Turning Poverty into Prosperity – Efosa Ojomo
Turning Poverty into Prosperity – Efosa Ojomo
He discovered the prosperity paradox … and its solution. Efosa Ojomo is a Nigerian author, former TED speaker, and researcher. He empowers entrepreneurs across the world to transform their communities through innovation. Ojomo discusses market creation and identifying opportunities for growth with host Charles Mizrahi.
- An Introduction to Efosa Ojomo (00:00:00)
- From Nigeria to America (00:06:22)
- American Prosperity (00:07:22)
- Market-Creating Innovations (00:16:37)
- Creative Destruction (00:23:50)
- Silicon Valley 3.0 (00:32:40)
- Changing the System (00:39:32)
- The Prosperity Paradox (00:46:02)
- Innovation Bootcamp (00:49:23)
Efosa Ojomo immigrated from Nigeria to the U.S. in search of a good education and the American dream. After attending Harvard Business School, he worked alongside legendary professor Clay Christensen and Karen Dillon to coauthor The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty. This book gives insights into building sustainable economies and is a call to action for anyone looking to create lasting change.
Since then, he has given several presentations on prosperity and entrepreneurship — such as his TED talk. He’s also partnered with The Legatum Center for Development and Entrepreneurship at MIT to build a market-creating innovation bootcamp for emerging entrepreneurs.
Before You Leave:
EFOSA OJOMO: The paradox is that you don’t actually fix poverty by trying to fix the visible signs of poverty. If anything, you create more dependence. Instead, you fix poverty by focusing on creating prosperity — which is something entirely different.
CHARLES MIZRAHI: My guest today is Efosa Ojomo. For years, governments, charities, and emerging markets have tried to alleviate poverty by providing free health care and clean drinking water and building schools. The results have been less than impressive. In fact, scores of countries like Burundi, Gambia and Malawi are worse off.
CHARLES MIZRAHI: On the other hand, countries like South Korea, Japan and Taiwan are prosperous nations today — despite a history of wars and unrest. The difference is market-creating innovations.
CHARLES MIZRAHI: Efosa Ojomo was born in Nigeria and came to the United States as a student on a scholarship. He graduated from Vanderbilt University with a degree in computer engineering and later went on to get an MBA from Harvard Business School.
CHARLES MIZRAHI: After graduating from Harvard Business School, he worked with world-renowned innovation expert Dr. Clayton Christensen and coauthored The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty.
CHARLES MIZRAHI: I recently sat down with Efosa to discuss how he goes about helping entrepreneurs create new markets and how to identify opportunities that have enormous potential for growth.
CHARLES MIZRAHI: Efosa Ojomo, I want to thank you so much for being on the podcast. I greatly appreciate it. We just spoke a week or so ago. After speaking with you, I had so many questions. I started to read your book, and you’re doing really exciting stuff.
EFOSA OJOMO: Thank you, Charles. It’s good to be here, and I’m looking forward to this conversation.
CHARLES MIZRAHI: Let’s start from the beginning. How does Efosa come from Nigeria and end up in the United States on a scholarship? He gets into the most prestigious school in the country and then partners and coauthors a book with legendary professor Clay Christensen. What did you do to get so lucky?
EFOSA OJOMO: Oh, man. Absolutely nothing. It’s by the grace of God. That’s the short answer. I was very fortunate to get a scholarship and come to the U.S. when I was 16. Without that scholarship, I wouldn’t have been able to afford college here. I came — I would think — like many people from lower-income countries. I came with no intention of ever going back or doing anything that was connected to Nigeria. I came for the American dream. Most people move to this country to get a piece of the American dream.
EFOSA OJOMO: I graduated college. I got a job as an engineer. I was working, and life was good. I bought a house and car. But in 2008, I stumbled upon some books on development and poverty. And it just changed the trajectory of my life.
EFOSA OJOMO: At the time, I had a full-time job. But I’d find myself staying up until 2:00 a.m. or 3:00 a.m. reading these books. Then, I’d have to wake up and go to work the following day. That’s when I knew something was going on. I studied engineering in college. And as an engineer, you don’t have to read a lot — which was part of the reason I did it. I’m a really slow reader. Anyways, to cut the long story short, I said: “I need to do something about this.”
EFOSA OJOMO: It was after I read the third book. I read about this 10-year-old girl who had to wake up every morning at 3:00 a.m., walk miles, fetch firewood and take it to the market to sell. I just knew I had to respond. I didn’t know exactly how, but I said: “I want to do something about this.”
EFOSA OJOMO: I was fortunate to start a nonprofit organization. We did work in some communities in Nigeria. But some of the projects we were working on — building wells and funding education initiatives — just didn’t have the kind of impact that I wanted. So, I thought: “I want to get some more education.” I happened to apply to business school and got into Harvard. That’s where I met Clay. And I have to tell you: It was hard for you to meet him and have your life be the same.
