Market Engagement Strategy

Mention the word “innovation” and most people will think of extraordinary inventions created by solitary geniuses. But the majority of business innovations today are quite the opposite. The companies that generate them thrive on collaboration, a free exchange of ideas and regular interactions with customers and other stakeholders. They innovate not necessarily to revolutionize their industry — although that may happen to a lucky few — but to meet specific objectives and carve out a competitive edge.

Perhaps most important, however, is that innovative companies do not outsource this function to a department or committee. Nor do they hastily come up with an innovation plan when the corporate strategy calls for it. Rather, for them innovation is a way of life. It is what they do. And to do it well, they change whatever needs
to be changed, whether it’s their organizational structure, their business processes, or even their core products or services. Yet this doesn’t happen randomly: leading companies do follow a process to innovate. Our research has found that this tends to be a spiraling, iterative approach that embeds innovation in every aspect of the organization.

The circle in the middle (Innovation spiral) shows how companies can gain competitive advantage, which is typically the purpose of innovation. The following are the components of the spiral:

Areas of innovation
Organizations typically innovate in three areas: products and services, processes, and business model. Our research shows that although product and service innovations certainly help businesses obtain a competitive edge, business model innovation tends to confer more lasting benefits.

Innovation process
Innovation has, up to now, typically followed a three- step process — idea creation, development and exploitation. Our research reveals a major shift in how leading companies go about innovation today. Intuition is the process of obtaining ideas, from anywhere and everywhere. Socialization happens when the idea is discussed and debated with other people, formally and informally. After this process of ideation, the resulting idea goes through development and exploitation. In the spiral approach, innovation doesn’t always need to start at the intuition phase but can start anywhere in the framework. If there are unanswered challenges at any stage, then the process can go backward until the issue is resolved. For example, new products may be rolled out and tested on consumers before the next phase of development, usually involving customer feedback or user experiences.

External collaboration
The most innovative organizations collaborate throughout the process to access diverse internal and external expertise. This involves working with customers, investors, suppliers, governments, financial services, competitors, academics and other companies.

Innovation enablers
These are the internal factors necessary for the innovation spiral to work. At the top are leadership mindset and culture: organizational leaders must be innovative and take risks to achieve competitive advantage. Once innovation is embedded in the culture, seven other key factors need to be aligned to allow innovation to flourish: people and skills, technology, infrastructure, organization and governance, risk management, measurement and key performance indicators (KPIs), and funding.
The right column (Business outcomes) shows that companies innovate to achieve five key business outcomes: profitable growth, customer engagement, business sustainability, productivity and business agility. The challenge is to focus on all of these outcomes together, rather than favoring one over another, which compromises the ability to anticipate change and drive growth.

Entrepreneurship oriented toward high growth
in the formal economy is a nascent phenomenon in Tanzania , particularly in the technology subsectors targeted in this assignment. Only a handful of entrepreneurs were identified, and nearly all of them were in the very early stages of development. Furthermore, other stakeholders interviewed identified many factors that contribute to the lack of robust entrepreneurs, but they nearly all confirmed that such high-growth entrepreneurs in the sectors were few and far between. The key points listed below summarize the observations gained on the biggest barriers
to angel investment in high-growth technology entrepreneurs in Tanzania:

1. There are few business mentors and no active angel investors. There are few successful entrepreneurs to guide and inspire new entrepreneurs. Stakeholders identified the lack of success stories of entrepreneurship in traditional sectors, much less in technology, as a primary inhibitor to interest from potential entrepreneurs.
2. The natural resources “curse” is inhibiting technology sector growth. With the discovery of abundant natural resources, the focus of investment and the majority of economic activity have been oriented toward developing companies to supply the value chain of large enterprises to displace import substitutes. Stakeholders indicate that while there has been some success, these companies are generally not innovative. Furthermore, stakeholders indicated that there is a considerable challenge to source domestic inputs, as small local producers do not have sufficient negotiating power nor quality control standards to sell to large extraction companies.
3. A critical mass of medium-size businesses does not exist. Tanzania has megaprojects and large companies, very few medium companies, and a large amount of small informal businesses (nearly 90 percent of the private sector). This results in small businesses being unable to join the value chain to eventually sell products and services to large companies, who largely rely on foreign suppliers. Stakeholders confirmed that part of the reason for this is that most entrepreneurs prefer staying small and informal to stay unnoticeable and not show public success
   so they don’t have to become the provider
   for family and friends. They would rather launch other small informal businesses than grow the initial one. The absence of medium companies to play a convening and distributing role exacerbates broken value chains between small producers and large client companies.

