Executive summary:
Most of us know the old adage "the rich are enriched and the poor are becoming poorer" and the truth is that this will ever change as long as the current commercial models, in particular with regard to affordable housing and the Supply of basic needs, will remain in place. The money is siphoned with communities towards the hands of a few, such as investors and promoters, instead of circulating within local communities to create growth and autonomy. Poverty cannot be eradicated and an middle class can only emerge if the rate of return on capital is lower than the growth rate of the local economy. This case examines various technologies which can be grouped to help redefine the current economic model of housing in general and social housing in particular. Renewable waste flows such as glass can be used to create glass foam, which offers a low -cost solution for safe and functional housing. The toilets are waste precious drinking water and the mass of layers that we currently use contributes to around 8 % of the waste in a city and one of the best resources is destroyed with it. A solution such that dry toilets would save massive volumes of drinking water and the adoption of a biodegradable layer produced locally to maintain the cost at a low level could provide nutrients to 1000 fruit trees per child. Changing our current electricity power methods from alternating current in the continuing current could save us from our current electricity crises and provide us with electricity at an affordable price.
Energy crisis and provide affordable energy and better health to the poor. This case
places innovations in the context of a community.
Transform poverty corridors thanks to new real estate models
Whoever walks in a slum feels the lack of dignity of this sorry world. As soon as there is poverty without dignity, we enter the world of misery. Citizens confined to this living space have the right to be impatient and to be upset. There are many options for implementing innovative commercial models in order to meet basic needs; We have to make a choice and decide the management to take. Instead of analyzing and rehashing the analyzes, you must resolutely go towards implementation. This grouped case focuses on a business model that requires fundamental change in the supply of affordable housing and the creation of communities based on local social fabric. Let us take the example of South Africa, a young democracy with a young population and an expansion urban lifestyle; It is faced with an increasing demand for housing. The government has a long list of people waiting to obtain accommodation and recognizes that it must deliver at least 2.3 million dwellings if it wants to eradicate the existing backwards.
There is no doubt that the South African government is eager to keep its promises, but it was not up to the expectations of the population. After a detailed assessment of the situation, it is clear that the government is not to be blamed; We should blame the dominant business model. As soon as a real estate project is designed, investors (capital) extract all capital gains before the construction of the first house and leave manufacturers of debt to build huts cheap and fast. The case can be summed up as follows: Rezoner, resell and cash twice. It is necessary to reveal the logic of this machine to earn money which does not share its massive financial gains in no way with people who have an urgent need of an shelter, and who hope to have an overview of what it means to live in a
community.
How does it work? The first investors take control of land through options, preferably in agricultural areas that have exhausted the soil by decades of monocultures and have lost all productivity. As the earth requires a significant chemical intake to grow anything, it does not generate any income. The plot can be acquired for almost nothing. The option agreement means that investors do not buy the land, but only promise to buy it at a later date at a (low) agreed in advance. The investor pays a commission to have this right and nothing more. When ownership is finally rezoned by a political decision, the land is acquired and, most of the time, it is instantly sold by the option of the option to a property developer. The land that was worth a dollar is now easily worth four to ten times more. Without investing all the value since only option fees are paid, billions are won thanks to a political decision.
According to the current economic model, the bad news for future owners is that the capital gains are (legitimately) withdrawn from the project to enrich those who have succeeded in assembling the options and passing the political decision. None of these capital gains are used to make housing affordable. Worse, the real estate promotion company will contract a loan guaranteed by 60 to 80 % of the new value, created only by rezoning. This means that the loan will be reimbursed with the profits made in the future on the sale of houses. Who pays for the billions that enrich a minority? This is only the start of a money system. Sterile land is then serviced, often using public funds, and developed by a new group of investors who will take care of urban planning. The main investment is the development of plans. When the water, electricity and sewer infrastructures are in place and the construction of housing can begin, the project, which is now ready to deliver buildings as varied as shopping centers, schools, hospitals, Sports centers and affordable housing, is sold to a property developer. This sale saves money by creating additional capital gains for those who have delivered the Rezoné land for development, in serviced land ready to be built. It is the second profits before even the first house was built. Unfortunately, this newly added real value is as the first withdrawn from the project by contracting additional loans to be reimbursed by the sale of mortgaged housing (low cost). Fresh money accumulates on bank accounts (abroad) totally distinct from the housing initiative, where money can earn more money by speculating on future transactions through healing funds or 'exchange of currencies to the nearest second. An enlightened estimate calculated that 20 years of social real estate development in South Africa have generated sufficient capital gains in the hands of a few, which could have reduced by half the cost of all the social housing already delivered.
The real estate development company must now deliver the house. As all capital gains have been extracted from the project, there is no more capital. Worse still, the exit of capital gains was made possible by going massively on the project and these loans must be reimbursed. The real estate promotion company is therefore indebted to the extreme and depends on the mortgage financing of the end consumer to reimburse their debt and achieve their benefit. It is the financing of the consumer by the owner of a first house which now has affordable accommodation which will reimburse the promoter's debt and capital gains paid to speculators, which have already been extracted for a long time.
