Belated benefit from slave castles

Last year a trip to Senegal opened my eyes to the evils of the slave trade in West Africa. More recently, I went to visit two of the 'slave castles' on the coast of Ghana. Both are carefully preserved and profoundly moving. I was impressed, as I have been throughout Ghana, with the knowledge and professionalism of the guides. They provided telling details of the greed and hypocrisy of the mostly British and Dutch traders. At Elmina (below), the governors used to have women they had captured parade in the courtyard and select one by leaning over their balcony. She was then dressed, washed and brought to the governor's quarters. If, at close quarters, she was found wanting, she was sent straight back to the dungeons.

The guides reminded us that these people operated with the connivance and support of European governments and many African rulers as well. Very few people are blameless in this sorry saga. So credit goes to the government, local authorities and Africans from the diaspora for helping to keep the memories alive.

In one respect, though, I felt that the slave castles were sadly unable to break from the past. Both the towns of Elmina and Cape Coast seemed extremely poor and unable to profit from their main attractions. I had expected to find legions of small hotels, restaurants and souvenir stalls, which might bring the people of these towns some belated benefit from their sorry history.

Instead, the dominant mode seemed to be "bus in, bus out". There are tourist hotels along the beaches, but virtually none in the towns. At Elmina, I only found one hotel catering to visitors; at Cape Coast, just a few budget backpacker places. Where there should be a bustling restaurant-and-souvenir complex, there is a ruin with a faded sign promising a 'visitor centre'. What went wrong? Where did the money go? Even the postcard and wood carving sellers, who are ubiquitous on Accra's beaches, were absent.

I would never suggest turning these lively fishing towns into slave coast Disneyworld. But fishing is a risky business and in decline, thanks to the European fishing fleets offshore. If big projects have failed, how about promoting small businesses? There are lots of little chop bars that no visitors go to: you could find a few ambitious ones and help them print English menus, maybe hire a kitchen help, put up some coloured umbrellas, then double prices. Or maybe set a fruit seller up with microloans to buy a juicer - I'd rather pay $1 for a glass of orange juice than try to peel my own for 10 cents. Or organize a fisherman's cooperative to offer canoe rides in the afternoon, for $5 per person? Set a fixed price, post it on a few notice boards and anyone shy of bargaining will jump at the opportunity.

Of course, if it were so easy, someone would have done it already. Would they?

The Great Illusion: Part One

Paul Krugman has a thought-provoking piece in the New York Times. He compares the international situation now with 1914, when the last great wave of globalization ended and the world turned in on itself for more than a generation.

I am substantially less well informed to comment than Krugman or many others, but it seems to me he is right to highlight the end of Pax Americana (but didn't that end in 2001, if it ever existed?). He is also right to point out how quickly national selfishness and protectionism reared their heads in the food price crisis - with export bans and the like.

There are three crucial differences between 2008 and 1914, however, which make me hopeful that we are not about to see an end to globalization.

The first is that international institutions are enormously stronger now than in 1914. The UN Security Council may have been powerless to do much about Russia and Georgia fighting, but that's because Russia is a member of it. The League of Nations would have issued a nice condemnation, but that institution was useless precisely because the USA, USSR, Germany and Japan were not a partof it. Besides the powerful military and economic bodies, there are countless talking shops where even sworn enemies without diplomatic ties can talk to each other in private, with a mediator if necessary. Europe depends on Russian gas; but Russia depends on Europe's continuing custom: you can't re-route a pipeline.

Second, unlike the Great Depression, the food price crisis contains the seeds of its resolution. 'Crisis' is often taken to mean a disaster, when really it means a turning point: this crisis is also an opportunity, by giving farmers in food-importing countries the incentive they need to grow more food. Here in West Africa, the price of imported rice and cooking oil has gone through the roof; but local food and oil production are starting to rise. Behind the crisis talk on the World Bank's website, a press release celebrates the halving of rice imports in countries as diverse as Guinea, Nigeria and Uganda, thanks to high-yielding rice varieties!

Third, there are large areas of the world that are as stable now as they ever have been. Krugman reminds us that war is now unthinkable in Western Europe; I would argue this extends to all 27 EU member states. The Americas and most of Asia are not islands of stability, they are oceans.

Rather than the end of globalization, I am much more concerned about another great illusion: the idea that we can deal with climate change by burying our heads in the sand. More uninformed ramblings on that to follow . . .

Togo's first Olympic medal

To be successful at the Olympics, it helps to be big, communist or preferably both. No surprises, then, that China is topping the medal table, followed by the USA. Meanwhile, North Korea and Cuba are 11th and 24th in the medal table respectively (as of Wednesday morning). Peninsular rivalry probably helps in the Korean case: the South Koreans are third overall. Just imagine how good a unified Korean squad would be. Or not: the unified German team is now further down the rankings than either of the two Germanies used to be.

So how can a small country without a well-resourced sports academy gain Olympic glory? One option is to find one sport you're good at and stick to it. 3 out of Ghana's 4 medals (mostly achieved in the 1960s) were in boxing. Kenya and Ethiopia excel at medium- and long-distance running. This is generally easier to pull off in the Winter Olympics, however, where Austria, Norway and Ukraine turn their climate to their advantage.

The final option, therefore: go random. Find someone who is good at a sport nobody else knows about. This seems to have worked for Togo, where Benjamin Boukpeti has become a national hero overnight for winning bronze in kayaking.

