Tag Archives: Africa

Africa Needs Aid, Not Flawed Theories

Bill Gates applauds the historical narrative, but doesn’t like the Rational Optimist’s views on aid to Africa. I agree with Bill’s points on aid for health care, and climate change. Bill doesn’t address Ridley’s case against general economic aid, where I think William Easterly has successfully demonstrated that the primary effect is to enrich the political elites and delay the day that they are forced to gain the “consent of the governed”. Excerpt:

The second key idea in the book is, of course, “rational optimism.” As Mr. Ridley shows, there have been constant predictions of a bleak future throughout human history, but they haven’t come true. Our lives have improved dramatically—in terms of lifespan, nutrition, literacy, wealth and other measures—and he believes that the trend will continue. Too often this overwhelming success has been ignored in favor of dire predictions about threats like overpopulation or cancer, and Mr. Ridley deserves credit for confronting this pessimistic outlook.

Having shown that many past fears were ultimately unjustified, Mr. Ridley finally turns his “rational optimism” to two current problems whose seriousness, in his view, is greatly overblown: development in Africa and climate change. Here, in discussing complex matters where his expertise is not very deep, he gets into trouble.

Mr. Ridley spends 14 pages saying that everything will be just fine in Africa without our worrying about negative possibilities. This is unfortunate and misguided. Is his optimism justified because things always just happen to work out? Or do good results depend partly on our caring and taking action to prevent and solve problems? These are important questions, and he doesn’t answer them.

(…) Mr. Ridley devotes his attention to just two present-day problems, development in Africa and climate change, and seems to conclude, “Don’t worry, be happy.” My prescription would be, “Worry about fewer things while understanding the lessons of the past, including lessons about the importance of innovation.” This might qualify me as a rational optimist, depending on how stringent the criteria are. But there can be no doubt that excessive pessimism may cause problems with how society plans for the future. Mr. Ridley’s book should trigger in-depth discussions on this important subject.

Why Africa Is Poor and What Africans Can Do about It

Cato recently held a book launch for South African development expert Greg Mills (you can pre-order at Amazon). This is a very smart book by a man who has spent his professional life in the thick of the problem (bad governments making bad policy choices).

Economic growth does not require a secret formula. While countries from Asia to Latin America have emerged from poverty, Africa has failed to realize its potential in the 50 years since independence. Greg Mills, the former director of the South African Institute of International Affairs and one of South Africa’s most respected commentators, confronts the myths surrounding African development. He shows that African poverty was not caused by poor infrastructure, lack of market access or insufficient financial resources. Instead, the main reason Africans are poor is because their leaders have made bad policy choices. Please join us to hear why a growing number of African opinion makers and ordinary citizens believe that to emerge from poverty, Africa must embrace a far greater degree of political and economic freedom.

I recommend the podcast of the event (download MP3). Excellent comments by Marian L. Tupy, a policy analyst with the Center for Global Liberty and Prosperity.

One of my favorite development economists wrote the lead blurb

“Poverty is now optional” is Greg Mills’ invigorating message’, Paul Collier, Oxford University, Author of The Bottom Billion and The Plundered Planet

African poverty has been optional for fifty years — just keep in mind that the African elites do just fine under the status quo. And so do the NGOs, who effectively get a commission cut of the western aid budgets (as does the consulting industry housed around the DC beltway).

Good job Cato! Now, if we can just inject some sanity into the NGOs and OECD aid agencies. The billowing aid continues to insulate the African leaders from the consequences of their policies (and of course insulates them from their own populations).

On aid, I was pleased to hear Greg Mills respond to questions, with, paraphrasing:

Obama said his Africa policy was to “double the aid”. In fact that is a clear signal that there is no Africa policy. An effective, Africa policy is far more nuanced and complex than “double the aid”. What is the point of aid if you do not have tools for measuring the effectiveness of that aid?

While we are at it, let’s measure the effective of NGOs! I would be perfectly happy to have the organization that I run measured. Also, measure the effectiveness of consultants.

(…) The average age of African leaders is 75. The average age of Africans is 25. The numbers for Europe are about 55, 45. I am stupified by how passive African electorates are. How long would Robert Mugabe have lasted in Serbia?

