29 September 2008

Liberian cassava farmers profiled on the BBC

I love this stuff . . . and there isn't a single man to be seen, except for a motorcycle taxi driver in slide 8.

In fact, in three months spent in Liberia, I never saw a man farming cassava. Rubber, yes and sometimes rice, but cassava farming is "women's work". Notice how the men in the picture below are 'supervising' (i.e., sitting around) while the women are busy.

Sometimes I imagine that the gender division of employment in agriculture will change as countries become more developed. But maybe not. I have been walking around rural Yorkshire in the last week, where there are a lot of sheep farms. Without exception, the farmers riding around the hills in Land Rovers and quad bikes are men. Maybe men only get involved when there are machines to play with?

28 September 2008

Emily is back in Liberia

The excellent Emily Stanger has gone to work for the Ministry of Gender in Liberia. Emily, please make sure you post regularly - your fans around the world will appreciate it!

Emily is working as a Scott Fellow (with support from the Nike Foundation), part of a scheme to bring young professionals (many of them Liberian) to work in the government there for a year, sometimes more. This seems to me is the right kind of technical assistance - not just a few months of consulting (something I have done in the past, but I have decided to steer clear of for a while!), but serious engagement, for a serious period of time. I wish her and the other Scott Fellows the best of luck.

25 September 2008

With or without the US

I've been enjoying reading Bono and Jeff Sachs' FT column from New York. Bono's ramblings might work better as rock lyrics, but he comes across as well-informed and genuine at least. Sachs, meanwhile, is passionate and provocative as ever:

"The UN meetings were abuzz that the US could find $700 billion for a bailout of its corrupt and errant banks but couldn’t find a small fraction of that for the world’s poor and dying. It didn’t make sense to the world community. The puzzlement was all the greater since the very banks being bailed out so generously had awarded themselves more than $30 billion in bonuses early this year, roughly the world’s entire aid budget for 800 million people in sub-Saharan Africa."

Amen. I wouldn't blame the financial crisis, entirely on the banks, but that's not the point. What is sad is how serious development issues drop off the news agenda as soon as there is a recession or 'crisis'. The same happened at the Gleneagles summit in 2005, when a terrorist attack send the TV crews scurrying to London. If we want to advance the development agenda at an international level, we need to work out a way of doing so even when the world's attention is elsewhere.

For the time being, a global financial crash is bad for emerging markets, as interest rates shoot up and 'risky' loans are called in. In the longer term, I wonder if it might be a good thing, for three reasons.

First, the USA and Europe no longer look like safe havens (OK, maybe Switzerland). A Brazilian, Russian or Chinese investor might therefore be keener to invest at home in the future.

Second, US banks and the US government are coming to depend increasingly on sovereign wealth funds, Japanese pensioners and so on for their capital. The result: the US will no longer be able to dictate terms to everyone else. The Washington consensus becomes the Dubai discussion.

Third, the reduction in US influence means we are no longer entirely dependent on US leadership in international economic matters. Not a bad thing when the world's largest economy is distracted by the election, bank bailouts and the like.

Indeed, Sachs praises Gordon Brown for continuing to push the MDG agenda at the United Nations. Brown doesn't have Bono's talent for PR, but if all world leaders took development as seriously as he does, we might make some progress - with or without the US.

24 September 2008

What I miss about West Africa - and what I don't

I'm spending a few weeks in northern England, preparing for a move to London. After a few days I am used to the weather again; but in other respects the UK feels quite alien. Here are a few things I have found myself missing about life in Ghana:

1. The way people dress. Wearing clean, colourful and well-tailored clothes seems to be a source of pride for Ghanaians everywhere; I am shocked at how little many Britons seem to care about their appearance, wandering around in dirty T-shirts and ill-fitting tracksuits.

2. Courtesy to strangers. In Accra, it's quite usual to greet other passengers in a share taxi or minibus with a low-key "good morning". Anyone doing so in a London bus would get embarassed looks in return and quite possibly a torrent of verbal abuse.

