30 July 2008

Colleagues' blogs in Liberia

While visiting Liberia last week, I was lucky enough to stay with three blogging colleagues: Laura Bacon, Diane Mak and Preya Sharma.

All three are working in various government departments and doing their best to understand and contribute, in some small way, to this small but important country.

Most people seem to be keen on the work they are doing or that we did last year; but of course it's not entirely costless and our impact is highly variable (my biggest impact seems to have been not my main project, but IT skills training I did in my spare time!). So I am wondering: what, if anything, have other governments got out of short-term technical assistance and internships? Are there any lessons that would be useful for Liberia? What can be done to bring in people from the diaspora, who can usually get up to speed quicker than well-meaning foreigners?

28 July 2008

Liberia: the process is on

Every time I visit Liberia, there are a few new buildings going up, a few more roads resurfaced, more private cars on the roads (and fewer UN LandCruisers, it seems) and another airline that has just started flights to Robertsfield.

It's slow progress, but it's progress. The atmosphere in Monrovia still feels tense, thanks to rising food and gas prices and continued problems with violent crime; but Liberia has so far been spared the 'rice riots' that have rocked Côte d'Ivoire this year or Liberia itself in 1979. Indeed, my former boss Minister Toe was instrumental in getting the World Bank to cough up $10m in response, including $3m to increase domestic food production.

Most positive accounts of Liberia begin with the government and that is my usual starting point too - but on this trip I tried hard to look for signs of life in the private sector.
On a road trip to Bong County, the graded roads and repainted schools are obvious - but also building materials stores sprouting everywhere. For now, this is mostly a reconstruction boom; but the service sector is growing too. More and better snacks available at the side of the road; more and better telephone, internet and printing services (though there are still no landlines); and best of all, insurance.

Why am I excited about insurance? I'm not, really: I have never worked in insurance and I hope I never have to. But my friend James, an old colleague at the Ministry of Agriculture, had just left his job to become a manager for an insurance company. I went to visit him and he introduced me to a colleague, who launched into a 20-minute sales pitch for their products. "Home and contents? We have it! Life? We have it! Automobile theft, collision damage, goods in transit, goods landed but not cleared, we have it! Liberians have grown to expect theft, flood damage, even losing their homes - no more!"

When he paused to catch his breath, I patiently explained that I was only visiting for a few days and my travel insurance policy was adequate to cover my few possessions. I wished them all the best in their quest to sell Liberians insurance and hoped that their brand-new office and freshly tiled floor would soon be ringing with the footsteps of risk-conscious clients.

Somehow, the very mundanity of this exchange encouraged me. Insurers may thrive on risk, but are naturally a risk-averse bunch. If African multinationals are investing in Liberia, they must believe the risk is manageable. If people buy their policies, they must believe that their claims will be taken seriously.

Over-eager insurance salespeople are tedious company. They are also an encouraging, a vital sign of capitalism. On my next trip, I hope I will be pestered by telemarketers and double-glazing salespeople. Now the post office is open, direct mail could be next. Liberians beware . . .

22 July 2008

A really cool way to reduce fuel prices

I'm generally in favour of letting the price mechanism operate. Fuel prices are rising because demand exceeds supply, so the rising prices are a necessary signal to help us adjust to using less fuel. Subsidising fuel will just lead to shortages and postpone the inevitable; it's generally a waste of taxpayers' money.

Still, when governments jack up fuel prices by 40% over the weekend, it blows a hole in commuters' budgets (and hurts anyone who needs kerosene for cooking or heating). This happened in Côte d'Ivoire two weeks ago and I saw how bus and taxi fares immediately jumped to reflect the higher costs. Still, transport operators staged a strike: they claimed the government wasn't letting them raise fares by enough to cover the cost of fuel.

The government's response was to cut ministers' salaries in half and curtail foreign travel for government officials. The money saved will pay for a reduction in fuel tax. Fuel will still cost more than before, but only by 30%, not 40%.

Cynics might call this an election-time gimmick, but I think it's fantastic. I doubt the ministers will be thrown into poverty by the cut and it probably won't last long, but it sets a great precedent.

Who should be next? Maybe Kenya, where the government had to raise taxes to pay for their hair-raising 40 ministers (that's power sharing for you). But I would start with the European Parliament, whose members receive probably the most ludicrous travel allowances of any organization in the world. They can fly to Brussels on Ryanair for €99 but charge the round-trip business fare on, say, Air France (€500? €1,000?) and pocket the difference. The EU has already imposed a travel ban on President Mugabe and his entourage; wouldn't it be nice if we imposed it on EU parliamentarians too?