The real estate promotion company earns money on a margin of the house and its profitability depends on its ability to extract the slightest penny from suppliers. The buildings delivered are certainly not cozy houses. These are shelters
that do not meet the conditions necessary for the construction of a community. The materials are purchased from the cheapest offers to obtain the lowest cost price as possible. This leads to the global supply typical of all building materials, equipment and installations. Although this responds to the logic of housing at low prices, this deprives the community of total value of this capital investment which is only done once in life. It is impossible that a housing construction program implemented according to this logic can one day get people out of poverty, because the poor carry the debt which is used to pay the capital gains from the project and the community well before delivery of their accommodation. What if the principle of meeting local housing needs was above all to grow a local economy, starting from what is available locally and capital that is generated by the change of destination of the land? Imagine that the capital gains are not evacuated from the project but that they can be an integral part of it. This means that instead of having to press each supplier to the last penny, assets and resources will be available to pay local suppliers at reasonable prices. Thus, the investment of $ 25,000 in a first house is also an injection of $ 25,000 into the local economy. This represents a livelihood for five family supporters which can now aspire to buy a house too. It is the beginning of a positive cycle which still improves if the materials are provided locally and if the money circulates locally, thus reinforcing the finances of this housing initiative. The houses can then be sold at an even lower price to the first owner, which allows more money to have other urgent expenses such as health, food and education. This is a new economic model.
This commercial model is not against capital remuneration; It is in favor of asking capital suppliers and speculators the following open question: "How much is sufficient?" Instead of winning twice a billion or more on a burning case, investors who signed the options and assembled the land would be ready to win only 200 million on the case and to devote the remaining 800 million to the Supply of affordable health services?
affordable housing and infrastructure services which are now exploited locally with initial investors still partners? And more importantly, are investors who remain from start to finish to finish a multiple of the amount devoted to affordable housing in additional income generated by new income flows from the growth of a new economy as described below ? It is always legitimate to speculate, to mingle with political influence and to extract the gains on paper by discharging the responsibility of paying on the poor. But it is also a question of morality and an act of leadership to build a local economy and to invest in its growth with the available money which, in the end, will be funded by the poor of the cities which aspire to join the class average.
The decision to transfer agricultural land outside the city perimeter to developable land within the city's urban perimeter is a political decision. Can we agree only if and when a political decision of this magnitude (and of this profit) is made, then the profits must go mainly to the people represented by these officials? Can we agree that instead of gaining 300 to 500 times the value of the initial land options, a yield of 5 or even 10 times is sufficient? Would investors be satisfied to win the initial amount up to ten times? This weight argument will not be greeted with open arms by traditional real estate development investors who have accumulated wealth for themselves and their shareholders for decades. The approach that we propose contains capital gains within the limits of reasonable and constitutes a first fundamental component of this new economic model. We must rethink each component and generate income for investors and poor people at the same time, on each need to which we can respond locally.
Buy local or buy global?
How many steel and cement does it take to build a house? A representative of light steel manufacturers and cement makers would say that the house cannot withstand the time test without their materials. Sometimes we have to be inspired by the greatest architects of modern times who have changed the rules of the game. The American architect Frank Gehry is certainly one of these exceptional creators of forms and beauty. Few people know that the foam glass is at the heart of its structures (see case 103). Glass mousse could be a virgin material or recycled glass heated and injected with CO2, to create neutral, light, inexpensive, acid, flashy, flashy and structural construction materials and being part of a system of prefabricated construction.
These "poverty corridors" have waste management problems and there is an abundance of glass to recycle. Today, recycling is poorly paid work. If the central structure of affordable houses could include glass foam, then this construction technique creates value from nothing, generates jobs, sequests CO2, while diverting the glass from the local discharge or exports to the foreigner. It is not a question of recycling of waste as we have imagined it in recent decades; This is the generation of value necessary to create jobs that will provide an income to pay the mortgage. Glass foam offers better quality accommodation, with insulation against cold winters and hot summers at a lower cost, and generates additional jobs that circulate additional money in the local economy. It eliminates the use of fireproof products (dear, toxic and imported) and introduces temperature controls that have never been part of affordable housing standards. This is not what Frank Gehry had in mind when he designed the Guggenheim Museum in Bilbao, which attracted millions of visitors to the Basque Country, a region plagued by decades of terrorism that made more than 1000 victims. Local recycling1 of building material waste is one of the many industrial initiatives that communities could launch to make their housing programs one of the many growth engines.
Move from an agreement to a flow
Let us compare how much money can be earned on the sale of a house and the fence of a mortgage. Let us then compare this income with the potential revenues generated over the next 25 years by the sale of water, food, energy, waste management, mobility and many other things that the same community needs. If the community purchases electricity to a national monopoly, the money spent on electricity leaves the community. The alternative would be that a new local continuous current network (CC) 2 can eliminate transmission losses and electricity flight, ensuring that all electricity is local and renewable. The surplus of electricity production is stored in water which is pumped and stored locally, recovering energy thanks to turbines and heat pumps powered by gravity in the pipes which receive water at 90 ° C and restore it at 40 ° C, supplying the network with low cost. This continuous current system now circulates energy and money in a growing local economy.
The State (for example, South Africa) generally obliges electricity companies to ensure a minimum supply of electricity to poor people at a marginal cost or even free of charge. The monopolies, whether energy controlled or privatized energy companies, have a lot of difficulty taking advantage of these "poverty corridors". The non-payment of public service bills is high and the hacking of electricity on the transmission lines drains up to 30 % of income. The supply of electricity at the bottom of the pyramid is therefore at a loss. To provide a minimum quantity of electricity, it takes subsidies from the central government and/or a cross subsidy from higher prices billed in the industry and households of wealthy citizens. Since the current distribution mechanism is not efficient or profitable and that the poor do not benefit from the service, the best way to solve this problem is that the poor produce their own energy.