CHARLES MIZRAHI: For our listeners, this is Professor Clayton Christensen, who was the master of The Innovator’s Dilemma. He came up with all sorts of new thinking about how companies compete in the marketplace, right?
EFOSA OJOMO: Yes, absolutely. He built his career on building and developing innovation theories that help managers make better decisions. He was so brilliant, humble and kind that when I met him — I took his class at business school — I just wanted to be connected to him. I wanted to stay close to him for as long as I could — for as long as he would let me.
EFOSA OJOMO: Thankfully, he thought I was all right. But, that’s more about him and less about me. He agreed to have me as a researcher. So, after I graduated from business school, I worked with Professor Christensen until he passed away in January 2020.
EFOSA OJOMO: Throughout the course of our work, we were fortunate to publish The Prosperity Paradox — which is really a book about innovation and how it can create a transformative impact in countries when they do it right.
CHARLES MIZRAHI: Let me just back up a second. What were your parents doing in Nigeria when you were a little kid? When little Efosa was running around a field playing soccer, what were his parents doing? I’m picturing Africa and [you’re] living in a hut with a dirt floor and goats. Tell me how off I am.
EFOSA OJOMO: So, that’s definitely not the Africa that I grew up in. We lived in Lagos, which is one of the biggest cities in the world. It’s certainly the biggest in Africa. There are 20-plus million people who live there. I don’t really know how many people live there, but that’s an estimate.
EFOSA OJOMO: My mom started out as an optometrist and then went to business school, got an MBA and worked as a banker. My dad is a civil engineer. He built stuff — roads, homes etc.
CHARLES MIZRAHI: So, your family was well-off, right? They were part of the upper class.
EFOSA OJOMO: Well, that’s a very tough question because we weren’t poor, but we weren’t well-off. It’s a tough question because if a major thing happened to us — like if one of us got really sick or needed to come to the U.S. for some kind of health care access or education…
EFOSA OJOMO: I said I couldn’t have come to the U.S. without a scholarship. Many of my friends, who I went to school with, could come to the U.S. or U.K. — those are sort of the two most popular spots — without needing scholarships. Their parents were really well-off.
EFOSA OJOMO: We were in an interesting place where as long as no major emergencies happened — which is how most people live in poor countries — we’d sort of be OK. But the minute that an accident happened — if my dad or mom passed away — we would have been screwed.
EFOSA OJOMO: So, it’s tough to say we were well-off. But I would say that we were certainly not poor. I had three square meals a day. I had access to a good education. I had a loving family and home. So, we were OK. But perhaps because of what I know now — as I’ve grown older — I [realize] that we were one accident away from things getting really rough.
CHARLES MIZRAHI: So many people in this country are one paycheck away from being evicted or falling behind on their debt. It just takes one paycheck, and life changes. It sounds like you had all that. But one little bump in the road would have been pretty severe.
EFOSA OJOMO: Absolutely — which makes life really difficult. When you think about it from a risk-taking standpoint…
EFOSA OJOMO: There are reports that say Nigerians are the most educated immigrants in the United States. You survey the land. Many Nigerians are doctors, engineers and lawyers. I had several in business school with me. I think that at the time, there were roughly 900 people in my class. But maybe 5% or 6% were Black. Of the Black folks in my class, maybe 30% were Nigerians.
EFOSA OJOMO: So, Nigerians take education really seriously — which is good. But when you think about innovation and entrepreneurship, you really have to think outside of the box. You have to create something that adds a ton of value to people’s lives. In doing that, there are some risks you have to take. When you’re one accident away from disaster, it makes taking risks really hard.
CHARLES MIZRAHI: So, you go to college. You get an undergrad degree and major in computer engineering, right?
EFOSA OJOMO: Yeah.
CHARLES MIZRAHI: So, you’re doing all that exciting stuff. You go to Harvard Business School, and by the grace of God, you not only get into Professor Christiansen’s class but also become buds with him. He coauthors a book with you. You have the perspective of seeing prosperity and poverty in Nigeria, emerging markets and countries that are really disadvantaged. And you’re living in America at the top 1% of Ivy League schools — and probably the top business school in the world.
CHARLES MIZRAHI: What did you see that was so different that you could say: “Holy smokes. This is what we have here, and this is what we have there. Now I know why American businesses and entrepreneurs are doing so well.”
EFOSA OJOMO: I think the first thing I would say is a perspective or a paradigm shift. People talk a lot about the mind and how important it is. You have to believe that you can do something before you do it. It’s somewhere in that space.
EFOSA OJOMO: When I left Nigeria, 20-some odd years ago now, I did not believe that country — or the continent of Africa and other emerging economies — could ever prosper. I just didn’t believe it. I got to America. I saw prosperity all around me. And there’s still a lot of poverty here. But this is the richest country in the world, bar none. There was this belief that prosperity is in our DNA. We can prosper.
