The Killing Of Africa Through Good Intentions Or Not So Good Intentions?

One of the broadest and most devastating economic issues currently is the food crisis. Not losing sight of the seriousness of the topic, it is still a source of debate between economic philosophies. Capitalist-oriented publications such as the Economist or the Financial Times weigh in on their perspective. FT.com The Economists’ Forum Food crisis is a chance to reform global agriculture. I will confess to basically following this philosophical perspective with perhaps a more liberal take on the issues. Liberal though can be a negative label from both ends of the economic/political continuum.

diigo tags: economics, poverty

Of the two crises disturbing the world economy – financial disarray and soaring food prices – the latter is the more disturbing. In many developing countries, the poorest quartile of consumers spends close to three-quarters of its income on food. Inevitably, high prices threaten unrest at best and mass starvation at worst.

There is immediately though an undeniable point where the philosophical debates have to cease and we are dealing with real people. That point is exemplified by Africa and how the world will assist in its development. How effective we are going to be though will depend in large part on which philosophy we follow. This weblog has featured a number of articles from TED, MIT and other organizations on their efforts in Africa and other developing third world countries through social-entrepreneurship, again following a free enterprise approach to these issues.

Here are two views of what is wrong with what we are doing in Africa, but they come from two very different perspectives. One is European and supposedly neo-liberal and other African and anti-colonial. My initial reaction is that I am not comfortable with either one of them but see valid points with both. Further education in this topic might move me one way or the other, but it will have to be in the opposite direction of one of them or it will have to be a middle path of some type.

Opinion: Developmental Aid Workers Are Killing Africa - International - SPIEGEL ONLINE - News

diigo tags: spiegel, economics

If you follow the reasoning of the United Nation's World Food Program, then Kenya is a unique region when it comes to hunger catastrophes. In this east African country, a popular vacation destination with 32 million inhabitants, UN workers hand out more food on an annual basis than they do in southern Sudan, which civil wars have ravaged for decades. But is Kenya really dying of hunger?

How Europe underdevelops Africa and how some fight back from Pambazuka News

From above, many African elites have succumbed to what Olukoshi terms trade-balkanisation, following the lead set by colonial pigs in the 1884-85 Berlin conference that so irrationally carved up the continent. Since 2002, the EPAs have supplanted the agenda of the gridlocked World Trade Organisation, just as bilateral trade deals with the US, China and Brazil are also now commonplace.

A united Europe deals with individual African countries in an especially pernicious way, because aside from free trade in goods, Mandelson last October hinted at other invasive EPA conditions that will decimate national sovereignty: “Our objective remains to conclude comprehensive, full economic partnership agreements. These agreements have a WTO-compatible goods agreement at their core, but also cover other issues.”

Those other “Singapore” issues (named after the site of a 1996 WTO summit) include investment protection (so future policies don’t hamper corporate profits), competition policy (to break local large firms up) and government procurement (to end programmes like South Africa’s affirmative action). These were removed from the WTO by African negotiators during the Cancun summit in 2003, but have re-emerged through EPA bilaterals.

Micro-Loans Snake Oil Panacea Or Pathway To New Economic Paradigms

This weblog has skirted around questions about micro-credit, micro-loans and micro-finance in the past. They were either related to other economic issues or links to online programs like Kiva. Recently, a number of articles have passed by my computer screen inspiring me to learn more. Two articles in particular caught my eye.

Microfinance's Success Sets Off a Debate in Mexico - New York Times

They are the center of a fractious debate: how far should microfinance go toward becoming big business? At one end stand traditional microlenders, like the economist Muhammad Yunus, founder of the most famous microlender, the Grameen Bank, and winner of the 2006 Nobel Peace Prize. At the other are the Two Carloses, as they are widely known in this tight-knit world that gave them their start as starry-eyed idealists.

U.S. 'micro-loan' effort yields big results in Iraqi province - Los Angeles Times

Al'laur Abd Mottar, 50, had a dream of starting a business to support his wife and eight children. He would buy and sell scrap iron, a material much in demand as residents seek to rebuild homes and businesses damaged by fighting between U.S. Marines and insurgents.

In November, Mottar got a $3,000 loan from a program underwritten by the U.S. Agency for International Development that is bringing the "micro-loan" concept to war-ravaged Anbar west of Baghdad.

To oversee the micro-loan program, USAID turned to the Louis Berger Group, an international consulting firm based in Morristown, N.J. Supervision of the micro-loans is only a small part of a $154-million contract between USAID and the firm to promote economic growth in all 18 provinces.