If the energy is essential, the water is just as important. Installing and exploiting each resource separately is an expensive operation. Combine the delivery mechanism of the two offers a portfolio of solutions. This combination of water and electricity is not only a financially viable delivery system, but it is also an ideal platform for creating a network of micro, small and medium -sized emerging businesses. Unfortunately, governments and businesses are organized and operate in silos. Water is processed by water experts and electricity is the fief of electricity experts. Corporate strategists are convinced that success is a question of "core business". They cannot imagine that the combination of water and electricity provides additional growth to the local economy and makes the grouping of basic basic services beyond today's standard investment returns. In other words, electricity and water are not only essential services, but the combination of the two stimulates investments that allow growth within poverty corridors.
Respond to essential needs: from alternating current to continuing current
The power lines which transmit alternative currents (CA) in a whole canton are exploited by local citizens who do not pay the city; They pay criminals who have the know-how to operate the power lines and charge 250 Zar for a connection and a 50 ZAR package per month for electricity. This flight of electricity also deprives the community of its income, while individuals risk their lives. The city of Johannesburg loses $ 260 million a year due to the flight of electricity. Social conditions are such that the guilt of ordinary people for the flight of electricity is not politically viable. In addition, those who have meters do not often pay their bills. No city can afford to lose more than a billion in stolen and unpaid electricity over five years. If political decision -makers or developers want to improve the situation, we must imagine a fundamental change in the economic model.
Technologies and the economic model must be improved without neglecting people who need legitimate access to electricity to ensure their subsistence. Privatization is not the solution. Although engineers may not appreciate these proposals, we are firmly in favor of the creation of hundreds, even thousands of intelligent direct current networks in "poverty corridors". Although this intelligent network is very different from the concept promoted in international forums, this CC -based energy distribution system is without danger of piracy3.
Containing hacking and involving the local community in the energy economy is not the only reason to go from alternating current to direct current. Eighty percent of the electrical devices used in the slums operate in direct current, which feeds phones and radios or LED lamps. This is not only the most energy -efficient option on the market, but also the cheapest option once the industry is no longer obliged to transform the alternating current into direct current.
The industry will no longer be forced to transform the current of 220 V CA into 12 V CC. LED, for example, could be improved by giving it the ability to be an internet support. The Internet with light source, known as Lifi (instead of WiFi) offers wide -band access to the Internet at the speed of
light. These innovations seem to be the type of innovations that guarantee everyone a cheap access to electricity and the Internet at a lower cost. Even if emerging savings like South Africa have no approved standard for Lifi, cities have invested massively in the construction of optical fibers to create the data highway, often forgetting the last kilometer. Lifi and LED lamps supplied in direct current could soon offer a cheap solution.
CC electrical network skills are widely available in Townships. All cars, with repair workshops in each corner of the urban fabric, operate in 12V DC. This implies that all devices, which are now designed with inverters and transformers, can be simplified. This reduces costs and could even be produced locally. Thanks to local skills and local manufacturing, a new strategy for energy emerges. The money lost because of hacking and non-payment could be partially transformed into an investment in local continuous current networks, fueled by renewable energies such as the Solarus system, uniquely adapted to the multiple needs of poor populations. The Solarus electrical and thermal energy device provides hot water and electricity in a single unit. This approach facilitates the construction of a local community based on the supply of energy and water at lower cost, offering economic advantages beyond the elimination of negative aspects such as piracy, electrocution and non-non payment. It transforms the negative spiral into virtuous growth.
To stimulate two -digit growth, a condition necessary for the eradication of poverty and unemployment, there must be multiple advantages, as described briefly in the case of glass foam, solar energy and the solution clean water. Technology must be converted into a business model that generates multiple cash flows and offers a series of non -financial gains that are just as important for the community. The case of health quickly comes to the fore. The additional advantage includes the supply of sanitized water by constantly maintaining the water temperature in the geysers above 70 ° C. Geysers automatically stop heating at 55 or 60 ° C, but bacteria are multiplying at this temperature level. Unfortunately, the water temperature of 70 ° C would result in excessive demand on the national electrical network, which would cause additional breakdowns. It is only by local solutions that these urgent health challenges can be met.
Health water and electricity
The new economic model around "smart Undeeling Current Local Networks" works with the national electrical network as a background. Local continuing current networks are the basis of local supply, with decentralized production based mainly on the storage of solar energy and water (gravity and heat exchange) by exploiting the abundance of the sun. For 10 to 50 households, there is a “DC Lady” formed, as proposed by Harry Stokman4, expert in the matter. The "DC Lady" would be responsible for supervising the delivery of water and electricity and ensuring the payment of invoices while guaranteeing the supply of services derived from clean water and abundant electricity. If one of the small networks breaks down, the rest of the CC network remains uninterrupted. As water will be stored at +70 ° C, heat pumps will compensate for any lack of power by lowering the temperature to 40 ° C, thus generating the necessary additional energy without having to invest in batteries.
This generates thousands of jobs for community development projects around major cities, while creating the local share capital necessary to strengthen confidence, thanks to the reliable supply of sanitized water and electricity. The deployment of this distribution mechanism supervised by local citizens empowers them, while generating and circulating locally circulating income which, otherwise, would be lost. Thus, this solution is launched with the "lost" money in the system which has never reached the energy supplier and has never been able to be deployed in favor of the population. There are fortunes at the bottom of the pyramid and it is necessary to find how to redirect them in a global economy and rather ensure that these fortunes help to improve the living conditions of poor people. When communities go to this intelligent continuous current system, the first advantage is the elimination of gastrointestinal diseases. It will provide cheap heating in winter, which will combat flu and tuberculosis by creating better living conditions in an isolated house (remember the foam glass). Improving health increases workers' productivity and guarantees better academic results. In addition, the entire new value chain, from solar panels for water and electricity to continuous current networks, including simplified devices and lights, supplemented by the Internet at the speed of the light could be made locally. This strengthens local primary and secondary industries and guarantees that affordable houses are transformed into communities with an emerging local economy that grows at two -digit rates with funds that circulate quickly. These elements of urban design are basic and easy to implement, but they have never been taken into account in the cost reduction program and increased income from the current electricity company.