EFOSA OJOMO: Now, what’s interesting about that is that belief is infectious. It affects everybody who comes into contact with it. I came to America, and pretty soon after I believed that I could get into Harvard Business School. I believed that I could work with one of the greatest management professors that’s ever lived. Back in Nigeria, I don’t know that I would have shot that high.
CHARLES MIZRAHI: But what’s that mindset? I was born here in a working-class neighborhood. I saw a friend of mine across the street from me. His father was a shop teacher, and he became the head of trading at a major bank. His brother went into the Merchant Marines. Down the block from me was a truck driver’s son who became an attorney. So, I’m with you. It’s almost expected — like “I can do that.” There’s no barrier. What’s the mindset in an emerging market?
EFOSA OJOMO: People in emerging markets are some of the hardest working people in the world — just in terms of what you have to do to stay alive. Folks work hard in America. But there are a lot of squeezes and not a lot of juice in emerging markets.
EFOSA OJOMO: Now, you saw someone across the street — a father or truck driver became an attorney or head of trading at a bank. In many emerging markets, we don’t see those things. All we see are people waking up every day and struggling. They rarely make it. Now, what we do see are people who cheat the system, and then they make it. So, whether you’re a public official and you embezzled some money or a big business person who gets deals with the government — and there’s some rent-seeking going on — we see that.
EFOSA OJOMO: Now, the thing is that what people see is what they believe. So, when you see that, it becomes the best or quickest path to prosperity. It’s really hard to convince someone to wake up, work hard, put in their application and make it. It’s really hard to do that in emerging markets. Every day, they look around and see other people making it through other means. So, that begins to define the culture of the region.
EFOSA OJOMO: The beauty about that is culture is not a static thing. It is malleable. It changes. It shifts. There was a time in America when the majority of people believed similar things. They believed the only way — or the best way — to prosper was through corrupt means. And we write about some of this in our book: The Prosperity Paradox. Corruption was at a height in government. Big businesses cared little about their customers.
CHARLES MIZRAHI: Are you talking about the late 1800s or early 1900s? Tammany Hall.
EFOSA OJOMO: Yes, exactly. But things began to shift. And they began to shift as new markets were created. Here’s the thing about creating a new market that serves many people. In our book, we call it: “market-creating innovations.” These are innovations that make products and services more affordable so that more people can get access to them.
EFOSA OJOMO: A few things happen when you do that. The first: People have access to these new products, so their lives become better. Whether it’s a car, clothing or housing, their lives become better because they have more access. Because you’re serving a vast majority of people who historically did not have access, you — as the entrepreneur or CEO — have to create new jobs. You have to create jobs so that people can make, market, service and sell the product.
EFOSA OJOMO: As you create these jobs, you’re providing income for people. And they now have more money to spend and take care of their families. But they also have more money to pay taxes. So, the government can improve the way it takes care of folks in the country — the institutions if you will. [It’s] the court systems, institutions that manage our transportation networks, energy and so on. So, you see that happening as a result. You have more money to spend on infrastructure.
EFOSA OJOMO: How do we fund infrastructure? Does that mean taxes? Whether it’s a toll, tire or gas tax, you have money for infrastructure. This is sort of the last thing that’s quite critical: When more people begin to pay into the system, they begin to demand more from the government. So, it’s really hard for me to go to the Nigerian government and demand something it when I haven’t paid taxes. I don’t even know how to pay taxes.
EFOSA OJOMO: But in America, there are trees around my property. If a tree falls on my home or car, you had better believe I’m calling my governor and saying: “Hey, you better come take care of this. Why am I paying taxes? Are you not taking care of this?”
CHARLES MIZRAHI: There’s a type of ownership and reciprocity. I pay you, so you have to take care of me. In Third World or emerging countries, you don’t feel that because there isn’t reciprocity. You’re not paying into a system, and they’re not giving back. In fact, they’re stealing — in most cases.
EFOSA OJOMO: Yes. It’s huge. Whenever you hear about Nigeria, Kenya, Bangladesh and India — all these countries that are struggling — it’s important to not just demonize those in power. I think that’s the visceral reaction. It’s a reaction I have.
EFOSA OJOMO: As I worked with Professor Christiansen and began to think about systems and how they worked and understand the process by which we can create prosperity, we saw the role that innovation, entrepreneurs and creating new markets play. And it’s not just to make the wealthy wealthier or make people rich. No. Markets are incredibly important because of these other benefits.
CHARLES MIZRAHI: It’s a whole ecosystem. I create a business downtown, and my workers come, get off the train and buy lunch or coffee. That’s basically me in my entrepreneurship, and they’re the recipients thereof. It’s like dropping a pebble in a pond, and those ripples continue to go.