15 July 2008

A lower-case capital

It’s not uncommon for countries to relocate their capital city: sometimes to an existing town or city, sometimes to a greenfield site. The cities thus created are as diverse as the reasons for creating them. At best, a new capital combines the vitality of any big city with a certain spacious self-confidence. Some of the world’s greatest cities (St Petersburg, Beijing) were designed as capitals, fully formed in the central planner’s (or emperor’s) mind. Washington DC may not have the lively churn of New York or Chicago, but its neoclassical grandeur sets it apart from other US cities. I have not visited Brasilia or Abuja: but whether you see these cities as bold visions of the future or a colossal waste of money, they are undoubtedly fully functioning capitals.

Other capital cities are still-born, capitals in name only. Tanzania’s parliament meets in Dodoma from time to time, but no ministries or embassies do. Burma’s junta recently relocated from chaotic, coastal Yangon (Rangoon) to a mountain village called Napyidaw, apparently at the suggestion of a fortune-teller. Strangest of all, perhaps, is Yamoussoukro, nominal capital of the Ivory Coast. 20 years after its designation, this bizarre city-village is a living monument to its creator and not much else.

Félix Houphouët-Boigny was certainly a master statesman. From the mid-1940s to his death in 1993, he was synonymous with Côte d’Ivoire, piloting his country from palm-fringed obscurity to the economic powerhouse of West Africa. The first African ever to sit in a French cabinet, Houphoët’s genius was to simultaneously convince the Ivoiriens that they were independent and the French that they were not. While Algeria, Kenya and Zimbabwe had to fight for their independence, Côte d’Ivoire was born without bloodshed. When neighbouring Ghana was convulsed by coups and economic collapse, the Ivorians took over as number one in cocoa. The national motto is hard-nosed: ‘Unité, discipline, travail.’

Houphouët ruled supreme for 33 years, buying off his opponents with cocoa farms and contracts. After he died, the falling price of cocoa and ever-growing corruption brought the Ivory Coast economic stagnation, political turmoil and eventually, tragically, civil war. But one aspect of ‘Le Vieux’s’ legacy is preserved: the largest cathedral in Africa and perhaps the world, rising out of the African bush in the middle of nowhere.

Yamoussoukro is a small village 200km north-west of Abidjan. It’s centrally located, on a main road, running through rolling hills with a pleasant climate. Houphouët was born near here in 1905 and that was why he designated this place to be capital. Nominally, it still is: the current government has no interest in the place but doesn’t want to touch his legacy. My bus from Abidjan suddenly burst onto a six-lane highway, completely empty apart from an army checkpoint, streetlights guarding both sides like silent sentinels. Outside the bus station, children and chickens played on a road as wide as the Champs-Elysées. Trucks laden with teak rumbled through on their way to the coast, lost in a vast expanse of concrete. Vast boulevards stretched in all directions, a few concrete bungalows stranded on the sides.

I saw a vast dome rising a mile away. My host, a local student and cousin of a friend in Abidjan, led me down the deserted avenue, past a mosque and a swampy lake where a teenage boy shook a single wriggling fish out of his net. As we crested the hill, the basilica loomed in front of us like a neo-Renaissance visitor from outer space. The guards were most welcoming: tour’s about to begin, they said.

The Basilique de Notre Dame de la Paix is the largest building in Africa and one of the hugest in the world. Its pews can accommodate 7,000 people, another 7,000 fit in standing. It has been full to capacity twice. The first was in 1989, when Pope John Paul II came to bless it. (At his request, the dome was made a few feet shorter than that of St Peter’s). The second was in 1993, at the funeral of its creator. On that occasion, over 200,000 people stood patiently in the grounds, which are beautifully maintained to this day. Only the Vatican and maybe Maracana stadium can compare.

The mind boggles at the megalomania that inspired this basilica in the bush and the sang-froid that permitted its financing. A simple plaque in the front pew commemorates President Houphoët ‘who gave this building to the nation’. God only knows what the nation gave him to build it. Our guide proudly recounted the details of its design (by a Lebanese) and construction (in three years, by French engineers). He did not tell us the price tag. In the past, I have marvelled at how much of Tibet’s GDP is tied up in temples or mediaeval France spent on cathedrals. But those monuments are alive: they are still at the heart of their cities, visited by the faithful as well as tourists. Save for a few weekenders from Abidjan, two young Germans (aid-workers?) and a French priest, the Basilique was empty. My friend had been a number of times; but he was Catholic. Most local people, he told me, ignored it completely.