Different paths but same destination, either small entities becoming large ones or large entities taking over the territory of small ones. Although the micro-lending industry began in the 1970's, it it is in the last few years that is has been around long enough to have raised some issues and gendered some controversy. Some of these issues have basic economic principals behind them, some are overly optimistic predictions, and some are simply human greed. The following link to the Tyler Cowen's post on this subject provided some rationale economic insight and some history.

Marginal Revolution: My micro-credit essay with Karol Boudreaux

For better or worse, microborrowing often entails a kind of ­bait ­and ­switch. The borrower claims that the money is for a business, but uses it for other purposes. In effect, the cash allows a poor entrepreneur to maintain her business without having to sacrifice the life or education of her child. In that sense, the money is for the business, but most of all it is for the child. Such ­life­saving uses for the funds are obviously desirable, but it is also a sad reality that many microcredit loans help borrowers to survive or tread water more than they help them get ahead. This sounds unglamorous and even disappointing, but the ­alternative—­such as no doctor's visit for a child or no school for a ­year—­is much ­worse.

This 2006 report provides a rosy outlook from a more liberal-progressive perspective.

The Chronicle, 7/20/2006: The Big Promise of Small Loans

Microfinance, pioneered in the early 1970s by nonprofit groups like Grameen Bank, in Bangladesh, and Acción International, in Latin America, is one of the hottest ideas in philanthropy — and it may become the next big thing in the investment world, too.

The overly optimistic and idealistic perspective is not limited to the liberal-progressive outlook. From the other side of the spectrum

The Entrepreneurial Mind: Cynicism about Free Enterprise

It takes time to build wealth. And real wealth comes from free enterprise. Are microloans the answer to transform an economy? Of course not. But they are a critical step in building long term transformations. Microloan programs are not just jobs programs, or worse yet, mechanisms for the redistribution of wealth from one country to another. Instead, they are creating a cultural seedbed for economic freedom and independence.

While I can agree with the good intentions of Professor Cornwall's philosophy, I am also wary of the overly optimistic outlook from the more business oriented perspective. The New Yorker article that Professor Cornwall takes issue with is based on the libertarian Marginal Revolution post above. Professor Cornwall may say cynical but Professor Cowen is likely to say realistic.

So far I have covered economic principles and overly optimistic predictions. The question of human greed will be looked at more closely in a subsequent post.

Now LA Times Recognizes That Africa's Anti-malaria Campaign Is Showing Results

Africa's anti-malaria campaign showing results
--------------------

Infection rates drop as nations take action against the disease. In Tanzania, Bush announces a venture to provide enough mosquito nets to protect every child between the ages of 1 and 5.

By James Gerstenzang
Los Angeles Times Staff Writer February 19 2008

BWEFUM, ZANZIBAR;-- Like clockwork, particularly on Mondays after his office had been closed for the weekend, the patients would line the concrete benches outside Mininyi Othman's tiny health center 10 miles from the nearest paved road.

It is good to read in the Los Angeles Times that malaria is finally diminishing its deadly impact in Africa and hearing that our President is committed to providing "mosquito nets to protect every child between the ages of 1 and 5", is inspiring, but the article does very little to tell us how we got to this stage. Not to be overly skeptical, but are we to believe that George W. Bush is a significant savior of Africa?

The Los Angeles Times article "Unintended Victims of Gates Foundation", which was the primary focus of the Best Intentions Unintended Consequences post, was the second most popular item link of this weblog so far. What are the key health dangers for children?, has been the most popular. The previous LA Times article provided an indepth analysis of failure. An equally indepth analysis of success would be appreciated.

Global Health Equity From MIT World

Paul Farmer speaks about public entities being enabled to confer rights while at the same time speaking about the need for business practices like supply chains to create comprehensive healthcare and medical delivery systems for the world's poor. This is a concerted effort to address the challenges raised by Best Intentions Unintended Consequences