3. A nod and a smile. Walking down a street in Accra at night, I know I stick out. But if I walked past a group of young men, my instinct would be to nod at them, smile and maybe say hello in passing. I would expect them to reciprocate, even more so in rural areas.

Walking around parts of north London a few days ago, my instinct was quite different. I averted my gaze from passers-by and walked fast so as to indicate that I was "minding my own business". There aren't many young people hanging around on street corners, but those who are there exude an air of menace (they are usually harmless, of course - but perceptions matter).

There are other things I don't miss:

1. Tropical fruit - mangoes and papaya especially. This surprised me, because I love all tropical fruit and devour it in large quantities. But the apples and blackberries which are all over rural England in September are equally delicious.

2. Uneven streets and pavements. Walking along a typical street in Accra is an obstacle course of open drains, potholes and cracked slabs. It's worse for pedestrians than for motorists. I used to think UK pavements were shockingly uneven, but maybe they have got better, or else my standards have slipped.

3. The humidity. I'm a dry kind of guy. I like mountains and deserts. The UK isn't exactly dry, but at least I don't wake up in the morning drenched in sweat.

How long does it take to adjust? The plane from Accra to Heathrow was a mix of British, Ghanaians and British-born-but-still-partly-Ghanaians. Almost all spoke with 100% London accents. At least, they sounded a lot more authentically London than I ever will.

17 September 2008

What's in a national motto?

To the best of my knowledge, only Brazil and Saudi Arabia have a national motto (or whatever you want to call it) on their national flag. Many more have a motto on their official coat of arms, though and from there, it frequently gets onto passports, official documents and the currency.

So how does the motto get chosen? And what does that choice say about a country?

I suppose most mottos are chosen at independence, so the leaders of the nationalist or revolutionary movements are probably important. But can we learn about a country's history from a motto? Or, especially in Africa, the personality of its first President or 'founding father'?

Compare these two, for example:
"Unité-discipline-travail" (unity-discipline-work)
"Unité-progres-justice" (unity-progress-justice)

The first is Côte d'Ivoire: serious, conservative, in keeping with President Houphoët's non-revolutionary ideology. The second is its neighbour Burkina Faso: superficially similar (and following France's lead by doing things in threes) but more progressive-sounding, more socialist maybe, with a revolutionary tinge. Coincidence?

I don't think so. When Burkina Faso was Upper Volta, its motto was actually "Unité-discipline-justice". When Thomas Sankara renamed it 'The Land of Upright People' in 1984, he changed the flag, national anthem and motto as well. Out with discipline, in with progress. A subtle change, but a symbolic one.

Or how about these two in East Africa? Kenya has 'Harambee' ('Together') while Tanzania has 'Uhuru na umoja' (Freedom and unity'). Almost identical, you might think. But 'Harambee' wasn't just a slogan for Jomo Kenyatta, it became a defining ideology for Kenya: nationalism, economic development and the uniquely Kenyan institution of the 'harambee meeting', community fundraising events in which local dignitaries donate to worthy causes and politicians (pardon my cynicism) return some of the cash they have looted to the people. Meanwhile, Tanzania - then as now a lopsided federation - stresses unity. The word 'Uhuru' is important too: Tanzania's president Julius Nyerere published two collections of speeches with 'Uhuru' in the title ('Freedom and Socialism' and 'Freedom and Development')

As to why Kenya has lions on its coat of arms and Tanzania has a man and a woman, I am afraid to speculate, but the symbolic contrast is striking.

Some slogans are unintentionally ironic. Liberia's fine emblem (left) fails to mention is that only 2% or so of its population where brought there by "the love of liberty". The rest of them were probably as bewildered by the beautiful ship with the white sails as I would be if a bunch of white Baptist Americans showed up in northern England and announced they had come to settle there.

How about the choice of language? Do you choose a colonial language, or do you pick a local one (and thereby risk offending minority ethnic groups?). Most countries in West Africa seem to go with English or French, whereas Swahili rules in East Africa, maybe because it's a regional rather than a local language so there's less chance of offending someone. The British and the Dutch royal families both have French mottos, but nobody seems to care.