Stimulate the local economy thanks to multiple cash flows
At least 70 % of Solarus and DC systems can be manufactured locally, which generates jobs. This virtuous cycle of increasing jobs and income, and increasing local expenditure in local hands works as follows: the production of Solarus systems will require a heat resistant plastic frame. This supports a new recycling program. Today's thermore -resistant plastics are recycled with all plastics and recuperators sell them 50
per tonne at intermediaries, who sell them to Chinese buyers for $ 150. When the Solarus units are assembled locally with locally molded frames, made from locally recycled plastics and collected in the regional landfill, then the waste is (again) transformed into value and more money circulates in the economy. Fortunately, all of today's plastics are properly labeled and these new ones
fortunately, all plastics are now labeled correctly and these new components succeed in surpassing aluminum of global origin, thus generating more jobs and income. This only strengthens the argument that we can create growth in "poverty corridors".
Creating new industries from nothing is a gigantic task. These industrial initiatives require a solid but modest start -up, with the vision of an expansion when demand increases. The assembly of the Solarus is simplified to the point of reaching the profitability threshold, with only 200 units assembled per month. This contrasts strongly with the 1,300 units per day of standardized panels which are necessary to make a profit on a photovoltaic solar panel. This extremely low volume, which is the result of an ingenious design in the assembly and exploitation of the concepts of the global supply chain, reduces the risk of launching.
It is possible to provide at least one factory for each medium -sized real estate development project, which makes it possible to distribute wealth and improve local membership. This type of local opportunities will make it possible to understand innovations in the field of water and electricity, using the language that convinces: the experience of workers who have a job and the experience of users who have Electricity, purified water, hot water and perhaps even heating in winter and air conditioning in summer. Even those who do not know how to read and write commonly can fully understand this new reality and explain it to their neighbors. In addition to health and employment, this new economic model will inspire people, bringing them a message of hope in very pragmatic terms. We give a future to hope.
Funding sources
A potential market of millions of units to respond to existing delays in the development of housing, and an estimated budget at one billion which has been hacked in the network over the years, can now be won and reinvested in the community, adding income to the city and the population. This cash flow, with all the advantages listed, should not be given to a wise investor (with even premises based abroad) in order to attract foreign capital. It is not so much the capital that is necessary, but the need to redirect existing financial flows. These local units offer multiple advantages, by offering electricity at a lower price than that of coal or nuclear options. This means that the owner will have greater purchasing power for essential expenses such as education, which will allow the whole family to access the middle class. This new decentralized distribution of water and electricity, combined with local production and quality control, is part of the inclusive real estate growth process; It underpins the logic consisting in moving from a market to conclusion of markets to participation in the endless monetary flow which constitutes the heart of the economy: food, electricity, water, health and education. The positive impact on the community will strengthen this emerging vision of a better future at hand. This will reduce violence and the need to turn to illicit trade to survive every day. Instead of policing society, we can now build the community.
We did not just start to describe the vast portfolio of initiatives. The details of all these opportunities would go beyond this article. The impact, when dozens, even hundreds of comparable opportunities take place in parallel, will be considerable. This is why any development project initiated in favor of inclusive growth should start by constituting a portfolio of opportunities and using it as a powerful starting point to mobilize capital beyond real estate, in order to build affordable housing and communities. In the end, it is not a question of building a cheap house, but of making a new community grow. If we can see the potential impact of a simple discussion on electricity and water, what if we include food, nutrition, health, culture, education, mobility What about jobs? Let's examine some of the fruit at hand.
Food, nutrition, sanitation and health
Fruits, vegetables, cereals and meat have become global basic products. Animal seeds and sperm are controlled by a few dominant companies; The harvest is marketed by some; Cereals are transformed by some and imported by some; And this business benefits some. Although the desire to eradicate hunger in the world must be applauded and the determination of the many organizations that undertake this initiative deserves admiration, it should not become an opportunity for some to win more on the back of the poverty and misery. In recent years, Africa has experienced an absolute increase in undernourishment, while Asia has experienced a slight decrease in the number of families suffering from food insecurity5. The difference between the two continents is that the poor populations of Asia have managed to become more and more net suppliers of food, ensuring their own self -sufficiency while marketing their surpluses on the local market. We often have to ask ourselves what is the priority: promote free trade or promote livelihoods and food security. It is time to accept that free trade cannot guarantee food security, especially not among the poor in cities.
This is what Africa needs. The continent has an increasing number of poor city dwellers who pile up in slums whose density exceeds 20,000 people per hectare, which leaves little or no space for agriculture. The demand for social services, from nursery school to hospital, via sanitation and freshwater supply, is so high that most municipalities cannot afford it. If we do not attack food security at the same time as sanitation and health, urban areas will experience hunger and malnutrition in the same way as water and electricity. Isolated strategies aimed at achieving isolated objectives are doomed to failure. The solution to provide food, nutrition, sanitation and health to the poor
poor succeeds when integrated commercial models prevail.