MIT World » : Global Health Equity

• ABOUT THE LECTURE:
  Don't foolishly advise Paul Farmer that his bold projects can't succeed. For the past 20 years, Farmer's been toppling orthodoxies concerning the delivery of health care to people of developing nations, and to our country's inner city poor. In a talk full of insights and anecdotes, Farmer brings his audience up to date on his groundbreaking work and methods.
• Farmer has written extensively about health and human rights, and about the role of social inequalities in the distribution and outcome of infectious diseases. He is the author of Pathologies of Power (University of California Press, 2003); Infections and Inequalities (University of California Press, 1998); The Uses of Haiti (Common Courage Press, 1994); and AIDS and Accusation (University of California Press, 1992). In addition, he is co-editor of Women, Poverty, and AIDS, (Common Courage Press, 1996) and of The Global Impact of Drug-Resistant Tuberculosis (Harvard Medical School and Open Society Institute, 1999).
• Farmer is the recipient of the Duke University Humanitarian Award, the Margaret Mead Award from the American Anthropological Association, the American Medical Association's Outstanding International Physician (Nathan Davis) Award, and the Heinz Humanitarian Award. In 1993, he was awarded a John D. and Catherine T. MacArthur Foundation "genius award" in recognition of his work.

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Best Intentions Unintended Consequences

The Los Angeles Times had an article that called into question whether the Gates Foundation was having a net positive impact on healthcare in Africa.

Unintended victims of Gates Foundation generosity - Los Angeles Times

The Gates Foundation, endowed by the personal fortunes of the Microsoft Corp. chairman, his wife and Berkshire Hathaway Inc. Chairman Warren E. Buffett, has given $650 million to the Global Fund. But the oxygen valve fell outside the priorities of the fund's grants to Lesotho. Every day, nurses say, one or two babies at the hospital die as Mankuebe did -- bypassed in a place where AIDS overshadows other concerns.

Mixed effects

The Gates Foundation has targeted AIDS, TB and malaria because of their devastating health and economic effects in sub-Saharan Africa. But a Times investigation has found that programs the foundation has funded, including those of the Global Fund and the GAVI Alliance, which finances vaccines, have had mixed influences on key measures of societal health:

* By pouring most contributions into the fight against such high-profile killers as AIDS, Gates grantees have increased the demand for specially trained, higher-paid clinicians, diverting staff from basic care. The resulting staff shortages have abandoned many children of AIDS survivors to more common killers: birth sepsis, diarrhea and asphyxia.

The article provided the impetus to go back and look again at the Vivian Hoffman paper. The paper raised questions about the real impact of social-entrepreneurs, such as the Acumen Fund, had on helping the poor. The post links to a Marginal Revolution post and from there to a New York Times article that questioned whether direct distribution of the nets of the nets was best or were social entrepreneurial programs. Similar questions of effectiveness arose from the the Fast Company article regarding Grameen Phone Company.

The Bill & Melinda Gates Foundation supported Global Fund seems to see this either as a public relations problem, if we want to be cynical, or as a problem of self-definition, they can't be all things to all people or perhaps something in the middle. There does seem to be some truth to the later proposition that they can't be all things to all people but it is arguably a matter of balance. Because it's Bill Gates cynicism seems far easier than it might otherwise.

The LA Times did do a follow up report on the Global Funds dispute with their article. The Global Fund not only has their own piece criticizing the LA Times article, they also have a letter from the National Aids Control Commission of Rwanda.

I have an issue with attempts to find fault to create a story, which the LA Times article and the Fast Company article seem to lean too much towards in my view. The New York Times article and Vivian Hoffman paper though seemed different. My second reading of the Hoffman paper did provide a better understanding and impressed upon me again the uncomfortable perspective that going in with a decidedly social-entrepreneurial slant as the best intentions to provide assistance without fully understanding the culture could have unintended but detrimental consequences. What I don't know is what course of action, if any, have been taken by the social-entrepreneurs to address these issues. This is not, of course, the same as arguing that traditional government centered policies are automatically better.

Within the LA Times article they make a statement which is apparently in conflict with what I got from the Hoffman article.

According to UNICEF, malaria kills relatively few children. Birth-related problems, pneumonia and diarrhea are the top causes of child mortality. All are treatable but occur at high rates, in part because resources are concentrated on AIDS, TB and malaria, The Times reported.

This is in contrast to the Vivian Hoffman paper,

Malaria kills over one million people annually, 90 percent of them children under the age of five (World Health Organization, 2004).

What I found at the WHO website, which provided more insight, is that the key health dangers for children are:

• From one month to five years of age, the main causes of death are pneumonia, diarrhoea, malaria, measles and HIV. Malnutrition contributes to more than half of deaths.

