Blattman, Banerjee and Duflo Debate

On Chris Blattman's excellent blog a debate about development sprung up last week.

The question was basically this: What is the best first step for South Sudan as an emergent country?

The two sides are as follows: social spending (Duflo and Banerjee) versus security and private sector (Blattman).

Banerjee and Duflo champion social services for the poor (on the economix blog initially), including: schools, health care, health insurance and even a direct cash transfer system.

Blattman argues, given that South Sudan has little to no operational capacity for such bureaucracies, creating a welfare state would be too much of a burden. He advocates making peace with warlords, and creating invectives for them, and the rich in general, to invest in productive fixed assets such as factories or plantations. He also pushes for an operational police force. His point is that politics is primary and security is at the heart of it: maintain peace and support private sector development. Oh, and build roads.

Banerjee and Duflo respond, that pursuing redistributive policies that target the poor is essentially building the identity of the state. Hopefully, as they suggest, a virtuous cycle would start whereby the poor support the state for putting them first and therefor hold off special interest groups (eg. warlords, elites) from capturing the product of nation (oil mostly for now).

Finally, Blattman remains skeptical. With evidence from Sierra Leone he chops down the benefits of cash transfers. From his own experience in Uganda and Liberia, his opinion of the effectiveness of redistribution programs, as far as they spur development, is jaded.

Of course, we are tempted to think that this is an atrificial trade-off, and that the state of South Sudan can pursue both courses at once. While to some extent that may be true (eg. placating warlords could fit on both agendas) I think the notion that these respective policies build the identity of the state is accurate and useful.

Will the state grow akin to an enlightened version of African socialism of 1960's? Or more like the capitalist enterprise of the 90's plus security and sensibility? Perhaps it is unfair to cast upon them such shadows. In any case, let us all hope for Lant Pritchett's work to have some impact.

In the end, I must admit, I am convinced by Banerjee and Duflo. Perhaps because because of quixotry, perhaps because of this:

World Bank Advocates Primary Education

Fifteen years ago if you had told me that the World Bank was in Uganda, advising the government there to spend more money on roads, and more importantly, education, I would have laughed at your cruel joke. In the 90s the Structural MalAdjustment Programs (if you haven't heard about them click on it!) were in full swing, and government spending was tantamount to turning off the taps of international aid.

Now we have this: the President of the World Bank advising the President of Uganda to spend more on primary education. Education! One of the least clearly measurable investments, in terms of economic outcomes, a government can make! Imagine that!

We should be hard on the Bank for their terrible mistakes. We should be skeptical of them because of their structure. Dominated by US interests and barely influenced by the 'recipients' of their policies, the World bank has arguably done more harm than good in the past. However, ever since they realized that capital controls and fiscal stimulus are an integral part of the developing nation toolbox, they have been getting more and more things correct. The IMF even have a set of guidelines to help poor countries manage capital controls, check it out. 

Right to the City

Too many people on this planet do not have the right to have rights.


Once that is fixed we can talk about the right to the 'city'.

...just a thought about the 'right to the city' movement.

Kyoto Prototype

On my last visit to Nairobi a few months ago I was fortunate enough to be introduced to a fascinating fellow by the name of Jon Bohmer. Jon is the founder of an energy solutions company called Kyoto that won a huge competition put out by the Financial Times (and another from Brit Insurance Designs of the Year) for their solar oven. Kyoto has high hopes for revolutionizing all Kenyan energy systems.

Jon's wife Neema is a well respected member of a Somali tribe in Kenya that has recently inherited a vast expanse of beautiful land in the Rift Valley. Their plans for this land are just as grand as the land itself. But before getting into the big picture ideas, Kyoto has been not-so-quietly offering up innovations for saving energy. Take a look for your self.

The question that is invariably asked about projects like this is: Do these products actually sell? For now the answer is still no. Jon explains that it is difficult to get people to change their habits especially with regard to everyday routines such as cooking, washing and lighting.

According to the WHO, 1.6 million women and children die each year from smoke inhalation. This does not come a surprise for people that have seen the way food is cooked. However, out of all the products the one with the least appeal is the solar oven. Despite its obvious health advantages, people just can't get with the idea that you can cook with the sun (when it is out) and would always rather see a flame or proper oven at work on their food. I suppose sometimes you'd rather spend the extra money to get what you like.