5. The risks associated with entrepreneurship and, to a lesser extent, angel investment are not assuaged by strong trust in counterpart stakeholders. Aversion to risk was reported at every level of the ecosystem. Entrepreneurs do not trust wealthy individuals or catalytic agents and fear having their idea or business stolen. Wealthy individuals do not trust local entrepreneurs and domestic economic growth to provide returns.
6. The government lacks a united vision and clear strategy for the development of the
   key high-growth sectors. The government
   is struggling to create and follow a clear national strategy on the development of the technology sector and innovation. This is due to a prioritization of basic poverty alleviation through sectors such as agriculture, education, health, and infrastructure. There is a clear
   lack of operational coordination between all actors in supporting early-stage technology companies, leaving entrepreneurs hanging along the development path.
   entrepreneurship oriented toward hIgh growth In the formal economy Is a nascent phenomenon In mozambIque, partIculary In
   the technology subsectIons.
7. There is a general lack of financial and managerial skills. From the available
   statistics and the interviews conducted, most entrepreneurs that do access initial capital mismanage it due to a lack of financial literacy and management skills. Personal pressing financial problems were also indicated as a cause of low financial discipline in management terms. Due to this, examples of seed funding usually did not translate into business results. There are Business Development Services (BDS) solutions available, but these are either too expensive for entrepreneurs to afford, led by a nonexpert in a governmental agency, or are a short-term generic training insufficient
   to improve managerial skills. Stakeholders indicate that technical skills are sufficient.
8. Financial instruments tailored for early-stage financing for technology are not available. The allocation process of available early-stage financing for start-ups through grants and loans is insufficient. However, stakeholders indicate that the technology sector is perceived as particularly high risk and low return,
   hence few options are available to potential entrepreneurs for early-stage initial capital beyond grant programs. Microfinance is quickly accessible. However, stakeholders indicate that rates are unaffordable for a start-up. Grant programs exist, but they have had very limited success in providing resources to start-ups.
9. The lack of growth financing for a small number of tech SMEs inhibits growth potential of start-ups. There is a genuine lack of growth financing for start-ups that are looking to grow into small or medium businesses, although it should be noted that these are very few in number.
10. The policy environment does not adequately promote entrepreneurship and investment in the tech sector. The cost of doing business—registration and licensing, opening ank accounts, obtaining and enforcing intellectual property protection, paying taxes and accessing information—is high for entrepreneurs. Outdated policies in rapidly changing subsectors such as mobile technology and the absence of guidelines in relatively nascent areas, including biofuels and e-commerce, stunts progress in the tech sector and inhibits the growth of technology entrepreneurship. While the government seems to recognize the employment potential through entrepreneurship, its initiatives are under- capacitated and are not actively supporting technology entrepreneurs.

Unmet Needs and Support Gaps
Entrepreneurs in Tanzania face particular difficulty overcoming key challenges in their path to establishing profitable businesses. In addition, the pool of growth-oriented entrepreneurs is quite small, and technical skills among that pool are limited. Chief among the challenges facing this small group of entrepreneurs is weak mentorship, coupled with a lack of coordination between support programs. The absence of real co-working space, and the focus on business plan competitions, can have the effect of making entrepreneurship more of a game than a career, particularly in the absence of a clear “next step.” Stakeholders indicate that most entrants into entrepreneurship are from wealthy, well- connected families and will most likely revert to government or international employment after tinkering for a while.

Furthermore, market research and other business services are either of low quality or are prohibitively expensive.

Unemployment rate and Economic Growth

Upfront the long term of Public Investment to Macro-economic Growth

Our Health System And Macroeconomic Growth

What is Insurance?

Represented in a form of policy, Insurance is a contract in which the individual or an entity gets the financial protection in other words reimbursement from the insurance company for the damage (big or small) caused to their property. 

The insurer and the insured enter a legal contract for the insurance called the insurance policy that provides financial security from the future uncertainties.