EFOSA OJOMO: Absolutely. You’ve been around long enough to see parts of America in their heyday — and maybe not so heyday today. If we go to the Rust Belt in America, what happened? I think that we can come up with a thesis of what led to the demise in many of those cities. But at one point, a market existed there. Jobs were created for a ton of people. Whether it was steel, Rochester, Kodak, Xerox or Detroit and the auto industry — it doesn’t matter what it was.
EFOSA OJOMO: At one point, there was a thriving market. Jobs were provided for a lot of people. Those people did what you just said. They went down to the coffee shop. They paid taxes. Taxes funded the roads, schools and so on. And then, boom. Industry starts to go out. You outsource, move or do whatever you do. Again, I’m not saying it’s good or bad.
CHARLES MIZRAHI: But you’re basically saying that one-factor changes upset the whole entire apple cart, and it’s a daisy chain event.
EFOSA OJOMO: Exactly. The market leaves. And now, you have a situation where many cities are struggling.
CHARLES MIZRAHI: But many of these cities also reinvented themselves. That auto worker is no longer an auto worker. He became a computer engineer and might move to Silicon Valley or have a startup. I think that’s our dynamic nature.
CHARLES MIZRAHI: I think you summed it up really well in the beginning. It’s in our DNA. Simply because you’re working at a hardware store on Monday, that doesn’t mean you can’t come up with an invention or start a business tomorrow. You see your stupid neighbor or dumb brother-in-law making tons of money doing X. You say: “Why can’t I do that?”
EFOSA OJOMO: Yeah, and that’s what Schumpeter calls: “creative destruction.” In fact, that is the cycle of capitalism and prosperity. In fact, you can’t thrive as an individual, city or country if you don’t go through creative destruction. This essentially means that today, here is how we get the bulk of our revenue. We make textiles. There was a time when we made a bunch of clothes in America.
EFOSA OJOMO: Today, we make Boeing 777s — wide-bodied aircraft and semiconductors. The thing that’s constant is that creative destruction. It’s the idea that what you’re doing today — the capabilities you’re building — will probably not serve you tomorrow. You always need to be on the lookout because somebody else will come do that. You need to keep skilling up so that you can improve.
CHARLES MIZRAHI: At the turn of the 20th century, I think around 50% or 60% of America were agrarian. They were farmers.
EFOSA OJOMO: Yes.
CHARLES MIZRAHI: If you said: I’m going to put all the farmers out of business,” people would say: “Are you crazy? How is this country going to last without farming?” Boom. The automobile comes with Henry Ford. It just continues. And the Rust Belt doesn’t work anymore. It’s cheaper to manufacture outside. We’ve become an amazing, innovative country with Google and Facebook starting up in dorm rooms. So, I get you.
CHARLES MIZRAHI: Why isn’t this happening in emerging markets? Or, you’re going to tell me it is happening. But tell me why. From my perspective, Africa is one of the richest continents in terms of natural resources, right? There are diamonds, oil, gold and fertile land. And it’s a huge continent. Why is it not Silicon Valley on steroids?
EFOSA OJOMO: I would say that there are three reasons. I’m sure there are more. The first is that it is happening, but not at the scale we need it to happen. When you go to different hubs on the continent — Cairo, Lagos, Nairobi or Cape Town — you are beginning to see innovations springing up that could be world-class.
EFOSA OJOMO: There’s a company called Flutterwave. It’s a fintech company that’s valued at over $1 billion. It’s a Nigerian/American company. There’s another company called ePharma. It’s sort of in the mobile health space. It’s raised upwards of $50 million or $60 million. It’s a startup. It’s happening, but it’s not happening at scale.
CHARLES MIZRAHI: Tell me why.
CHARLES MIZRAHI: Now, why? One of the biggest reasons is that many of these countries are looked at as poor. Unfortunately, poverty is looked at as a problem that professionals have to come in and solve. When you go to a poor country, the first thing you see is the lack — the lack of infrastructure, schools, hospitals and so on. As a development professional coming from America, France or the Netherlands, you’re coming from a place where you don’t see that lack. You see a lot of bounty.
EFOSA OJOMO: So, instantly, you know what the problem is — or you tell yourself that you do. We need to build schools. We need to build hospitals. We need to build roads. We need to build all these things because that’s where the problem is. But you and I just talked about the mechanism that makes that work. It’s the mechanism that makes the road, schools and hospitals work. It’s that market. And their market is missing. The innovation is missing.
EFOSA OJOMO: A lot of the professionals want to push resources onto these countries. And they have the airwaves. You have the United Nations and the World Bank — which have very big anti-poverty programs. I think they’re doing the best they can. But it doesn’t matter what you do, as long as you don’t take into consideration that mechanism that we talked about — innovation and entrepreneurship. I don’t care how many roads you build in whichever countries. It’s not going to work.
CHARLES MIZRAHI: They’re solving a problem that’s really a symptom. It’s not really the core. The bathtub is overflowing, but instead of closing the faucet, you’re mopping the floors.