• Pneumonia is the prime cause of death in children under five years of age. Nearly three-quarters of all cases occur in just 15 countries. Addressing the major risk factors – including malnutrition and air pollution – is essential to preventing pneumonia, as is vaccination. Antibiotics and oxygen are vital tools for effectively managing the illness.

• Diarrhoeal diseases are a leading cause of sickness and death among children in developing countries. Treatment with Oral Rehydration Salts (ORS) combined with zinc supplements is safe, cost-effective, and saves lives.

• One African child dies every 30 seconds from malaria. Insecticide-treated nets prevent transmission and increase child survival.

• Over 90% of children with HIV are infected through mother-to-child transmission, which can be prevented with antiretrovirals, as well as safer delivery and feeding practices.

• About 20 million children under five worldwide are severely malnourished, which leaves them more vulnerable to illness and early death.

  About two-thirds of child deaths are preventable through practical, low-cost interventions. WHO is improving child health by helping countries to deliver integrated, effective care in a continuum - starting with a healthy pregnancy for the mother, through birth and care up to five years of age. Investing in strong health systems is key to delivering this preventive care.

This does argue for taking a more comprehensive approach to children's healthcare in developing countries but it does not argue that it is being caused by “in part because resources are concentrated on AIDS, TB and malaria, The Times reported.” Amy Smith of MIT, who is recognized for finding low tech solutions for global problems informed us that smoke from indoor cooking was the number one killer of young children.

Meanwhile, Acumen Fund has been recognized by Fast Company as one of its top 45 Social Capitalists: Acumen Fund.

The increasing gap between rich and poor is one of the greatest challenges of our generation. Half the world lives on less than three dollars a day while 250 individuals hold more wealth than the bottom two billion. Creating a sustainable world means reducing that gap.

Aid alone will not end poverty. Traditional charity often meets immediate needs but is not designed to enable people to solve problems over the long term. Poor people seek dignity, not dependence.

Acumen Fund identifies and supports enterprises that provide health, water, housing and energy to the poor. We bring capital, knowledge and talent to accelerate markets for the poor, having seen their power as customers who are willing to pay for affordable, quality services that can change their lives. We have seen this working with our portfolio enterprise in South Asia and Eastern Africa.

While Iqbal Quadir has become the head of the Legatum Center for Development and Entrepreneurship at MIT.

Acumen's founder Jacqueline Novogratz, Iqbal Quadir and others working in this field have also been topics of contemplation in this weblog and have been included within the Pearls of Paradigm Processing Social and Economic Paradigms.

No final conclusion, just an ever increasing realization of the complexity of the issues. As Emily Oster, the University of Chicago economist, pointed out we need to look for root causes in not only understanding poverty and poor health care -- but also other issues such as the price of coffee, and the routes of long-haul truckers.

“In short, there is a lot we don't know; and our assumptions about what we do know may keep us from finding the best way to stop the disease.”

Finding Connections In All Directions

Unlike some blogs, this one does not only connect to the immediate and often transitory concerns. It will re-connect to the past and find new pathways forward, revisiting and rethinking previous themes. One of these is the connections found under Shifting to a Better World. These included Kiva.org and the Catalogue for Philanthropy GREATER WASHINGTON 2007-08 that were written about before. Since then my web-wandering found similar sites closer to home, California Community Foundation, Southern California Grant Markers and the San Francisco Homeless Resource - a Wikia wiki are three examples of what can be done combining web 2.0 with philanthropic work. However, it doesn't seem that anyone has done on the west cost what Greater Washington did on the east coast.

Shifting to a Better World also has a link to to the William J. Clinton Foundation and the new YouTube MyCommittment.Org which promotes the Clinton Initiative. Google is also only helping to promote social responsibility through Checkout for non-profits. Other avenues for micro-financing include E-Bay according to BusinessWeek.

"Microlending is just a good fit for eBay," says eBay spokeswoman Catherine England. "It really leverages eBay's areas of expertise to address what we see as an emerging market." Omidyar is also an investor in Kiva, a microlending site run by former TiVo (TIVO) executive Matt Flannery and former PayPal executive Premal Shah.

Finally, in addition to new resources, there is also potential inspiration from How to Save the World and How to Change the World with No Plan, No Capital, No Model...No Problem. New resources will be added as time goes on.

Questioning Assumptions

There is no great desire to get too immersed into what seems to be the tit-for-tat gotchas of Marginal Revolution coments again, because they either offer little real insight into economics just political bickering or are just too much technical minutiae. There are a few posts that get to the heart of what is of interest. One particular example directly questions a previously held premise. Tyler Cowen introduces us to Vivian Hoffman, currently a Ph.d. candidate at Cornell.