Food safety plan
A new real estate development within urban limits must provide 90% of food security. This is viable if the open spaces are secure with a solid flow of soil enrichment. Any food production, such as bakeries and butcheries, must be local. It is not only a question of nutrition, but a strategy aimed at ensuring that money circulates and remains in the community, thanks to the local transformation and delivery of food. The high population density offers unique possibilities of reducing distribution, logistics and packaging costs. The programs established to cultivate edible mushrooms on coffee and tea waste offer a first platform that guarantees a variety of protein for human and animal consumption. The transformation of coffee grounds and used tea leaves into substrates for fungi uses a tiny flow of bio -waste from households. However, it is converted into a rapid and effective catalyst in the local economy. Each kilogram of coffee or wet tea leaves can produce another kilogram of edible mushrooms, converted into a wide range of essential amino acids, while the leftover after the mushroom harvest is ideal for nourishing chickens or goats . The cultivation of fungi is fast and easy, and gives results in a few weeks. Urban vegetable gardens, edible bushes and parks can all be part of the global urban planning. The key is the continuous circulation of nutrients and energy. Human waste is one of the critical resources. Many consider them a cost, requiring an expensive development, but it is an opportunity for others. Few of them are aware of the economic models that could emerge from a waste management process aimed at guaranteeing health, food security and long -term use, while reconstituting the arable layer which depends strongly on the continuous contribution of fertilizers, which are out of reach of the majority of residents of slums.
Waste water by pulling flush
The modern standard is to use water to pulling the toilet toilet. Dry toilets are an anachronism for most citizens. Consequently, a third of drinking water in urban areas is consumed for the evacuation of toilets - undoubtedly one of the most ineffective uses of this rare resource.
The young children are the only members of the family to be exempt from going to the toilet and pulling flush. Drats have become the standard elimination means and if it saves a little water, this increases the problem of waste management in cities. Officials from discharges from around the world provide that up to 8 % of solid waste will be diapers. These artifacts of modern life were invented in Sweden before the Second World War and quickly became a symbol of modernity. Each child will have to use between 8,000 and 10,000 layers before being clean.
Children who are not yet used to cleanliness should never be considered a problem. Plastic layers that cannot be composted should be considered a problem. Biodegradable plastics could be used, but while these plastics are more expensive for the moment, the layers produced and distributed locally are much cheaper. The compostable layers represent the beginning of a process that reconstructs the soil while generating income and jobs. Ms. Ayumi Matsuzaka6, an artist who has become an experimental scientist and working with Berlin botanical gardens, showed how a daily production, supply and recovery service of layers, which are then composted in combination with charcoal to produce Terra Preta7, allows a quick, healthy and safe means of reconstructing the arable layer. The economy of diapers is a monetary economy. The 10,000 layers that a child soils during his first years of life produce around 3 tonnes of high quality soil which allow to plant fruit trees on exhausted land. In fact, diapers should not be a cost for the family, but rather an investment that is harvested in the form of fruit. When the baby becomes a teenager, about a thousand fruit trees will bear fruit, offering abundant harvests for the decades to come. Why limit himself to planting a tree at birth, since the baby produces enough food for more than a thousand trees? This requires urban planning with urban agriculture and edible urban gardens, combined with urban industries, bringing a market for bioplastics which can only become fruitful if the economic model evolves from the sale of layers produced locally with biodegradable plastics, To a system that generates arable land on exhausted land and provides long -term food security while sequestering carbon dioxide.
When we predict the size and extent of activities in emerging communities and we know that fruit trees will dot the region at the rate of 1000 per newborn intended for social and economic development, then there is another Opportunity: bread. The manufacture of bread has been so industrialized that local bakeries have disappeared or have been reduced to warm pre-defined and pre-menaged frozen pasta. Various initiatives were taken to revive the local bakery, but they have almost all failed. The reason is that if a small bakery competes with a tiny version of the industrial bakery, it will fail in the competition game. For a local bakery to be competitive, it must change economic model starting with the dough.
The dough.
The recent successes of local bakeries in Mexico and Algeria show that the dough and the bread produced locally can be cheaper and more nutritious. To do this, agreements have been made with fruit processing companies (for example, Guacamole in Mexico or grape seeds in Algeria). All the seeds are dried, crushed and mixed to enter the composition of bread up to 25 %. The logic of local economic development is always the same: to use what we have and to ensure that money paid daily for bread now circulates in the local economy. It has been calculated that for 50 to 100 households, there could be a bakery which uses the energy of the local continuous current network powered by solar energy and which delivers fresh bread every morning. It is an ideal platform for micro-enterprises. A housing program which aims to provide accommodation to 100,000 families can provide at least 1,000 bakeries, thus creating around 3,000 direct jobs and up to 10,000 indirect jobs. The industrial version of this same supply chain will generate 100 jobs as much as possible and will devote a third to transport, packaging, marketing and distribution. By replacing 25 % of the dough with ground fruit seeds, using peelings to improve taste and eliminating associated expenses such as plastic packaging, fungal controls, storage and logistics, bakery Local becomes competitive by generating 30 times more local jobs while selling at the same price as industrial bakery. If, in addition, the subdivisions are located near the production of wheat or corn, then the value generated by the small bakeries of the community can surpass that of any industrial factory, while this bread enriched with seeds and Fruit bark and rich in minerals has a quality that exceeds the means of industrial bakers. The number of jobs generated, based on cash flows, capital, materials, human resources and even available waste, offers a first overview of the way in which a local economy can surpass a global economy. This overview of these opportunities confirms that demand can be satisfied by the local supply, generating local value, jobs that allow savings and the constitution of share capital. There are many other opportunities and a few others in the following pages that will support the slogan with which I conclude each fable, "... and that is only just beginning! ».