Greg Mills emphasized that Africa’s demographics are a powerful positive force for economic development. Africa is rapidly becoming urbanized; by 2020 fifty cities of over one million population. (I think Africa today is about 40% urban). One clear benefit of the urban trend is it incentivizes agricultural productivity. The subsistence lifestyle so dear to the NGOs is finally going to be swept away. My guess is that the dreaded GMO crops will finally be grown seriously in Africa.

And in about the same time frame, one-quarter of the world population of “young people” under age 25 will be in Africa. They expect what they can see in the developed world – the affordable electricity, the communications, the computers, the autos. An African policy will be focused on ensuring those wants are satisfied rapidly by economic growth (jobs). If those expectations are not met…

Why big dams and big ag are good for the poor

(…) The United States, Western Europe, Japan, all countries in developed parts of the world that have significant hydro potential, have used more than 80 percent of that potential. In Africa, they’ve used 3 percent.

So you have countries like Norway and Switzerland and others that have developed 90 percent of their hydro potential, then sitting on the boards of their aid agencies and the World Bank and they say to Ethiopia, “We don’t like dams. We don’t like hydropower. You can’t have it. We won’t support it.” This is done in the name of environmental concern and it’s deeply, deeply resented by these countries.

(…) In my view, there’s a deep problem with the aid business. You read the UN Millenium Development Goals and in my view they put the social cart before the economic horse. They are all about social outcomes, but nothing on the economy that’s produced those outcomes, so infrastructure doesn’t figure, agriculture doesn’t figure. These global solutions are driven by rich countries and rock stars and just sort of run from fashion to fashion.

Marc Gunther interviews Harvard development expert John Briscoe.

(…) John, who was trained as a civil and environmental engineer, has worked as an engineer in the water agencies of South Africa and Mozambique; as an epidemiologist at the Cholera Research Laboratory in Bangladesh; as a professor of water resources at the University of North Carolina; and, for the past 20 years in a variety of policy and operational positions in the World Bank. Most recently he has served as the Bank’s Senior Water Advisor and the Country Director for Brazil. John is now a professor of environmental engineering at Harvard.

This is a terrific interview — I learned several things about water resources. Unfortunately, the rich country “environmentalists” don’t like dams, or GMO. Here’s an excerpt on Brazil and the 2008 food crisis:

(…)

JB: Yes. I think the energy, water, and food—this is a bad metaphor–but they are three sides of the same coin. You can hardly deal with one without the others. They all are interrelated.

Here there’s an extremely worrying situation. Look back to the 1960s and the success of the Green Revolution. People were saying that poor countries like Bangladesh could never feed their people. We now have India, Bangladesh, all these places, essentially, self sufficient in food production. We had in the 1960s and 1970s a yield growth of 3 to 4 percent a year. This was just incredible and had huge positive impacts. Even today, food prices are less than half than what they were in 1960 in real terms. So, this has been, in my view, one of the greatest achievements of science, contributing to the well-being of billions of people.

MG: But those gains are petering out, correct?

JB: Essentially, yes. Because the scientific ingredients of the Green Revolution have largely run their course, we now have yield improvements of half a percent and one percent, with large growing populations. and markets are becoming very, very thin. When there is some disturbance, the market tips and we food crises as in 2008.

Let me give an example: I lived in Brazil for the last three years. Brazil has had an amazingly positive experience. The value of agricultural output in Brazil today is three times what is was 35 years ago and Brazil is an agricultural superpower, one of the biggest producers of bio-fuels, of soy beans, meat, fruits, etc.

It turns out that of that 300 percent increase in production, 90 percent is attributable to productivity increases. Only 10 percent of that increase is accounted for by increases in input of land, labor, and capital. Most it comes from being much smarter. This is because Brazil over this period – even through hyper-inflation, through economic crises — never stopped investing massively in agricultural research. So they have today, without anybody being a close second, a research establishment on tropical agriculture that is by far the best in the world. They’ve seen enormous returns on investment in agricultural research.

Strikingly, look at that same period and see what the development agencies, including the World Bank, did in agriculture. In 1975, about 20 percent of development assistance went to agriculture because it was, in my view, correctly perceived that agriculture was one of the bedrocks on which countries developed. By 2008, agriculture had slipped from 20 percent to around 3 percent of official development assistance.

Why? Like all things, it’s complex. One contributor was that there was a lot of opposition to modern agriculture from green groups, environmental groups and others who don’t like irrigation and large scale agriculture, just as there was opposition to large-scale infrastructure. There was also a sense that the private sector would take care of this. The private sector, of course, does do quite a bit with agricultural research, but there is an enormous role for the public sector as well.