EFOSA OJOMO: I couldn’t have said it better.
CHARLES MIZRAHI: You went to Harvard Business School. I went to one year of Brooklyn College. I got my money’s worth.
EFOSA OJOMO: Can you believe that? All that money…
CHARLES MIZRAHI: Let me ask you this. You take two countries — more or less at the same time. You have Jamaica and Singapore. Jamaica’s GDP — the country opted to go to farming. Singapore decided to go on a totally different path. Singapore’s GDP is multiples of Jamaica’s. Now, it’s not that Jamaicans are dumb. They didn’t take stupid pills. Assume all intelligence is average to above-average throughout the world. There are really no stupid people. It’s education…
CHARLES MIZRAHI: OK. Israel has no natural resources. Now, it’s a startup nation. It has no natural resources — just its people and the startup environment. It’s system of government changed from socialism to capitalism — which created or spurred this innovation. Now, we’re seeing these countries — Singapore and Jamaica — and wondering: “How the heck do they choose that?”
CHARLES MIZRAHI: Or, you look at Israel and the Arab countries around it that didn’t choose the innovation that Israel chose. It chose oil. How do you change the mindset of these countries to say: “Look what my neighbor is doing. My dumb neighbor’s GDP is soaring. They don’t have anyone coming there to build schools for them. They’re self-sufficient and exporting”? What is the catalyst for that change?
EFOSA OJOMO: It’s a process, right? It’s important to know that Singapore did not get there overnight. We have to appreciate the long, arduous journey. And Singapore is actually an anomaly. I can count on one hand the number of countries that have achieved Singapore-level prosperity in the timeframe that Singapore did.
CHARLES MIZRAHI: That’s because they had a phenomenal leader, right? He went ahead and basically cloned good ideas from other countries.
EFOSA OJOMO: I think it’s important to appreciate that these are anomalies. It’s a process. The second thing is that the mechanism doesn’t change. How productive are my people in creating goods and services that a bunch of other people need? If you can answer that question and connect it to the capabilities you have around you, you can begin —
CHARLES MIZRAHI: Let me ask you a question. You went to the best business school in the world. You know a lot of smart people. And you probably know a lot of people that started businesses — great entrepreneurs and captains of industry. You take 10 of them and go back to a village in Nigeria. Five years from now, would I see Silicon Valley 3.0?
EFOSA OJOMO: Probably not.
CHARLES MIZRAHI: Tell me tell me why.
EFOSA OJOMO: Well, Silicon Valley 1.0 didn’t get created in five years. Maybe you could see Silicon Valley 3.0 in 25 years — or whatever that becomes. But I wouldn’t necessarily frame it that way. I would frame it as: Would you see prosperity? And prosperity doesn’t necessarily mean that people have a ton of money in the bank accounts. Prosperity equates to hope. It equates to people not having to leave their countries just for better opportunities.
EFOSA OJOMO: They can still leave if they want to. You’ve got Canadians in America. You’ve got English folks in America. They leave if they want to, but they don’t leave just for prosperity. When you can create that in a region, then I think that’s when it’s on a path to prosperity. In terms of how you do that or what you do, that’s where it really depends. It depends on the capabilities of the region.
EFOSA OJOMO: Capabilities are made up of three things. It’s your resources. So, let’s take stock. What do we have access to? It’s your processes. Processes are the ways you’ve figured out how to work together to use your resources. Different countries are at different levels when it comes to how efficiently they use their resources. And the last is the priorities. What do people in that country want to prioritize?
EFOSA OJOMO: If we look at China and India, we see a stark difference, right? China prioritizes economic growth — almost at the expense of a bunch of other things. India prioritizes its democracy in a way, and says: “We’re going to try to practice this democracy even though we’re not a wealthy country. We’ll prioritize that.”
EFOSA OJOMO: If you want to build a plant in India — and you’ve got your plant on my land, and I’m a poor farmer — I can probably take you to court and delay construction.
EFOSA OJOMO: In China, if it’s going to benefit the region and create economic growth, we’ll figure something out. We’ll expedite that thing.
CHARLES MIZRAHI: I got you. That’s a good example. China and India are really good examples. I was in Shanghai a few years ago, and they have the view from a hotel of what it looked like in the 80s — not a lifetime ago — to now. And I thought: “Holy smokes, this is a 30-year period. It’s absolutely staggering the way that economy flourished from an agrarian society to a highly productive one in so many different ways.”
CHARLES MIZRAHI: But here’s my question for you. You have been here close to 20-some odd years. You went to an elite school. You studied with elite professors. You caught the American germ of entrepreneurship. Could you have been Efosa at 40 years old? I’m assuming you’re 40 or thereabouts.
CHARLES MIZRAHI: Could you have become Efosa in Nigeria? Would your trajectory have been the same? You’re a smart guy. You had all the same things, but you changed one thing in your life. You came here at 16 years old, and your life went into the stratosphere compared to if you would have stayed in Nigeria. That’s my opinion. Do you agree with that or disagree?