Waste and energy management
The organic component of solid waste flows is estimated at 50 % on average. However, the waste of slums have a much higher organic share. Biodegradable, renewable and organic waste should never end in a discharge or be cremated. The best approach is to exploit additional organic materials of waste at the bottom of the pyramid to generate more value. Health is always at the heart of concerns and, therefore, any waste, with the exception of coffee and tea that have been sterilized by their use, must be treated. Ideal treatment is anaerobic digestion, that is to say that methanogenic bacteria mineralize the content, making it inert to produce biogas which is composed of two thirds of methane and a third of CO2. This bacterial digestion requires a stable, solid and diversified intake of organic matter which is mixed thanks to intelligent chemistry8. Muds from wastewater treatment can be combined "intelligently" with organic waste from households and food markets, as well as small local agro-industrial processing factories. This intelligent chemistry generates up to four times more biogas than if sludge or organic waste was digested separately or mixed without taking into account reinforced reactions.
If local economic development considers glass as a raw material for the building industry, it needs CO2. This gas molecule can be extracted from the biogas from the digesters. Instead of requiring external supply, glass foam can now be fully produced locally. Production engineers must study the predictability of the supply chain for goods and materials. The digestion process will always work because the sludge from treatment plants or household biomass waste is abundant, as long as there is a community. This is the key to setting up new industries based on safe and predictable material flows, so we can use mathematical models to provide for the amount of income and the number of jobs to wait meeting the immediate needs of the local community.
Breeding of fast consumer animals and goods
Goats and chickens should be raised in and around urban developments. If avian flu has given the world a few hygiene lessons, the integration of locally produced animal proteins ensures food safety and constitutes another catalyst for local economic growth. The goat breeders of the Canary Islands have small operations with up to 50 animals and benefit from the greatest productivity in dairy production. Goat milk is considered healthier than cow's milk because it contains less lactose and its chemical structure is similar to breast milk. Goats also provide lea meat. Each small voucher in
urban urban areas needs a cluster of companies in order to generate maximum value. Goat milk has the greatest value when used in ice. If local farmers combine with a chain of local cooperatives to transform goat milk into cheese, yogurt and ice cream, based on a commercial model where the farmer receives a 10 % participation in the final price paid by the consumer.
On the final price paid by the consumer, local farmers will earn more money than what was considered viable, without any form of grant.
When goats and chickens are slaughtered in a local butcher's shop, the offal can be converted into protein thanks to the breeding of soldier flies, which are the most productive protein producers. The South African company Agriprotein, based in Cape Town, has proven that this method is viable in urban and peri-urban areas, thus confirming the previous experiences of the Songhai Center in Porto Novo, in Benin9. Hygiene, breeding, food production and nutrition go hand in hand with economic growth aimed at raising poor populations. The same soldier flies can effectively treat human waste (black waters and raw human waste) and help resolve another expensive budgetary position in the assessment of each city. This process has passed all health tests to the point that the European Union approved it.
The portfolio of opportunities to organize food security in the urban periphery is large. It cannot be known that all productive industries require investments. All projects can mobilize funds, provided that you can demonstrate the existence of a request, a foreseeable cash flow, known funding, a transparent profitability threshold and a clarity to social impact. If we do not manage to hear ourselves on the advantages of economic development on a case -by -case basis and on the basis of a common method, on the back of an envelope, we will not be able to speed up inclusive growth. The implementation of these initiatives cannot be subject to a rigid plan, nor to the game of Excel spreadsheets. Inclusive blue growth is rather led by strong motivation, a focus on local resources, the generation of more added value, the response to the basic needs and the assurance that the money generated circulates above all in the local economy . Remember the challenge we have proposed concerning the fact that the rate of return on capital is lower than the growth rate of the local economy (R
Mobility and jobs
The standard model is that the poor live in slums and that, every morning, they start their odyssey to find a job or go to work. Informal establishments and slums do not generate any job. Millions of people make a trip to two to three hours, spending more than a third of their meager income just to go to work. Not only is it a waste of time, energy and resources, but it makes no sense. The logic of employment in industrial zones is partly due to the traditional zoning of cities with
residential, commercial and industrial areas are arbitrarily divided according to a master plan developed by urban planners, who have limited experience in the creation of a local economy with high growth. The result is that poor people sleep in the streets or
invade open spaces and are forced to organize themselves to go to work.
The growth potential to get people out of poverty is once again demonstrated by poorly oriented financial resources. It is common for a lively single mother to her mother, who is the most reliable baby-sitter in the area. She spends about five hours a day to commute between her home and her workplace, where she is a maintenance agent. The cost of the journey represents almost 40 % of his monthly salary of 1900 ZAR ($ 190). She leaves her home at 5:00 am to be at the office at 7:30 am, starting with a two -kilometer walk to the taxi station which takes her to the station. After arriving at the central station, she takes another taxi.
After leaving work at 4:00 p.m., she may not go home before 7:00 p.m. because trains are often late. It spends more than 700 ZAR per month on transportation and almost 100 hours on the road10. The ineffectiveness that a private domestic economy must tolerate would be completely unacceptable for any business manager. However, industry in general and employers in particular "outsource" the
cost of mobility and await marginalized workers that they support it by inflicting severe penalties in the event of delay or absenteeism.
People with the lowest incomes working in the informal economy are currently spending more than 30 % of their transportation income. In the South African context, a third of income can be converted into an obligation, which means that the cost of transport (700 Zar/month) is equal to the value of the obligation (210,000 ZAR) against which a house could be acquired. If the jobs were not "there" but "here", then the money spent to come and go to work would be converted at an asset. The total amount of money which could be diverted over 25 years of expenses to capital for a project of 100,000 dwellings reaches 20 billion ZAR (approximately 2 billion dollars) 11. If this demonstrates the "fortune at the bottom of the pyramid", this also confirms the concept that the poor have the potential to create their "city of joy" 12. It is difficult to achieve the power of small numbers and even more difficult to seize that this number can facilitate the arrival of new members of the middle class, thanks to an affordable housing initiative combined with the creation of local jobs.