So, we get to 2008 and I was actually in Brazil when the food crisis struck. The International Assessment of Agricultural Knowledge, Science and Technology for Development — a twenty million dollar project done by the World Bank and 17 other partners – then came out telling us why the Brazilian approach (heavily scientific, large scale, and technologically sophisticated) was the wrong way to go and that the right way was small, beautiful and organic. And the Minister of Agriculture of Brazil quite rightly tore me to pieces and said, “This is bizarre….”

(…) Fortunately, I think what is very good in the international scene is the rise of the middle income countries, like China, India and Brazil. They are much closer to the issues of poverty, much more pragmatic, much less ideological and bring much more common sense to the discussion.

Bizarre indeed. Thanks Marc — an important interview for everyone to read.

The New Science of Feeding the World

More good commentary and resources to read from Bill Gates, who is for sure my favorite philanthropist:

While traveling last week to Antarctica, I had a chance to read a book recommended by our foundation’s agricultural development group, Tomorrow’s Table: Organic Farming, Genetics, and the Future of Food by Pamela Ronald and Raoul Adamchak.

This is an important book for anyone who wants to learn about the science of seeds and the challenges faced by farmers. It’s only 167 pages, and includes personal stories that give you a sense of the authors as people and how strongly they feel about farming, food and the environment. I think anyone who reads this book will be convinced of the authors’ sincerity and intelligence – even if, like me, you never try any of the cool-sounding recipes.

Whenever I read about farming, I’m reminded how tough it is. Between the weather, weeds, viruses, insects and other pests, farming is a constant struggle, always posing new challenges. A city boy like me can think of it as putting a seed in the ground and waiting for nice stuff to grow. Wrong.

(…) I wish Tomorrow’s Table discussed the problem of underinvestment in agricultural research. But the authors’ personal involvement in what they do write about gives the book a note of deep sincerity. That may help get people who are skeptical or confused about new science, including biotechnology, to see that it has an important role to play.

China Hearts Africa: Beijing Does Deals, Not Gifts

Thanks to Paul Kedrosky for this gem:

Good piece in Time (sic.) on China’s expanding love affair with Africa:

The ambition, speed and scale of Chinese involvement in Africa is extraordinary. According to Chris Alden, author of China in Africa, two-way trade stood at $10 billion in 2000. By 2006, it was $55 billion, and in 2009 it hit $90 billion, making China Africa’s single largest trading partner, supplanting the U.S., which did $86 billion in trade with Africa in 2009.

… Beijing doesn’t do gifts; it does deals. In Congo, China’s infrastructure-for-mines deal irked the International Monetary Fund (IMF). The Fund argued that Congo’s guarantee to China that it would recoup at least $3 billion in minerals was an IOU on Congo’s national assets and therefore a new debt. That fell afoul of debt-write-off conditions, which require that the debtor take on no new loans. “If the Congolese take the Chinese deal,” said a Western official familiar with the negotiations in mid-2009, “they will not get any more [Western] support.” A standoff ensued. An earlier deal, in 2007 with Angola, also outraged the IMF. It had been negotiating a new loan with Angola for years, with carefully calibrated conditions to block corruption and alleviate poverty. By paying Luanda $5 billion in return for oil concessions and infrastructure contracts, China effectively made the IMF redundant. [Emphasis mine]

Deborah Brautigam on Sino-African Development Partnerships

If you have been wondering about China’s expanding role in Africa, read this:

In Africa’s Eastern Promise, a recent article in Foreign Affairs, Deborah Brautigam writes of the two-part development strategy that China pursues with a select number of partner countries in Africa. The strategy consists of loans backed by natural resources and special economic zones—ideas that come directly from China’s development experience at home.

China Eximbank issues market-rate loans that finance infrastructure projects such as roads, railways, hydropower, schools, water systems, and hospitals in Africa. Borrowers repay the loans with natural resources—oil in countries like Angola, Nigeria, and the Republic of the Congo, cocoa beans in Ghana, and copper in the Democratic Republic of the Congo. More often than not, Chinese firms receive the infrastructure contracts, but the agreements typically contain provisions that specify a competitive bid process and a degree of subcontracting to local firms.