And yet it’s staggeringly beautiful. Some dictators build mass graves or châteaux in France. This one at least gave the country something it can be proud of. Indeed, though Yamoussoukro was at the front line of Côte d’Ivoire’s ‘crise’ for 5 years, it was spared the shelling, rioting and looting. A battalion of Bangladeshi blue helmets live opposite; they didn’t look busy. Buses and trucks are running to the north again. The Hotel Président, a vast concrete pile on the edge of town, had a scattering of SUVs parked outside it. The market in the city centre was full of students eating at roadside stands. When I glanced up from my fried chicken and chips, the dome of the basilica stood in vast relief against the greying sky.

While the building may be unique, the ‘Big Man’ spirit that inspired it is not. When Houphouët died, his funeral was delayed by President Mitterrand, who reportedly had his Concorde circle above the airport for hours to make sure he was the last to arrive. Last week, President Kofuor hosted a sparkling awards ceremony for Ghana’s National Day, creating a brand-new ‘Medal of the Star of Ghana’. The first recipient: himself. As I write this in my hotel, Radio Télévision Ivoire has just devoted 30 minutes to what President Gbagbo did this weekend.

On the way back to Abidjan, my bus suddenly lurched to the side of the road. As we ground to a halt, I heard a wail of sirens and seconds later, a series of police cars flashed by at incredible speed, followed by three or four black S-Class Mercedes and a bunch of SUVs, indicators flashing. His Excellency on a visit to the North, or maybe his Prime Minister, the former rebel chief? The TV news confirmed it was the President on a 200km/h ‘peace-building’ tour. I wonder if he stopped at Yamoussoukro to pay his respects to Houphouët, who is buried in his palace, surrounded by a perimeter wall and moat. Once a day, a palace guard throws some fresh meat to the crocodiles who live in the moat. The Big Men continue eating, even after they die.

08 July 2008

Cocoa processing in West Africa: addendum

Thank you to readers for commenting on the question of cocoa processing - I stand corrected! In fact, Côte d'Ivoire isn't just the world's largest cocoa producer, but the third-largest processor (only just behind the Netherlands and the USA). Ghana, though much smaller with less than 100,000 tonnes of capacity right now, is catching up - ADM and Cargill have gleaming new factories under construction.

It seems that tax incentives do the trick, along with the comparatively cheap energy and transport out of the coastal ports - great news for anyone working there. I'd be interested to know what the CID folks make of this. Are the tax incentives a good use of resources? Presumably yes, if two conditions are met: (1) cocoa processing has positive externalities that give it a social benefit over and above the direct jobs/profits and (2) the processing wouldn't have happened without the tax incentives. I can see lots of good spillovers from cocoa processing, so this is probably a good deal for the governments concerned.

04 July 2008

Why cocoa-growing countries shouldn't make chocolate

It's an obvious economic development strategy: add value to your natural resources. After all, why should coffee growers only get a few cents when a cup of coffee sells for $3? Why should Liberians export their rubber raw to Ohio when they could earn more by making tyres? And why should Ghana and Côte d'Ivoire send most of their cocoa to Europe for processing? Isn't this just the legacy of colonial exploitation and underdevelopment?

Of course, adding value in the source country doesn't pay for multinationals, otherwise they'd be doing it. Now a team at the Center for International Development at Harvard show that it doesn't pay for the country either.

West African countries have lots of rain, cheap labour and an ideal soil for growing tree crops: in other words, a comparative advantage in growing cocoa. Processing cocoa requires entirely different factors: cheap power, semi-skilled labour, a stable environment for big capital projects and cheap transport links. Making chocolate out of cocoa butter is a different business again, calling for more specialized equipment and skills. There is one company making chocolate in Ghana, but it doesn't sell well even here. In fact it's highly unlikely that any country could have comparative advantage in such completely different activities. We shouldn't expect Ghana to specialize in chocolate any more than we would expect Belgian or Swiss chocolatiers to source their cocoa from European greenhouses.

Hausmann, Klinger and Lawrence conclude their paper as follows: "Policies to promote greater downstream processing as an export promotion policy are misguided. Structural transformation favors sectors with similar technological requirements, factor intensities, and other requisite capabilities, not products connected in production chains." (Policy brief here)

Now if only I could figure out what that actually meant in Ghana . . .