In simple words, insurance is a contract, a legal agreement between two parties i.e.the individual named insured and the insurance company called insurer. In this agreement, the insurer promises to make good the losses of the insured on the happening of the contingency and the insured pays a premium in return for the promise made by the insurer.

The contract of insurance between an insurer and insured is based on certain principles, lets us know the principles of insurance in detail.

Principles Of Insurance

The concept of insurance is risk distribution among a group of people, hence cooperation becomes the basic principle of insurance. 

To ensure the fairness and for the proper functioning of an insurance contract the insurer and the insured have to uphold the 7 principles of Insurances mentioned below:

1. Utmost Good Faith
2. Proximate Cause
3. Insurable Interest
4. Indemnity
5. Subrogation
6. Contribution
7. Loss Minimization

Let us understand each principle of insurance with an example.

Principle of Utmost Good Faith

The very basic principle is that both the parties in an insurance contract should act in good faith towards each other i.e. they must provide clear and concise information related to the terms and conditions of the contract.

The Insured should provide all the information related to the subject matter and the insurer must give clear details regarding the contract.

Example – Jacob took a health insurance policy. At the time of taking insurance, he was a smoker and failed to disclose this fact. Later, he got cancer. In such a situation the Insurance company will not be liable to bear the financial burden as Jacob concealed important facts.

Principle of Proximate Cause

This is also called the principle of ‘Causa Proxima’ or the nearest cause. This principle applies when the loss is the result of two or more causes. The insurance company will find the nearest cause of loss to the property. If the proximate cause is the one in which the property is insured, then the company must pay compensation. If it is not a cause the property is insured against, then no payment will be made by the insured. 

Example – 

Due to fire, a wall of a building was damaged, and the municipal authority ordered it to be demolished. While demolition the adjoining building was damaged. The owner of the adjoining building claimed the loss under the fire policy. The court held that fire is the nearest cause of loss to the adjoining building and the claim is payable as the falling of the wall is an inevitable result of the fire.

In the same example, the wall of the building damaged due to fire, fell down due to storm before it could be repaired and damaged an adjoining building. The owner of the adjoining building claimed the loss under the fire policy.In this case, the fire was a remote cause and storm was the proximate cause hence the claim is not payable under the fire policy. 

Principle of Insurable interest

This principle says that the individual (insured) must have an insurable interest in the subject matter. Insurable interest means that the subject matter for which the individual enters the insurance contract must provide some financial gain to the insured and also lead to a financial loss if there is any damage, destruction or loss.

Example – the owner of a vegetable cart has an insurable interest in the cart because he is earning money from it. However, if he sells the cart, he will no longer have an insurable interest in it. 

To claim the amount of insurance, the insured must be the owner of the subject matter both at the time of entering the contract and at the time of the accident. 

Principle of Indemnity

This principle says that insurance is done only for the coverage of the loss hence insured should not make any profit from the insurance contract. In other words, the insured should be compensated the amount equal to the actual loss and not the amount exceeding the loss. The purpose of the indemnity principle is to set back the insured at the same financial position as he was before the loss occurred. Principle of indemnity is observed strictly for property insurance and not applicable for the life insurance contract.

Example – The owner of a commercial building enters an insurance contract to recover the costs for any loss or damage in future. If the building sustains structural damages from fire, then the insurer will indemnify the owner for the costs to repair the building by way of reimbursing the owner for the exact amount spent on repair or by reconstructing the damaged areas using its own authorized contractors.

Principle of Subrogation

Subrogation means one party stands in for another. As per this principle, After the insured i.e. the individual has been compensated for the incurred loss to him on the subject matter that was insured, the rights of the ownership of that property goes to the insurer i.e. the company.

Subrogation gives the right to the insurance company to claim the amount of loss from the third-party responsible for the same.

Example – If Mr A gets injured in a road accident, due to reckless driving of a third party, the company with which Mr A took the accidental insurance will compensate the loss occurred to Mr A and will also sue the third party to recover the money paid as claim. 

Principle of Contribution

Contribution principle applies when the insured takes more than one insurance policy for the same subject matter. It states the same thing as in the principle of indemnity i.e. the insured cannot make a profit by claiming the loss of one subject matter from different policies or companies.