China also partnered with Nigeria, Mauritius, Zambia, Ethiopia, and Egypt to build special economic zones (SEZs) oriented toward the type of light-manufacturing that drove Chinese growth in the recent past. In most cases, the Chinese agencies with experience building China’s own SEZs advise the development of the new zones in Africa. The zones will allow African “countries to improve poor infrastructure, inadequate services, and weak institutions by focusing efforts on a limited geographical area.” With the new zones, China appears have learned some lessons from its past development failures in Africa:

“For decades, Chinese teams in Africa constructed agricultural projects or built factories only to turn them over to inexperienced and sometimes uninterested host governments. Once the Chinese left, the benefits of the projects declined, prompting the host governments to ask the Chinese to return. Now, Chinese companies are taking responsibility for both designing and building the zones and then managing them as businesses.”

Though the prospect of China partnering with authoritarian regimes in Africa may seem disconcerting at first, Brautigam calls on Westerners to be open-minded about China’s initiatives in Africa. Indeed, rich Western countries might do well to follow China’s lead. Where traditional aid programs have failed, forging partnerships with African leaders and establishing special zones could be a more effective way for the West to promote development and respect for human rights.

Brautigam’s latest book, The Dragon’s Gift: The Real Story of China in Africa, treats the development relationship between China and Africa in greater detail.

[From Deborah Brautigam on Sino-African Development Partnerships]

Rwanda the global top reformer

This is very good news for Rwanda

Rwanda tops the World Bank’s list of reformers in their annual “Doing Business Report”, which measures the ease of opening and closing businesses, enforcing contracts, trading across borders and other key benckmarks used by investors to evaluate location choices. The sub-Saharan country vaulted to the 67th from the 143rd rank in the report, ahead of India, Italy and Turkey. The index ranks 183 participants.

Rwanda improved regulations that eased access to credit, simplified business formation, strengthened minority-shareholder protections and sped up trade and property registration, according the report.

This is good news for President Kagame before speaking at the U.S. Africa Business Summit early next month to attract further investment. Good news also for the country’s effort to shift from a high-dependency on foreign aid to job creation and economic development fuelled by private international capital. This effort has faced serious challenges over the past months with multimillion dollar tourism projects of Dubai World scaled down. This rolling back of private investment in the wake of the global recession hit several African economies hard, the New York Times reported last month.

Armed with the World Bank’s ‘Best Reformer” label and aided by signs of global recovery, President Kagame is likely to return from the U.S. with more ambitious investment projects for the growing East African country.

Malaria: Root Causes of African Underdevelopment

Here is another case of confirmation bias — at least it confirms my bias on malaria and economic development. Sambit Bhattacharyya at The Australian National University has a new paper forthcoming in the Journal of African Economies [PDF]. From the Abstract:

What are the root causes of Africa’s current state of under-development? Is it the long history of slave trade, or the legacy of extractive colonial institutions, or the fallout of malaria? We investigate the relative contributions of these factors using Atlantic distance, Indian Ocean distance, Saharan distance, Red Sea distance, log settler mortality, and malaria ecology as instruments. The results show that malaria matters the most and all other factors are statistically insignificant. Malaria also negatively affects savings. The results are robust even when the malaria ecology instrument is replaced by frost, humidity, and rainfall and when the latter are used as additional control variables. We find that frost alone is enough to knock off the effects of slave trade and institutions on long term development in Africa.

From the Introduction:

It is well known that Africa is falling behind the rest of the world in terms of economic wellbeing. Even though global poverty is on the decline due to rapid economic growth in India, China, and other parts of the world, Africa’s contribution to this decline is disappointing. Absolute poverty in many of the African nations is in fact rising (Sachs, 2005). What is the fundamental cause behind this decline? This has been a topic of research for a few decades now. Even though it is extremely difficult to summarize this voluminous literature, it is perhaps fair to say that three strands of thoughts stand out. The first is the disease view. According to this view, malaria and other infectious diseases have fatal as well as debilitating effects on the human population in Africa. It negatively influences productivity, savings, and investments in physical and human capital and directly affects economic performance of the continent (Gallup and Sachs 2001; Bloom and Sachs 1998). According to Bloom and Sachs (1998), the high incidence of malaria in sub-Saharan Africa reduces the annual growth rate of the continent by 1.3 percentage points a year and eradication of malaria in the 1950s would have resulted into a doubling of per capita income.