An inspiration from the United States
If the jobs of the local economy are based on inclusive growth, it is necessary to connect to the region. This requires the implementation of a transport of "de flour", that is to say a transport between the new development zone and the main arteries of public transport. In the 90s, Mr. John Thomas "Jack" Lupton, heir to the fortune of the Coca Cola traffic jam, wanted to put his homet anal city on the map. He wanted to unlock the city's dilapidated center in an innovative way. Mr. Lupton made his idea for local transport by electric bus for a city of around 170,000 inhabitants. The city went forward against the advice of all major public transport experts and has made the Chattanooga Area Regional Transport Authority (Carta) the first American public authority to offer free shuttle service with electric buses. There was no expertise in the region and without the leadership of some fathers of the city, including David Crocket, technical, political and organizational obstacles would never have been overcome.
Carta now has a story over 20 years old. The electric bus system was the first to quickly replace the batteries in the deposit and garage of the bus, and it now goes to induction on the roadside: a buried coil loads the wireless bus in the parking lot or to a Stop sidewalk. The load can be generated by solar energy or be connected to the network. While traditional load methods provide battery power to roll a bus over 65 km, this induction load system brings the bus autonomy to 160 km per day. The energy and maintenance cost represent only a fifth of the traditional operating costs of a bus (with fuel at American prices). As minimum partial recharge takes only one minute, buses can work all day, which reduces capital investment in vehicles. When operating costs are only a fraction and the living laboratory has proven itself for 20 years, the city becomes a research center and a manufacturer of advanced transport technology. Mr. Lupton realized what he wanted and Chattanooga is on the map.
The battery -based bus system has an additional advantage. Any electrical network based on renewable energies needs a backup. The traditional solution is a battery pack. If this option is technically valid, it is also expensive. The batteries have a rather short lifespan and this additional cost to stabilize the network makes solar and wind energies often not very competitive, unless you opt for a solution that combines the supply of public transport by bus batteries as a source Additional electricity when the wind does not blow, the water is cold and the sun does not shine. Although these emergency batteries should not provide electricity for more than a few hours, this is a necessary installation when you want to avoid traditional help of diesel generators. The intelligent network of the new inclusive development means that the batteries of the buses, which operate in 12V DC, are loaded at night with the excess energy accumulated during the day. At the same time, bus batteries constitute a powerful and cheap component of a resilient community in half the cost.
The construction, operation and maintenance of a 20 -seat passenger transport bus offers job possibilities. Public transport buses are managed in the metropolitan area and the service buses are managed in the local area. As the scale is smaller, the window for innovation is larger. This system confronts practical engineering with new skills that were not available in major scientific centers; It therefore represents an opportunity to position the university platform for this new inclusive development. While others are interested in information and communication technologies (ICT), nanotechnologies, sophisticated sensors and biotechnologies, this new development zone is based on practical experiences, by grouping dozens of inclusive growth projects with their financial models as a basis for teaching and inspiring an audience of students. This ensures that this living laboratory of inclusive growth brings all the advantages to the community, including learning.
Culture and education
To create a community, it takes more than water, food, housing, energy, mobility and jobs. One of the most prolific industries is that of the arts, based on culture and tradition. This sector must be part of any local economic development, because it is based on the skills that people have had for generations. Some may not know how to read or write, but over the centuries, they have benefited from the knowledge and wisdom of their ancestors. It is therefore essential that the emerging community benefits from the respect and appreciation of the diversity that characterizes human establishments. Unfortunately, in a recent past, culture has been
considered a necessary expense. The inclusive growth model considers it as an opportunity to generate income and jobs, and to celebrate the identity and diversity of these emerging communities.
African arts, crafts, music and dance is recognized internationally. However, just as nature has been considered threatened and therefore had to be protected, culture is also considered threatened and must be subsidized and protected. Protection costs money and will have to face many obstacles to succeed. It is important to go beyond preservation and engage in an active promotion of the arts by creating master classes inspired by the German learning system which has succeeded in identifying the innate capacities of a child from his Young age and to provide him with technical training, thus avoiding many people to follow an academic route which does not correspond to their forces. The exhibition of arts and crafts strengthen creative, practical and technical minds so that they can find their professional path.
This reflection on culture and the arts puts education in the foreground. Any community that wishes to offer a better future to future generations does not need schools where children learn to memorize what the teacher already knows. These communities need a learning environment where children can call on their imagination from an early age. They must understand that they can do better than their parents and believe that they can succeed despite all the limits they face. Children must have the opportunity to get out of their misery, not as victims of globalization, but rather as a change agents that will make the difference in their local economy. If young people have this attitude towards life, then these communities will develop.
If community schools emerge in an environment that offers a new approach to urban design and development as we have described, and implements a wide range of innovative commercial models that meet the needs, then children can witness the Economy growth potential. It is the ideal environment for an educational platform. This learning environment will not only meet the needs of the local community, it will attract national and international students, from high school to university. It is one of the most catalyst effects of local economic growth and the presence of foreign students considerably strengthens self -esteem, necessary for the creation of a solid social fabric.