Here is the abstract on her main paper

This paper reports results from a field experiment in Uganda. Whether a mosquito net was purchased or received for free affected who within the household used the net. Free nets were more likely to be allocated to those members of the household most vulnerable to malaria, whereas purchased nets tended to be used by the household's main income earners. The effect was strongest for free nets received by the mother, increasing the probability that all children five and younger slept under nets by 26 percent relative to when nets had been purchased by either parent or given to the father.

This makes a seemingly substantial argument against the social entrepreneurship approach as it relates to the distribution of mosquito nets. Of course what it might be indicating is that women, in these situations, should be making the economic decisions and not men regardless of whether it was charity or social entrepreneurship. The social status of mean and women and their interrelationships has shown to be very important in these programs. The Grameen successes were, as I understand it, mostly with women.

Vivian does, however, find the discussion on the Marginal Revolution blog helpful having far greater familiarity with the language of economics.

Thanks everyone for your interest in my work. In my current revision I’m dropping the (tedious and unnecessary) theory section and dealing with the potential sample selection bias arising from the fact that I only observed net use in the households that purchased any nets. The new version should be up tomorrow (what timing!!)

Posted by: Vivian at Oct 16, 2007 7:39:29 PM

MicroFinance Program Kiva

Adam Smith blog writes about a new program that allows people to make direct micro-finance loans. The program is called Kiva. From their website:

Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can "sponsor a business" and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you've sponsored. As loans are repaid, you get your loan money back.

Why participate in such a project? Tom Clougherty at Adam Smith explains it this way:

The great thing about micro-finance is that it is based on the philosophy of the hand-up rather than the handout. As I wrote for the GI: "Micro-finance is not a top-down solution to poverty, it is a bottom-up approach that aims to empower the poor, harnessing their individual aspirations and abilities and creating an environment in which they can realize the true benefits of the market economy." That's why micro-finance has been so successful where traditional aid has failed to make an impact.

A Question of Nets Malaria and Social Aid

Marginal Revolution had a post regarding the economics of malaria net distribution which is based upon a New York Times article Distribution of Nets Splits Malaria Fighters. The article is not as "full" a review as is claimed in the post as it does a meager job in looking at the other side and it is hard to evaluate the unilateral positions taken. One of the claims made is that

"There has been a paradigm shift," Dr. Olumese said. "We need to use the momentum we have right now." But is that actually the case or is it business as usual with the same old paradigms.

The immediacy of the issue would argue for direct action without complications of entrepreneurial marketing and distribution but is it that simple or is there a place for the social marketing approach and the goal of empowerment? Providing another perspective is Jacqueline Novogratz who has implemented on the ground solutions. The first video is from 2005, the second is from 2007. The first video is misnamed, it goes beyond Africa. The issue of nets is covered more fully under confluence of health and enterprise in the second video.
TED Talks Jacqueline Novogratz: Investing in Africa's own solutions
TED Talks Jacqueline Novogratz: Tackling poverty with "patient capital"

Unplanned Obsolescence

A now not so recent FAST Company article by Richard Shaffer Unplanned Obsolescence
takes a seemingly critical look at the Grameen Phone Company.

"Grameen's famous Village Phone Program lifted thousands out of poverty-- and helped Muhammad Yunus win the Nobel Peace Prize. The problem: It's not working anymore."

However it never mentions Iqar Quadir who also played an important part in the Grameenphone program. The article cites a number of benefits from the program before getting to it's main complaint which is that it did not maintain those benefits forever. This raises a couple of questions. One, should we be surprised that the benefit decreased over time or is this another example of another economic factor becoming a commodity. Dictionary.com defines Commodity as 1.an article of trade or commerce, esp. a product as distinguished from a service. If everybody has the article of trade then the service is no longer as valuable. Obviously those individuals who entered early and capitalized on their early fortune will do better than those who didn't. Bringing up the second question, individual entrepreneurs often go through what is deemed the "Valley of Death" basically the transition from working in the garage to having a viable sustainable business. (Can't seem to find my copy of the graph right now) Do developing countries go through that as well? A few people will benefit from early intervention but it does not mean that the stimulus will be there to move the country to the next level. This would mean that we need to be circumspect about early successes while nevertheless still pushing forward, being able to answer such criticisms not only with words but new ideas and actions.