I wondered what led him to take up kayaking. Did he pick up a paddle to navigate the rushing mountain streams of south-west Togo? Did he pilot a pirogue around the mangrove swamps of his country's coast? Does Togo have a national kayaking academy, the relic of an unusually random far-sighted development project or an eccentric colonial administrator?

A little research revealed that Boukpeti's mother is French and he started off training with the French kayak squad, but switched to Togo in 2003. The competition was tougher in France, he said and they were worried I was getting too old. In fact, in spite of his dual nationality, he has spent the last 8 years training in Toulouse and only visited Togo once, as a small boy.

In my view, this shouldn't stop Togo from celebrating him as a hero: after all, they have the benefits of winning a medal without the costs of training him. It's the perfect technology transfer. With any luck, his success will inspire other young Togolese to take up the paddle (or find another little-known sport to excel at). I'm planning a hiking weekend in Togo's Kpalimé region next month; maybe I'll be able to fit in some watersports at the same time.

Doha and Firestone

Two pieces caught my eye yesterday:

First, my old Professor Dani Rodrik's offers a characteristically acerbic critique of the Doha Round. A waste of time, he says; most of the benefits would go to rich country taxpayers. And why is it published in an English-language Egyptian newspaper? Maybe Egyptian cotton farmers were hoping to benefit from Doha?

Second, the Firestone Company has signed an agreement with workers in Liberia. For the first time in the 82-year history of the world's rubber plantation, the company has done a deal with elected workers' representatives. (The ILRF has a self-congratulatory press release, but I would give more credit to the workers' union, Liberian government and media for keeping up the pressure). I wouldn't expect the miserable working conditions in the plantation to change immediately, but higher wages, more schools and buses to take tappers to work and their children to school are certainly steps in the right direction. As ever, the difficulty will be in implementing the deal: after all, workers are already supposed to be limited to an 8-hour working day when in fact it takes more like 12 hours to reach the daily quota (see picture).

At first glance, these two items are entirely unrelated. But I began to wonder why we never hear about rubber in the global trade talks? Or, for that matter, cocoa, coffee or oil palm?

Probably because none of the commodities above are grown in the USA or Europe. The most egregious trade restrictions, the ones that protect a few rich-country farmers at the expense of millions of Africans, are in cotton and sugar. Even Rodrik agrees that farmers in West Africa would benefit from a more liberal trade regime in cotton - but the US blocks it because of a few thousand swing voters in Florida. Meanwhile, in Europe we still make sugar out of beet. Maybe we're afraid that pirates will cut off our supplies of cane from the Caribbean.

I certainly hope that global trade negotiators will find a way to salvage some useful parts from the wreckage of Doha. But let's not pretend that selling a bit more cotton or sugar will end poverty in Benin or Burkina Faso. Low productivity means poverty, whether your crop is freely traded or not.

Microfinance for the armchair investor

I have been a big fan of Kiva since I stumbled across their website nearly two years ago (just before a NY Times article got them widely noticed). Late-night visitors to the Kennedy School of Government's computer lab found me perched on the edge of my stool, pondering the relative merits of investing in chickens in Kenya, a bookstore in Bulgaria and cassava-grinding in Colombia. It's strangely addictive, or would be if I could remember my PayPal password.

Lately, though, I've begun to wish there were more Kivas out there, for two reasons. One, Kiva doesn't pay interest. That's fine if you only have $100 invested, but put $1,000 in and you start to notice. Two, a lot of the businesses I lend to are very small, doing very similar things. I'm all in favour of food retailers, but there is a limit to the number of them a street or market can support. I have at least 5 vegetable sellers within a 5-minute walk of my house in Accra. (That's 5 times more than I did in Cambridge, unless you count WholeFoods). Any new one would probably compress the margins of the others.

So I was excited to discover MyC4 yesterday, Denmark's answer to Kiva (with loans in euros!). MyC4 is set up for bigger loans: they pay interest, usually around 10%. This cost is passed onto borrowers, but if the loans are bigger, the operating costs fall to compensate. Best of all, the interest rate is set by auction, so the borrower gets to borrow from whichever lender offers the lowest interest rate. It's a slightly different model - more wealth creation than poverty reduction perhaps - but a welcome one, in my opinion.

I bought €100 of credit and jumped straight in. So far, MyC4 only has partners in three countries, but one of them is Côte d'Ivoire, which is exciting because they don't get a lot of microfinance. Right now I am invested in 2 Ivoirien businesses and am waiting to hear if my bid to invest in one in Uganda has been accepted.

Even with the prospect of larger loan sizes, though, the most common business model on MyC4 is "X buys Y wholesale and sells it retail. The loan will enable her/him to buy more stock." Sure, but food and clothing retail is highly competitive in most developing world cities I know, so the potential for additional profit is small.

What am I looking for, then? Three things. One, rural lending. Microfinance seems to be as scarce in rural areas as it is common in the cities (how many Ugandan microfinanciers operate outside Kampala? maybe this Kiva fellow can tell me). Small loans for fertiliser and seeds would make a huge difference to many farmers. Two, product differentiation. Three, businesses that add value to commodity items. I can get delicious mangoes and pineapples all over Ghana, but no fresh mango juice. I'll bet if you wheeled a juicer around Accra you could make some good money and undercut Coca-Cola at the same time. Good for you, good for Ghana and great for my teeth.