As soon as parents have some additional financial resources, education expenses are one of the fastest budgets, whether it is learning English (the biggest education expense in the world today) or science. Many parents know only too well that not entering school, or not finishing it due to early pregnancy, is one of the most predictable ways to stay in poverty. The fact of not obtaining a secondary school diploma and having a single -parent family guarantees that the next generation will not be able to get out of the poverty trap. Parents who have gone through this life course are often the most dedicated to guarantee that their children do not fall into the same trap. It is therefore essential that children feel the potential for progress during their growth and that they imagine their future.
Children need challenges and should be inspired. This is why inclusive growth, with all the new models that have proven themselves elsewhere, offers an learning environment that allows children to imagine more than parents and teachers know. It starts with the design of the school itself. Most schools are designed to respond to low budgets. Since the early 1960s, Anders Nyquist13 has designed highly ecological and functional buildings. He applied his science, experience and wisdom to schools to guarantee children a healthy and stimulating environment. This can be more expensive in capital and building materials, but will reduce operational expenses. The biggest advantage is that healthy children will study better; They can go to a local school where natural filters purify the air so that no one thickens after someone else sneezed, and where these filters are clusters of large leafy plants cultivated in the terra ready Produced locally from the diapers of their brothers and sisters. It has been shown that when innovations are everywhere, they turn into a lifestyle. The children will first inspire their parents, then modify their behavior according to the solutions they experienced in school.
Focus on creating value rather than reducing costs
The critical change of the economic model of housing and community development is financial. This is not cost, but value. If there is a school or network of schools where we know that children are healthier and get better academic results than elsewhere, that parents would do if it was a public school where One can only register according to the principle of first arrival, first served, the premises having absolute priority? Parents would like to get closer to school. What then happens when more parents want to live in the immediate vicinity of a school to guarantee them a place for their child? The land value of the property would increase. When the heritage increases, the people who live in this district become bancable beyond their employment and the existing mortgage. They can take advantage of an asset that represents the investment of their lives, because the region promotes health and education, which ultimately means local economic growth. Tuition fees are local, capital gains are local and the community now has a chance to evolve from discrimination to inclusion. The rate of return on capital is exceeded by the rate of social, ecological and economic growth which represents the basis of a future for an entire generation.
This vision becomes reality when real estate and local development aim to achieve inclusive growth, by constituting assets that come out people from poverty in a generation and eliminate unemployment. It takes a few years to land speculators to win 500 times their investment. It takes a two -digit generation of growth to deploy these funds and pass an entire middle -class misery company with sustainable growth parameters, while ensuring investors a solid return on investment.
From vision to reality
This article asked the following question: "Is it possible to create economic growth that goes beyond the rate of return on capital?" ». The working hypothesis follows the logic that the poor will be enriched, provided that the return on capital is lower than the economic growth rate. The answer is clearly yes, provided that one focuses on two -digit growth in "poverty corridors", which are characterized by a high unemployment rate among young people; That products and services be first created with what is available locally, and that the generated value transforms existing public procurement and purchasing power into a gold stimulus which circulates money in the local economy.
The two -digit growth proposal is viable thanks to the design of new commercial models for real estate development, where the economy is first built, then rebuilt housing. It rethinates the trade in building materials, electricity, water, food, health, mobility, waste management, culture and education. It guarantees the highest standards for resource efficiency. This scheme is brief and the cases are concise, but they are described in detail in the boxes presented on. This case does not pretend to be a plan to copy as is. This synopsis shows that new corporate models are not only viable if they are grouped in a cluster for inclusive local economic growth; This system will have a greater impact than expected. This method is applicable everywhere and has inspired political decision -makers and private developers.
Since the current economic system is not up to the task and the expected economic growth will not provide additional jobs, I suggest that it is not necessary to analyze why the market economy and the commercial model dominant fail to reach the excluded. Today's reality offers an opportunity window to create local two -digit growth pockets in "poverty corridors". Once the local offer is taken into account and people are no longer obliged to commute for hours and devote a large part of their meager income to transport, local jobs allow people out of the trap of Poverty. The increase in available money allows micro-investments in productive companies, which increases the taste for risk and gives the confidence necessary to embark on larger companies. Even when there is no prior experience, there is always the desire of a parent to see his children acquire the ability to act and do better than previous generations.
We have already seen communities achieve the value of such innovations unprecedented in commercial models and we have had the privilege of supporting them for decades. Las Gaviotas in Colombia and the island of El Hierro in Spain are some inspiring examples. The time has come to rely on these cases and create new references of another magnitude in Africa for Africa, in Asia for Asia and beyond. I think that the daring initiatives of Tau Parks, the executive mayor of Johannesburg, are exemplary and allow jobs to be created in a few months, leaving society from the poverty trap that characterizes too many cities in the world.
For more information
While this article refers to a dozen technologies, there are hundreds described on the website of the blue economy. There are many additional technologies that have been identified, tested and proven and which contribute to the overhaul of economic models. These grouped business models will be published regularly during 2015 on the following website:
www.theblueeconomy.org
The blue economy is Zeri's philosophy in action. Zeri was created in 1994 after the author concluded that his biodegradable cleaning products and the green factory he had just created were not sufficient to operate a sustainable business. Its cleaning products were based on palm oil and its success led to the destruction of at least a million hectares of tropical forest-the habitat of orangutan. While philosophy was called "zero emission and zero waste", the research initiative sponsored by the Japanese government and the University of the United Nations focused on the design of a concept where everything is used and nothing is is wasted. The author of this article and all other cases has focused on the implementation of this philosophy since 1994.
www.zeri.org
The author has 40 years of experience, has traveled a lot around the world, has undertaken projects and published books and articles.
www.gunterpauli.com