Example – A property worth Rs.5 Lakhs is insured with Company A for Rs. 3 lakhs and with company B for Rs.1 lakhs. The owner in case of damage to the property for 3 lakhs can claim the full amount from Company A but then he cannot claim any amount from Company B. Now,  Company A can claim the proportional amount reimbursed value from Company B.

Principle of Loss Minimisation

This principle says that as an owner, it is obligatory on part of the insurer to take necessary steps to minimise the loss to the insured property. The principle does not allow the owner to be irresponsible or negligent just because the subject matter is insured.

Example – If a fire breaks out in your factory, you should take reasonable steps to put out the fire. You cannot just stand back and allow the fire to burn down the factory because you know that the insurance company will compensate for it.

Types Of Insurance

There are two broad categories of insurance:

1. Life Insurance 
2. General insurance

Life Insurance – The insurance policy whereby the policyholder (insured) can ensure financial freedom for their family members after death. It offers financial compensation in case of death or disability. 

While purchasing the Life insurance policy, the insured either pay the lump-sum amount or makes periodic payments known as premiums to the insurer. In exchange, of which the insurer promises to pay an assured sum to the family if insured in the event of death or disability or at maturity. 

Depending on the coverage life insurance can be classified into the below-mentioned types:

• Term Insurance: Gives life coverage for a specific time period.
• Whole life insurance: Offer life cover for the whole life of an individual
• Endowment policy: a portion of premiums go toward the death benefit, while the remaining is invested by the insurer.
• Money back Policy: a certain percentage of the sum assured is paid to the insured in intervals throughout the term as survival benefit.
• Pension Plans: Also called retirement plans are a fusion of insurance and investment. A portion from the premiums is directed towards retirement corpus, which is paid as a lump-sum or monthly payment after the retirement of the insured.
• Child Plans: Provides financial aid for children of the policyholders throughout their lives.
• ULIPS – Unit Linked Insurance Plans: same as endowment plans, a part of premiums go toward the death benefit while the remaining goes toward mutual fund investments. 

General Insurance – Everything apart from life can be insured under general insurance. It offers financial compensation on any loss other than death. General insurance covers the loss or damages caused to all the assets and liabilities. The insurance company promises to pay the assured sum to cover the loss related to the vehicle, medical treatments, fire, theft, or even financial problems during travel. 

General Insurance can cover almost anything and everything but the five key types of insurances available under it are –

• Health Insurance: Covers the cost of medical care. 
• Fire Insurance: give coverage for the damages caused to goods or property due to fire.
• Travel Insurance: compensates the financial liabilities arising out of non-medical  or medical emergencies during travel within the country or abroad
• Motor Insurance: offers financial protection to motor vehicles from damages due to accidents, fire, theft, or natural calamities.
• Home Insurance: compensates the damage caused to home due to man-made disasters, natural calamities, or other threats

Benefits of Insurance

The insurance gives benefits to individuals and organisations in many ways. Some of the benefits are discussed below:

1. The obvious benefit of insurance is the payment of losses.  
2. Manages cash flow uncertainty when paying capacity at the time of losses is reduced significantly.
3. Complies with legal requirements by meeting contractual and statutory requirements, also provides evidence of financial resources.
4. Promotes risk control activity by providing incentives to implement a program of losing control because of policy requirements.
5. The efficient use of the insured’s resources. it provides a source of investment funds.  Insurers collect the premiums and invest those in a variety of investment vehicles.
6. insurance is support for the insured’s credit. It facilitates loans to organisations and individuals by guaranteeing the lender payment at the time when collateral for the loan is destroyed by an insured event. Hence, reducing the uncertainty of the lender’s default by the party borrowing funds.
7. It reduces social burden by reducing uncompensated accident victims and the uncertainty of society.

Essential for Strengthen Partnerships between Civil Society Organizations-CSOs , Key Stakeholders and Government.tic

Economics and Capital Markets

WHAT IS PUBLIC FINANCE?

In simple layman terms, public finance is the study of finance related to government entities. It revolves around the role of government income and expenditure in the economy.

Prof. Dalton in his book Principles of Public Finance states that “Public Finance is concerned with income and expenditure of public authorities and with the adjustment of one to the other”

By this definition, we can understand that public finance deals with income and expenditure of government entity at any level be it central, state or local. However in the modern day context, public finance has a wider scope – it studies the impact of government policies on the economy.