On thing Jon believes firmly, if incorrectly, is that he cannot give these things away for free. He argues that a free item that necessitates a change in behaviour, is not likely to be used, whereas a small investment of money obligates a small change of behaviour. I disagree. If people are fully aware of the financial and health related gains in a new product, they are just as likely to use it either way. Jessica Coen and Pascaline Dupas agree. They set up randomized trials in Kenya using bed nets to test this question. They found that free ones were just as likely to be used as ones that cost 3USD. Unfortunately this study is not open to the public but one using pregnant women as the sample is.

Whereas all of the smaller products can save people time, effort and money if they so choose, the bigger projects in the works promise structural change. As of very recently, Jon and his team can install an array of private, portable, affordable and easy to maintain solar powered appliances including solar water pumps, solar air conditioning, solar desalinization, and general solar electricity. In the areas of Kenya that get sun everyday these really work well, including the land he has married into! Their scope for energy production in the rift valley is huge. He says within two years they'll be up and running, providing Kenyans with cheap and reliable electricity! A recent study of medium sized firms in Africa found that electricity was a major constraint on growth.

Another project that seems a bit further off involves algae. According to Jon, algae can be used for cleaning and fertilizer, but most importantly algae is a great source of nutrients. He believes firmly that algae can be the source of food security for millions of poor East Africans and beyond. If energy/money saving solar ovens can't find demand among the poor, will edible algae?

Also in the works is a Kyoto Institute at Narok University, where the team hopes to disseminate the value of solar energy and other innovative energy solutions. Maybe he'll be able to convince a young troop of Kenyans that a little algae for breakfast is a good thing. Go Kyoto!

A dollar a day keeps the doctor away

The arbitrary measure of poverty that the World Bank concocted out of thin air several decades ago, and the language that surrounds that famous "dollar a day", is unfortunately stuck in our discourse on poverty.


Widespread efforts have been made to redefine poverty, focusing on access to basic amenities such as health care, habitation and education. A broader view, as encouraged by Aramrtya Sen among others, would analyze poverty in terms of an "individuals potential to function", which is to focus on what can be achieved with a certain level of income and the barriers to opportunity. This highlights constraints beyond access to basic necessities, such as broader monetary conditions and power relations.


These ideas, although pushing the concept in the right direction, often miss the blaring problem that the language of the World bank has created. 


"A dollar a day": doesn't it sound like a magic dollar arrives at the doorstep every day? Ok, perhaps you don't explicitly think like that, but the phrase certainly misses the biggest problem with income for the poor; the risks associated with uncertainty and inconsistency. 


As Eleni G. Medhin, the director of the Ethiopian Commodities Exchange, once suggested, the risks that a poor farmer must bear are greater than any speculator, investor or human being on earth. If the rains fail, people will die. (For those relying on income from medium sized firms, unpredictable policy changes seem to be most crucial.)


Buzzing around the Kenyan countryside with my friend Teddy, I came upon this cow carcass.  Prior to my visit the rains did not come, and then they did not come again. As Teddy put it, "This Maasai was a millionaire, now look at what he has got."

Where is the next dollar coming from? Who is it owed to? These are critical questions for those living with no social safety net.

"Just MPESA his ear back on"

Nairobi, Kenya, 6am: Legishon, a night watchman, stumbles drunk to work, work he should have been doing since the evening before. He fumbles with the keys to the gate of this modest plot of land in the suburbs that he has been guarding for the past 4 months. Finally managing to remove the lock and chain, he swings open the gate to find the gardener, Anthony, a Luya man of about 36 years. The watchman slams the gate closed loudly and points his finger daringly in the face of the gardener. "You Luya are not to be trusted, why are you here watching the house?" he imposes. Angered by the late watchman, and tired from the sleepless night, the gardener shouts back, insulting the guard and his people, the Maasai. Legishon picks up a rock and throws it at Anthony's head, splitting his ear open wide. 

At the hospital Anthony is denied treatment because he has no money, no insurance and no prospects for paying. He calls his employer Theodore. Theodore picks up his phone, acknowledges the gravity of the situation, presses a few buttons on the phone and sits back, satisfied that he has helped out his injured gardener. He sips his beer and continues on with his evening.