EFOSA OJOMO: I agree. My story is anecdotal. Studies and papers have been written on it. You take a person from a middle-to-low-income country. You put them in the U.S. and [have them] do the same thing. They could be a barber in their country, and they come here and cut hair. They make multiples. There are papers that talk about this.
EFOSA OJOMO: Empirically speaking, that’s the case. It’s because the system here — and there are issues with it — by and large, works. The systems in many other countries don’t work. And it’s really, really hard to get that system going. The system requires multiple stakeholders.
CHARLES MIZRAHI: I agree with you. So, for me to start a business tomorrow, I’d have to go online, pay a fee and become an LLC. Three seconds later, I’m on GoDaddy and buying a domain and website. I’m in business tomorrow morning. I get a bank account and a tax ID. In 24 hours, I could be in business. That’s not the case in a lot of these countries, correct?
EFOSA OJOMO: It’s not the case. And what you’ve actually described is really just the beginning. It’s the surface. Where are you going to find workers? Where are you going to find suppliers? Where are you going to find customers who understand the product? Where are you going to find distribution, logistics and so on? The system is set up to advance innovation and the creation of markets. Now, that doesn’t mean it’s not possible. Many emerging economies are in a different phase.
EFOSA OJOMO: If you went back 100 or 150 years in America, you could not just go to GoDaddy. I’m being facetious there. But the point is: You couldn’t just start a business. You couldn’t just send goods from New York to Missouri. We were in the market-creation phase. We were building those systems.
EFOSA OJOMO: Now, we have those systems. We see they work. We see the benefits, and it’s hard to go back. What I’m trying to do is encourage people in emerging markets — and many of the parts of this country where things may not work as well — and say: “There’s hope if we build the system.”
CHARLES MIZRAHI: But here’s my point: If you’re in these emerging markets, you just have to look to your right and left. Look to the United States, China, Singapore and Israel. Why don’t we model ourselves after them?
CHARLES MIZRAHI: If you and I became the kings of a country in Africa, I would think the first thing we’d do — and I don’t have a Harvard business education, so you’ll have to correct me on this — would be to create a capitalist system with fair and equitable taxation. I’d attract wealthy people to invest in opportunities using the labor force that was around me. That’s my simple, non-educated way of doing things. Is that hard?
EFOSA OJOMO: It’s very hard.
CHARLES MIZRAHI: Tell me where I’m missing it.
EFOSA OJOMO: It’s very hard. You see, you’re one person. It’s not impossible. It’s just very hard. So. I just talked about capabilities. There are things that you can do as Charles — as the president or king of a country — and there are things the country is set up to do. There are the capabilities of a country. So, it’s very hard for you to become a leader of a country that has existed a certain way over decades — one that has a certain level of comfort with the way things work.
EFOSA OJOMO: And then you say: “Hey, guys. Here’s what we’re going to do now. Just trust me.” The majority of people do not trust the folks that sit in your position. They don’t know who you are. As far as they’re concerned, you’re just like the last guy. Everybody who goes into power promises that there will be no more corruption. “No more of this. We’re going to build this.” So, it’s not that easy.
CHARLES MIZRAHI: So, I made a lot of assumptions that are really not so. For example, in Arab countries, it’s: “Tomorrow. We’ll do it tomorrow.” There’s always a delay.
CHARLES MIZRAHI: I remember there was a commercial in Jamaica where they were driving slowly. They stop at a cow passing. Instead of beeping, they’re like: “Just take your time. It’s Jamaican time.” It’s not like: “Let’s get here.” It’s like: “I’ll see you in an hour or two.” There’s no rush for a deadline. There’s no movement. This is the way they were brought up. Their whole existence [revolves] around this.
CHARLES MIZRAHI: I totally get what you’re saying. But here’s what I’m not getting. If I’m in this culture or emerging market environment, these people work 50 times more than me. I sit by a desk, drink a cup of coffee and say: “I had a tough day.” Digging ditches is a tough day. Carrying 50 pounds of water in jugs for three miles is work. I don’t do work. So, if I just looked around me and studied those other countries, wouldn’t I conclude that I should change?
EFOSA OJOMO: Yeah. But we’re talking about a system. You can change, but if the system is not designed to incentivize you…
EFOSA OJOMO: People work based on incentives. If the system is not designed to benefit you for working, then you can change all you want — and change is costly — but you will not reap a reward.
CHARLES MIZRAHI: I want you to tell a story. I forgot where I heard it. It was from one of your presentations. It was about your sister who went to court, and there were payoffs involved. She was doing the right thing. She couldn’t believe it. Share that with us.
EFOSA OJOMO: Yeah, it was from my TED talk. I started out by explaining that somebody had broken into my sister’s office at the university where she taught and stole her laptop and a couple of other things. She found the person and took him to the police station.
