into an East-African "Tiger").  However, it will be difficult to convert Addis Ababa into the northern hub of a "Silicon Valley" as long as there are large slums scattered throughout the city, spawning begging and petty crimes.  Therefore, this project might be interpreted as a flanking measure to improve the general infrastructure and environment for the main projects of the International Development Trust.  

Chapter 1 >

© DACO - DAvies COnsulting GmbH 1997

[Note for writers: Bookmarks are installed at the beginning of each section, i.e. 2.1 - 2.7, and for each figure, i.e. fig2-1 - fig2-3.]