It is that easy. In Kenya, if you want to send money to your family, if you want to pay for a bill, if you want to put down collateral on a purchase, you press a few buttons on your phone and presto, money is sent to anyone with a cellphone and an MPESA account. And like that indeed, the doctor received payment and stitched Anthony's ear back on.

Most urban people in Kenya have a MPESA account, some 10 milllion out of 30 in the entire country, and keep it well stocked with money incase a situation, like this one, arises. It has revolutionized bank transfers in Kenya.

One downside to MPESA is that it is a monopoly. Being a monopoly, MPESA kiosks can charge substantial fees for transferring and restocking accounts with money.

Can you think of any other reasons why MPESA might have any adverse repercussions? A potential one was recounted to me by Theodore himself: Men in Kenya often leave their home to find work elsewhere in the country and, when they can, bring money back home to provide for their family. Now, with MPESA, they don't have to travel back home, they can simply send it back, and the family never gets to see their father/husband.

Other than that, any ideas? All in all, I think it is a fantastic system and I wish it would spread around the world!

Calling Out Quiet Corruption (or Cultural Imperialism?)

"In Uganda, teachers in public primary schools are absent 27 percent of the time. In Chad, less than one percent of the non-wage recurrent expenditures reaches primary health clinics.  In West Africa, about half the fertilizer is diluted before it reaches the farmer. " - Shanta Devrajan, World Bank Chief Economist for Africa


The World Bank this year has focused their African Development Indicators on a concept called 'Quiet Corruption'.

According to the WB this form of corruption, the likes of which Dr. Devrajan discusses on his blog, quitely stifles the chances for growth and prosperity among the poorest people in the world. This type of corruption, they say, is very different from the headline-grabbing corruption scandals that indict morally depraved people for heinous crimes involving some transfer of wealth. Instead of overtly breaking the law for personal monetary gain, perpetrators of quiet corruption may simply not show up for work <=. This notion is broad enough to include all actions that deviate from what is normally expected, such as putting in a lower level of effort than expected, or bending the rules for some people and not for others. 


If we can define this term so broadly it could include what Nicholas Kris(jerk)off wrote in the NYT about the choices that poor people make. Poor people put in less effort to provide for their children than he expects. (Ok, perhaps that is stretching the term, but I just had to mention that terrible article. I won't quote it or deal directly with the problems with it - too annoyed - so you'll have to click on the links.)  


While we cannot deny the facts he quotes, what we can do is find the reasons why quiet corruption is so rampant and why poor fathers blow all their cash on beer (as he should have instead of perpetuating ignorance). If there is a ribbon that ties these concepts together it is the notion of 'role models'. Who are the role models in society? The richest, most powerful and most famous people in many developing countries are the corrupt political elite. They are also, unfortunately, the most emulated. If the people at the top made it there by being corrupt, and they are now above the law, wouldn't that pervert most peoples incentives for honest work? If it appeared that the only way to get ahead would be to cheat, lie and steal then I might also drown my conscience in beer. I might also not show up for work as often. 


But Dr. Devrajan is right: incentives need to change. Work could be more piecemeal, police and regulatory bodies should be better funded, and perhaps most important, the voices of the informed critics must be heard. 


But wait, in light of my contempt for Mr. Kristof, aren't we being a little bit one sided on this issue? I mean, life just doesn't work the same way in all places and we can't expect it to. Here in the UAE, as my neighbour once told me, "It's not a task based life, it's a person based life." Things almost always work differently in person than they do on paper. Some things In the UAE are expected to take more time then they would in the West, and meetings are a good token. Should I demand that this meeting - that I should be in right now - start on time? Should it think of this as corruption that we are expected to be in a meeting, getting paid as if we are, but really we are chinwagging the hours away (or in my case writing blog posts) ? No, that would be rude, people are just getting to know each other before the meeting starts, and that is part of this culture.


So when is it 'quiet corruption' and when is it just an acceptable part of culture? Perhaps the context of rampant poverty makes a difference? 