EFOSA OJOMO: When they got there, the police officers said: “We can’t do anything until you pay us.” And she said: “That’s your job. I just brought you somebody who stole my stuff — an alleged criminal —and you’re telling me that I have to pay a little bribe so you can do your job?” They weren’t asking for a bribe because they were doing something illegal.
CHARLES MIZRAHI: Just do your job.
EFOSA OJOMO: It’s hard when you live in that system. What does my sister want to change that will change the system? She’s teaching. She’s doing her best. But you wake up every day in a system like that, and it beats you up. It really does. But I think where I want to leave people is even in the midst of that, there’s hope.
EFOSA OJOMO: A lot of the work that I’ve done, and the books I’ve read … I’m looking around for this particular book on the Industrial Revolution. When you go back and read where we’ve come from — and you the evolution of development and prosperity — you find that we are not coming from a place that is dissimilar. We’re coming from a place that’s quite similar, but people have built systems.
EFOSA OJOMO: At the time, we did not have other countries that we could compare ourselves to — where the comparison was really stark. You can argue that in the American government, the bureaucracy gets an eight out of 10 for efficiency. The Nigerian government gets maybe a two out of 10. It’s very stark. Back in the day, maybe all of us were hanging around two, three, or four out of 10. But I can say that because we came from there, it’s possible for other countries to do the same. It’s hard work, but it’s possible.
CHARLES MIZRAHI: OK. So, you titled your book: The Prosperity Paradox. What’s the paradox?
EFOSA OJOMO: You mentioned it earlier. Remember the analogy you gave about the bathwater overflowing and mopping up the floor? The paradox is that you don’t actually fix poverty by trying to fix the visible signs of it. If anything, you create more dependence. Instead, you fix poverty by focusing on creating prosperity — which is something entirely different.
CHARLES MIZRAHI: Give me an example. Make that real for me. Tell me what that means in a real example.
EFOSA OJOMO: So, here’s a real example: You take the continent of Africa. Economically speaking, it has the poorest parts of the world. Twenty years ago, an entrepreneur said: “I want to go sell inexpensive mobile phones to people.”
EFOSA OJOMO: You have to understand that 20 years ago, we didn’t have broadband the way we do today. Mobile phones were still relatively new technologies back then. There were no smartphones. People said: “You’re crazy! There’s corruption and malaria and there’s no infrastructure, education or health care. We’ve got to fix all these other problems. Let’s fix the poverty before you even start talking about selling mobile phones. That’s a luxury.”
EFOSA OJOMO: Mo Ibrahim — an entrepreneur — says: “No. I will create a market for this product because this creates value for people.” Cut the long story short. He invests and makes it affordable for many people. Today, there are close to one billion subscriptions on the continent. It’s has the economic value of $200 billion. He’s created two to three million jobs and provides annual revenue of $10 billion to $20 billion to different governments.
EFOSA OJOMO: That’s what we call the solution to the prosperity paradox. If he went in and said: “Let me fix the road. Let me get water. Let me do this,” he would still be working on that. Instead, he takes an entirely different approach. He creates a market for a product that people would value and has now created prosperity in that sector. What I’m arguing is what if we did something similar for a bunch of other products and services? I think we could.
CHARLES MIZRAHI: Give me an example.
EFOSA OJOMO: Health care. Housing. Food. The average household in many African countries spends over half of its income on food. Insurance. Access to insurance. Now, we would have to change the business model of how we make and sell these products. But if we do that, then we create jobs.
EFOSA OJOMO: Then, we create that mechanism we were talking about earlier — where people can go down to the coffee shop and create a ripple effect. That’s what we do. If we keep trying to fix poverty by building schools, wells and all these things, we’re going to be doing it for a long time.
CHARLES MIZRAHI: We’ll be doing it forever. So, tell me what you’re doing. I saw that you have workshops. You’re nurturing entrepreneurs in these countries?
EFOSA OJOMO: Well, that’s my hope. After the book came out, we got a lot of requests from people who wanted to touch the material. They wanted more. We’re in a partnership with MIT — The Legatum Center for Development and Entrepreneurship. We are building a market-creating innovation bootcamp.
EFOSA OJOMO: The whole idea is to empower innovators in emerging markets with these principles and connect them to a community where they can get support and build market-creating innovations. That’s what we want to do.
EFOSA OJOMO: We’re going to launch in a few months — probably at the end of June. We’ll launch this in Rwanda. We’ll do it in seven countries this year. We’re hoping to scale this out. If we can get people to start thinking differently and empower them with the necessary skills that let them know they can create a market that can help their country prosper, then I think there’s hope. I really do believe there’s hope.
CHARLES MIZRAHI: So, you’re going to start with one guy, one place and one village and keep multiplying that and connecting them with networks. And it just mushrooms.