Sometimes national mottos resonate in unintended ways. Mali's motto is a super-idealistic "Un peuple, un but, une foi" ("One people, one goal, one faith"). At first I thought it sounded like a song by U2. Then I remembered where I had come across 'one people' before. The motto of Hitler's Germany was "Ein Volk, ein Reich, ein Führer". Thankfully, a motto does not always a people make.

16 September 2008

The market versus the mall

Whenever I travel out of Accra towards Ghana's central or west coast, I pass through Kaneshie station - which is really a large market with a bus station attached. It looks chaotic, but is actually very well structured: if you can bear the noise and the smell, you will be on a minibus to almost anywhere within a minute or two. The market sellers are organized too: all the plastic-sandal-merchants are in one corner, all the beef-and-goat-meat-choppers in another.

A few miles away is the Accra Mall: a new, air-conditioned shopping emporium as clean and bland as any other in the world. Between the stressed-out SUV drivers and lost-looking backpackers, upper-class local kids 'hang out' in the food court, because that's what kids do in malls.

Where is the future of African retail? For now, my money is on Kaneshie market. Their local produce is cheaper and better (never mind the cold chain: it was picked this morning) and their imported Chinese crap is as cheap and as crap as anyone else's. The problem is, there are no economies of scale and virtually no product differentiation. 500 people selling the same pile of onions equals 500 tiny profit margins. Fine if you are content for people to just survive. Not fine if you want some of these businesses to grow, employ others, maybe move into a proper shop so I don't have to trip over goat heads on my way to the beach.

So far, so much anecdotal speculation. Fortunately, when I got back from the beach I found this new paper by Rafael La Porta and Andrei Shleifer. (Thank you Dani Rodrik for pointing it out). Their question is: does a large informal economy help or hinder economic development? Their answer is: neither.

According to La Porta and Shleifer, there are three ways of viewing the informal economy. The first is the 'romantic view', associated with Hernando de Soto and a thousand microfinance outfits. According to this view, the sellers at Kaneshie market are all budding entrepreneurs. Give them secure property rights and some microloans and presto, within a few years we'll have a Kaneshie Mall with a plastic sandal supermarket and value-added goat head products.

Not much evidence for that, unfortunately: it turns out that almost all small businesses stay small even when you pump them up with microloans. So how about the 'parasite view', exemplified by this article from the McKinsey Global Institute? These guys say informal firms have a cost advantage in spite of their low productivity, because they pay lower taxes and rent than the formal ones. This prevents more productive formal-sector firms from getting off the ground. The solution: cut taxes on the formal sector and enforce them in the informal one. Then watch the Accra Mall outcompete the street markets, just like Wal-Mart does in Mexico.

This is a controversial view: who likes Wal-Mart? There's not much evidence for it either. Many city governments have cracked down on street vendors and markets, only to find them creep back months or years later. Zimbabwe's Operation Murambatsvina ('Drive Out the Rubbish') in 2005 destroyed the informal economy in Harare, but did nothing to alleviate food shortages. Rather than the informal entrepreneurs rushing to register their businesses, most just stop trading and are forced to find another livelihood.

The most interesting finding of the paper is that the formal sector does not grow out the informal sector, it replaces it. Most formal firms started off that way: they registered and paid tax from the beginning, using seed capital from friends, family or foreign investment (rarely banks). That lends credence to the third view of the informal economy, the 'duality view'. This view explains the productivity differences between formal and informal firms in the skills of their owners and managers. Skilled managers (usually those with a college education) go to work in the formal sector, where their productivity is rewarded with high wages. Less educated managers stay in the informal sector, whose meagre returns are commensurate with their skills. The formal and informal sector are different people selling different things in different markets. The South African running the Nike store in the Accra Mall would no more think of competing with the Hausa shoe trader at Kaneshie than she would of buying her biltong from him.