Africa Goal and Goal Condoms

In a previous post about the regulations that FIFA has placed on advertising in South Africa, I mentioned how I thought the poor would not benefit from the World Cup. When I wrote that post I had forgotten about a project several friends of mine started for the last world cup. Their initiative is brilliant:


"Africa Goal was initiated in line with the World Cup 2006. A team of nine people from diverse backgrounds travelled from Kenya to the West Coast of Namibia, projecting live World Cup matches every evening for the duration of the football tournament, together with HIV and AIDS information videos. Following the success of Africa Goal 2006, the same team, building on their experience gained and lessons learnt, is proposing the 2010 Africa Goal Project. Africa Goal 2010 will start in Nairobi, Kenya and end in Johannesburg, South Africa. The team’s journey will follow the “AIDS Highway” through Eastern and Southern Africa, where increased mobility and migration in conjunction with rising disposable incomes and the associated escalation of transactional sex along this central transport and trade route were a major contributor to the spread of HIV through the region."


Its an amazing adventure that I wish I could be a part of. Maciej Sudra, currently a High School Teacher at the International School of Harare, and Matt Herren, the CTO at a software company called Blankpage AG, are co-founders of the project and all around stellar guys. Also, two more friends and vital members of the team are Ana Sudra and Chris De Nogales who are also brilliant designers and visual artists. 


For this World Cup they have also put their talents towards creating a world cup condom initiative: Goal Condoms: 

Their practical approach to disseminating such vital information should be a lesson for the bigger, more well-financed initiatives. Speaking of finances, if you like the idea why not send them a shilling or two?

Best of luck and hats off to you guys!

Advertising, Extortion and World Cup Revenues

Free things that are advertised are never free. Powerful companies will give away something free only to rake in subscription revenue later. The psychological effect of receiving the free item is often powerful enough to coat the bitter pill you swallow every month thereafter. You'd rather not waste that freebie's value (or hurt the environment) by throwing it away, right?

That free printer that you got with your new computer? Well, be sure that you will be buying ridiculously overpriced (unicorn) ink cartridges very soon. The profit on these will make up for it, and then some!

The free razor you were handed at the supermarket? Same deal; just try finding new blades (cost~10 cents) for less than ten dollars. How about TV subscriptions (free hookup!) Cell phones (free mp3 phone!)... this list goes on.

Far worse that this, though, is when the poor bear the brunt of these tactics:

Nestle's 'free' campaign for breast milk replacement formula that, no doubt, hurt the chances of survival for 1.3 million babies.

Ooh, how about Microsoft's campaign to give away computers to get poor people hooked on Windows, instead of letting people use the free-to-update, open source Linux alternative.

And finally to the World cup. The worlds biggest sporting event ought to bring in some revenue for the host nation, but no, South African's were duped into being the hosts. FIFA has moved aggressively against anyone who is using the FIFA World Cup name, or anything referring to it. Establishments have to pay FIFA, or lose out on the flood of football mania spending. This tips the playing field towards establishments who are well off already, and siphons off revenues from small businesses (read:bars). There is little in this event that I can imagine helping the poor (besides the obvious entertainment value.)



This whole 'restricted areas' idea just smacks of apartheid doesn't it?!

Poverty as a Resource

Sometimes the owners of a resource do not reap the rewards of the sale of said resource. Sometimes other groups capture the 'rents' through manipulation and exploitation. This is broadly referred to as rent seeking. I never thought of poverty as a resource prone to rent seeking until I saw this clip. Its pretty damn obvious isn't it? Nothing is safe from the engine of commodification and commercialization that is advanced capitalism!





Several weeks ago many bloggers were talking about this paper by Ravi Kanbur discussing the moral qualms 'poverty professionals' have with living well by the poor. He concludes that week long "immersions" into the world of the poor by these professionals will serve as a reality check from the upper-middle class (read:sumptuous) lifestyle that they normally afford. "They are distinct from project monitoring or highly structured ‘red carpet’ trips when officials make brief visits to a village or an urban slum…” and keep people focused on the core mission at hand; helping people out of poverty.

Doesn't it seem like these trips are really only serving to palliate built-up middle-class guilt? It begs the question; are people working in poverty simply because they are on a career path? Do careers in our advanced capitalist world get in the way of other, more admirable motives? Are careerists more likely to make a living as poverty professionals than bleeding hearts? Perhaps the entire structure of careers in the poverty sector needs adjusting.

Still, the 'Enjoy Poverty' sign seems a little much for my taste. I suppose, though I understand the 'posty' nature of it, I would prefer it to read "Who Enjoys Poverty?"

HT:Bombastic