EFOSA OJOMO: That’s the beauty about the network effect and the unpredictability of creating a new market. When I build a school, I can predict what might happen. If I build a road from here to there, I can predict that, if it’s a two-lane highway, 200 cars [will pass] every minute. When you create a new market, you can’t really predict what’s going to happen.
EFOSA OJOMO: Take the computing industry. You create the market for computers. People think: “I should put a camera on this thing.” And then, somebody says: “I should create an app that connects people with this camera.” Then, people are making money and creating wealth through this new market. Then, someone says: “Let me connect people to doctors.” That’s the beauty about a market.
CHARLES MIZRAHI: I love you that you brought that up. You look at the iPhone, and you couldn’t have Uber without it. Uber is an app. It’s just the thought process of someone who said: “You know what? Let’s create…” It’s brilliant, but it never would have happened without broadband, a smartphone, an app store or any of these things. And now, it becomes exponential growth in terms of everything.
EFOSA OJOMO: Here’s the thing, Charles. Imagine somebody sat you down and said: “Charles, I want you to show me the impact that this phone is going to have.”
CHARLES MIZRAHI: I wouldn’t have any idea. Zero idea.
EFOSA OJOMO: You’ve just put a camera and a little night screen [on it]. You’re telling me that I’m going to spend $700 on this phone. I can’t eat. I have to pay rent. And they say: “Show me this thing.” It’s hard! You asked earlier: “Why isn’t this happening?” Well, the acute signs of poverty — we’re trying to fix those. If we changed that thinking to iPhone thinking, then you’d begin to see the Ubers happen. And man, that’s when the floodgates open.
CHARLES MIZRAHI: That’s the flywheel.
EFOSA OJOMO: That’s the flywheel. I’m on a mission. I’m on a mission to spread the message to as many people as possible to show that it is possible. I think it can happen — because it happened for me. I left, and I was like: “There’s no way.” Now, I do believe it’s possible.
CHARLES MIZRAHI: Yeah. Wow, phenomenal. So, when is this starting up? You said this is a new project.
EFOSA OJOMO: Yeah, it’s a new project. We’re starting out around the end of June. We’re working with a few partners. We’re just managing dates and things like that now. But during the second half of this year, we’ll be very busy executing on these programs. I’m very excited about it.
CHARLES MIZRAHI: I’d love to have you on the show a year from now when you have one of these networks up and running — where you have this young person who created some type of health care product that now employs 300 people and created roads and jobs. That whole network effect of wealth — and all you need is one! You start with one, and that’s really it. You don’t need a zillion.
EFOSA OJOMO: No, you don’t. That’s the cool thing about it. How many Henry Fords are there?
CHARLES MIZRAHI: I’m just saying that you need one Steve Jobs. Just give me one Steve Jobs. Give me one Larry Page. Give me one Zuckerberg.
EFOSA OJOMO: Exactly. So, we’re going to find those guys and empower them. They will create new markets that’ll create prosperity the world over.
CHARLES MIZRAHI: I don’t think you’ll have to find them. I think they’re going to come to you. You just need to get it up and running — in my humble opinion. You just need to get one or two pioneers. And then, everyone else will see what they’re doing and jump along. If this is an example of everything that you learned from Professor Christensen — and building prosperity — [there will be] exponential growth. It’s a hockey stick kind of growth.
EFOSA OJOMO: That’s the hope.
CHARLES MIZRAHI: It won’t take 50 years. Wow, that’s great. OK, man. We definitely have to have you back on. I’ll tell you what: Call me at 3:00 a.m. when you have your first millionaire, and we have to do a show. I want to have that person on.
EFOSA OJOMO: Sounds good. I’ll be sure to do that.
CHARLES MIZRAHI: That’s great. Thank you so much, Efosa Ojomo. This has been absolutely great. You’ve schooled me on so many things that I thought I knew, but I’ve realized that I haven’t scratched the surface. I just think more about it. There were so many things. If I lived in a community where there wasn’t broadband, how would I be able to work? How would I work from home? How would I be able to download things?
CHARLES MIZRAHI: If you go to a hotel and don’t get that Wi-Fi password, you feel like you’re back in the Middle Ages. You can’t download things. Or, you’re on an airplane. You could just text. I can hear what you’re saying. Absolutely phenomenal. Thank you so much for being on the show. God bless. I wish you continued success. I’m rooting for you.
EFOSA OJOMO: Thank you. Thanks a lot, Charles. I appreciate it.
CHARLES MIZRAHI: Thanks for listening to this episode of The Charles Mizrahi Show. If you’re a new listener, welcome! If you’ve been listening for a while, we’re glad to have you back. Either way, we’d love to know what you think of the show. Please leave a review if you listen on Apple Podcasts. Reviews make it easier for others to find the show. You can also see the video of the interview on The Charles Mizrahi Show channel on YouTube.
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