A good friend recently came to Accra to research the same topic and he described the informal sector as facing a 'mesh ceiling': there is no insurmountable obstacle to small businesses growing large, it just almost never happens. He found that even when market-traders and shopkeepers were selling the same product, their perceptions of the challenges and opportunities of the business were completely different. In particular, the shopkeepers, who usually have some access to credit, complained bitterly about high interest rates and stingy banks; the market traders, who have none at all, didn't even mention it.

The informal economy doesn't formalize when an economy develops, therefore: it just gradually becomes less important. In the USA, 95% of food is sold in supermarkets; in Latin America it's close to 50-50 and in China their share is growing fast. Shoprite won't put my local fruit seller out of business. But her grandson might get a job there.

12 September 2008

Limits to aid: yes please, but not a cap

Earlier this week I wondered about how to engineer a 'negotiated withdrawn' of aid to avoid fast-growing countries getting trapped in aid dependency.

Then I came across an interesting article in the Financial Times by Adrian Wood, Chief Economist of DFID. Wood argues that we should limit aid to a certain proportion of a country's budget - say 50%, or maybe 10% of GDP. Bill Easterly and Robert Wade provide trenchant commentary. (Nothing new here, says Easterly, but it won't work - the incentives for donors are to continue putting out aid come what may).

The debate continues at the Center for Global Development, with contributions from Nancy Birdsall, Jeff Sachs and Michael Lipton, amongst others. (Surely the problem is not too much aid, but too little? says Sachs - particularly when we have promised it and then not delivered, as is happening now).

I'm all for setting a limit to aid: but please let's make it a time limit, not a quantity limit. As Jeff Sachs points out, 10% of GDP for a country with a GDP per capita of $200 is $20 per person per year. That might be the upper limit of what a capacity-strapped or corrupt government can spend, but in post-war or desperately poor countries, much more will have to be directed at (re)building infrastructure, if necessary bypassing the government. To give an example off the top of my head, Liberia's annual budget is about $200m (itself the highest for 15 years), rebuilding their old hydropower station would cost at least $200m. I'd be curious to know what proportion of German or Japanese GDP was spent on rebuilding in the period 1945-50.

Rather than limiting expenditure per year, I'd like to see an aid agenda that says "We will work with you to achieve these targets and build capacity - but after 2015 we will begin cutting aid - and by 2025 we will have shut up shop, sold our Land Cruisers and our country economists will be out of a job. Over to you." Call it a surge, then a staged withdrawal.

09 September 2008

"Aid is good, business is better"

Last week's International Herald Tribune carried an article by two most unusual co-authors: the world's largest diamond miner and Africa's first woman president.

President Johnson-Sirleaf of Liberia and Nicky Oppenheimer of De Beers write: "Countries must be willing to make a change in mind-set from the idea that foreign programs and plans will lift countries out of poverty to a belief in their own vision for their future. Foreign aid should only temporarily support countries while they implement difficult reforms and get on their feet."

Fantastic. I wonder how long 'temporary' means, though? Ghana has had billions pumped into it over 50 years and there is no sign of it stopping anytime soon. In fact, Ghana is getting more aid than ever - partly because its government has the capacity to spend it. Even more deservedly, Liberia is (at last) getting the huge inflows it will need to build up its infrastructure and public services. Not much of it is channeled through the government yet, but that is beginning to change.

In the longer term, though, I wonder if it might be wise to plan ahead for when the aid money will stop? Cutting off aid from one year to the next is hugely damaging, but pretending that it will continue for ever is a recipe for continued stagnation and dependency. I'd favour a negotiated drawdown - somewhere between Obama's 2 years and McCain's 100 years.

Some countries will need help for longer than others. Post-war countries are a special case and so are small islands or landlocked countries without natural resources. But I'd argue the chances of, say, Kenya or Ghana becoming middle-income countries by 2020 would actually be enhanced if we could agree a plan for aid drawdown now. (It has been done: look at Botswana, South Korea, Taiwan, Mauritius, even India is now a net donor).

So, Madam President, will you be brave enough to announce the date when Liberia will be independent from aid?