Let’s understand the scope of public finance to understand how public finance impacts the economy.

Components of Public Finance

The main components of public finance include activities related to collecting revenue, making expenditures to support society, and implementing a financing strategy (such as issuing government debt). The main components include:

• Tax collection

Tax collection is the main revenue source for governments. Examples of taxes collected by governments include sales tax, income tax (a type of progressive taxes, estate tax, and property tax. Other types of revenue in this category include duties and tariffs on imports and revenue from any type of public services that are not free.

• Budget

The budget is a plan of what the government intends to have as expenditures in a fiscal year. In the U.S., for example, the president submits to Congress a budget request, the House and Senate create bills for specific aspects of the budget, and then the President signs them into law

• Expenditures

Expenditures are everything that a government actually spends money on, such as social programs, education, and infrastructure. Much of the government’s spending is a form of income or wealth redistribution, which is aimed at benefiting society as a whole. The actual expenditures may be greater than or less than the budget.

• Deficit/Surplus

If the government spends more then it collects in revenue there is a deficit in that year. If the government has less expenditures than it collects in taxes, there is a surplus.

• National Debt

If the government has a deficit (spending is greater than revenue), it will fund the difference by borrowing money and issuing national debt. The U.S. Treasury is responsible for issuing debt, and when there is a deficit, the Office of Debt Management (ODM) will make the decision to sell government securities to investors.

FUNCTIONS OF PUBLIC FINANCE

There are three main functions of public finance as follows –

THE ALLOCATION FUNCTION

There are two types of goods in an economy – private goods and public goods. Private goods have a kind of exclusivity to themselves. Only those who pay for these goods can get the benefit of such goods, for example – a car. In contrast, public goods are non-exclusive. Everyone, regardless of paying or not, can benefit from public goods, for example – a road.

The allocation function deals with the allocation of such public goods. The government has to perform various functions such as maintaining law and order, defense against foreign attacks, providing healthcare and education, building infrastructure, etc. The list is endless. The performance of these functions requires large scale expenditure, and it is important to allocate the expenditure efficiently. The allocation function studies how to allocate public expenditure most efficiently to reap maximum benefits with the available public wealth.

THE DISTRIBUTION FUNCTION

There are large disparities of income and wealth in every country in the world. These income inequalities plague society and increase the crime rate of the country. The distribution function of public finance is to lessen these inequalities as much as possible through redistribution of income and wealth.

In public finance, primarily three measures are outlined to achieve this target –

• A tax-transfer scheme or using progressive taxing, i.e. in simpler words charging higher tax from the rich and giving subsidies to the low-income
• Progressive taxes can be used to finance public services such as affordable housing, health care, etc.
• A higher tax can be applied to luxury goods or goods that are purchased by the high-income group, for example, higher taxes on luxury cars.

THE STABILIZATION FUNCTION

Every economy goes through periods of booms and depression. It’s the most normal and common business cycles that lead to this scenario. However, these periods cause instability in the economy. The objective of the stabilization function is to eliminate or at least reduce these business fluctuations and its impact on the economy. Policies such as deficit budgeting during the time of depression and surplus budgeting during the time of boom helps achieve the required economic stability.

Now that we understand the study of public finance, we must look into its practical applications. So let us understand the career opportunities in public finance –

CAREER OPPORTUNITIES IN PUBLIC FINANCE

INVESTMENT BANKING

An investment banking career in public finance domain entails raising funds for the development of public projects. Investment bankers help government entities in the following three areas –

• Raise funds by underwriting debt securities such as bonds, debentures, commercial papers, etc.
• Analyzing project finance opportunities for large government projects and raising debt and equity funds for such projects.
• Advising government companies on mergers and acquisitions, divestments, etc.

RESEARCH

This is a fairly large area of public finance careers, and a lot of public finance professionals eventually become researchers.  Many large banks, government entities, and world organizations require public finance professionals to consolidate necessary data points for decision making. Thus there is a regular requirement of public finance professionals in the field of research.

ACADEMIA

A lot of public finance professionals eventually go on to become professors and teach public finance in universities and colleges. Not only limited to teaching, but they also participate in university researches to improve understanding of the field and create new tools for efficient practical applications.