Advice for the Generous

Really excellent advice:

A reader asks for recommendations about worthy charities:

Dear Dr. Mankiw,

As I draft my extensive Christmas list of unneeded items, my conscience calls me to add a favorite charity or two, which my family members could consider gifting in my name.

Still, I know that not all charities are as efficient (or proficient) at their giving. For example, I remember reading (in Easterly’s White Man’s Burden, I think) that there have been many less-than-perfect results in distributing free bed-nets, arguing that they are optimally delivered subsidized rather than free. While I think bed-nets are a great avenue to donate to the world’s poor, there are many different organizations where someone can purchase them, and I, for one, have no idea who is the best at it.

Do you know any for market-friendly charitable-giving groups, who give bed-nets or anything else? If so, could you please post on your blog? (I think many students and other young people are interested in giving to national and international organizations but know little about how the money flows to the people.)

I hope my request isn’t too vague. Happy Holidays!

Chris



I doubted that I knew enough about the topic to offer a good answer, so I passed the question on to my Harvard colleague, development economist Michael Kremer. Here is his reply:

Dear Greg,

Sure, I would be happy to make some recommendations.

If readers want to donate for nets, one good organization I have supported in the past is here. TamTam provides nets free at clinics. Personally I think this approach makes sense because charging dramatically reduces use, free distribution can help encourage mothers to come to antenatal clinics, and, like vaccines, insecticide treated nets can help interfere with disease transmission creating positive externalities. For some evidence on the first issue, see this paper.

One of the best buys out there is treating kids for worms. Two billion people have intestinal worms worldwide, including 400 million school-children. The medicine costs pennies per dose. Because the medicine is cheap and safe, but diagnosis is expensive, the World Health Organization recommends mass treatment in schools in areas of high prevalence, which can keep total costs per treated child to $0.25.

Treatment not only has medical benefits but helps kids stay in school longer. Ted Miguel and I estimate benefit/cost ratios of more than twenty to one in Kenya. Hoyt Bleakley estimates that the Rockefeller Foundation’s deworming campaign in the US South in the early twentieth century added two years to average education in affected areas and that worms accounted for 20% of the income gap between the US North and South at the time.

Based on the evidence, several economists, including Esther Duflo, Kristin Forbes,and me, are involved in, and have donated to, a new group called Deworm the World. Information is available here. There is a donate button which explains how people can give.

Deworm the World will soon be a tax exempt 501(c)3 organization, but not before either the holidays or the end of the tax year. If readers are from the US and want a tax deduction, they can support Save the Children’s school health efforts by clicking on the link above and going to the donate box, or if they want to more directly help Deworm the World, they can donate to Innovations for Poverty Action by going to this link and noting that the donation is for Deworm the World in the comment box.

Thanks for writing,

Michael



Thanks to Chris for asking the question and to Michael for answering it. I hope this information helps direct some charitable giving in the right direction.

Power to the People or Power from the People?

This short Google.org piece is highly recommended:



In early 2008, Google.org announced its initiatives to the world and made clear how the company would leverage its people, money, and creativity to address some of the world’s most pressing and difficult problems. Among them were climate change/renewable energy, global poverty, and emerging threats.

In Africa, one of our initiatives is focused on leveraging the power of information (or the right to know) to increase transparency, accountability, and ultimately the delivery and quality of public services. “You can’t change what you can’t see” is one of our mantras, and our job is to shine light in dark places and help people decipher the black box of public service delivery. What is working? What is not? What options are available to people to plug holes in a leaky pipeline of service delivery?

Much of the initiative is about unlocking quasi-public information. One of my colleagues calls it DBHD (database hugging disorder). Why is so much “public” information not accessible (ie government budgets, service level indicators, population data) and sitting on servers in London, New York, and Geneva but not accessible to citizens, media, and even planners in Africa countries? This clearly needs to change.

What is less intuitive, however, is that there is so much information, knowledge, and wisdom within Africa that is not making its way to politicians, planners, and policy makers who make decisions about Africa. We often hear that teachers, nurses, and civil servants do not show-up for work across the continent and this is a primary contributor to the poor quality of public services. Do we bother asking why absenteeism is such a problem? Ask teachers, nurses, or administrators and they will tell you. For example, since Universal Primary Education (UPE) was adopted in many African countries more than a decade ago, classroom sizes have doubled if not tripled while teacher salaries, instructional materials, and training have hardly changed at all. Government dispensaries are rarely stocked with medications that people come to purchase so why bother staffing clinics?

More…