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Archive for the ‘Africa’ Category

Will Ross has a nice piece on BBC Radio 4 Today this morning in which he goes to Lalibela, a small, quite remote, mountain-top town in Northern Ethiopia, and interviews the kids there about the World Cup. They know all about the players and are so excited about the World Cup.

The developing world may seem far away (I’m in a very modern hotel in Madrid at the moment) so I was glad to be reminded that people all over the world have much more in common than our differences – we all share very similar worries, loves, interests and excitement.

No less a scholar than Bill Nighy urges us to support a “Robin Hood Tax” to take money from the bankers and speculators and give to the poor.

The Robin Hood tax appears at first sight to be a way to kill three fairly succulent birds with one stone.  It offers an attractive combination of:

1. Higher taxes on the wealthy, so reducing inequality
2. A curb on speculation and financial market excesses
3. More money for global public goods and aid.

All these are worthy objectives, but Robin Hood tax is not a good way to achieve any of them.

Branding a financial transaction tax as a “Robin Hood tax” which takes from the rich and gives to the poor is a brilliant piece of communications.  (Imagine if it had been called a “Class War tax” – this says more or less the same thing but somehow seems less appealing.)  A Robin Hood tax lures many people who care about social justice, and want to spend more on international development, into opportunistically supporting the introduction of a tax on financial market transactions.  But before we are seduced we should take a hard look at whether it will achieve what we want.

Stand and Deliver!

The campaign would like us to believe that this tax will be paid by speculators.  That isn’t true, of course.  It is like thinking that beer duty is paid personally by the barman in the pub, or that Richard Branson personally forks out for your airline passenger duty.  The people on whom a tax is levied generally pass it on to someone else: their customers, employees, suppliers or shareholders.  We don’t know who will end up bearing a financial transactions tax, but it is likely to be all of us who meet the costs, as customers of firms that use financial markets, or savers whose money is invested in financial assets.  You should not assume that it will mean less champagne for people who work in the City: they may be in-bred aristocrats but they are probably smart enough to figure out quite quickly that they should pass on the cost to someone else.

If we want to tax the rich more, there are much more effective ways to do it than to tax financial transactions – ways which might actually fall on the rich, and catch a much bigger spread of rich people than a transactions tax.  For example, you could raise much more money from the rich by extending National Insurance charges to all capital income (eg interest, capital gains, dividends and rent) rather than imposing it only on labour income.  You could also abolish the upper earnings limit on National Insurance.  You could close loopholes for non-domiciles and people who use trusts to avoid inheritance tax; or simply raise the top rate of income tax.  You could treat all inheritance as income in the hands of the beneficiary, and tax it accordingly.  Any of these would be a more targeted and fairer way of increasing taxes on the rich than a financial transaction tax.

Reducing volatility

Financial markets play an important role in the real world by channelling our savings to investments with higher returns and enabling us to share risks.  In well-functioning markets, allocating money to businesses that meet the needs of their customers and so make a good return tends to benefit all of us – whether we are investors, customers or employees of these firms.  For this allocation of resources to happen well, the prices of financial assets had better reflect their true underlying value, at least most of the time, and we are all worse off if financial asset values deviate for long periods from what the underlying businesses are really worth.  But there are plenty of structural problems in the financial services industry that make it likely that financial assets may in fact be mispriced some of the time.  These include the incentives created by bonuses (for example, linking bonuses to the value of a deal as predicted by firms’ financial models rather than the value that is eventually realised) and the rise of institutions that are “too big to fail” and therefore enjoy the implicit subsidy of a public guarantee.

However, it is hard to see how the existence of speculators, arbitrage and – most of all – liquid and highly traded markets make financial markets less effective.  In most cases, we would expect markets with lots of buyers and sellers to do a better job of identifying the underlying value of assets than markets with relatively few transactions.  Speculators generally make money when they correctly assess that a market price does not reflect the real value of the asset. George Soros made money from Black Wednesday when he judged that the value of the pound in the Exchange Rate Mechanism did not reflect what it was really worth (because the government was trying to sustain a higher value for the pound).   By betting on that judgement, Soros helped to bring about the change in price that he was predicting, and so accelerated the alignment of the asset price with its true underlying worth.

A small turnover tax is likely to deter the small-scale arbitrage that helps to reduce the short-term discrepancies between prices, making markets marginally less transparent and  slightly less efficient.  It probably won’t make any difference to the big misalignments, such as asset price bubbles. The short term gains to traders from buying in a rising market will far exceed the cost of any turnover tax, so they’ll continue to get behind bull markets. Their behaviour is only likely to be moderated if they can be made to bear some of the costs of the future correction, instead of just getting the rewards when the bubble inflates.  It is theoretically possible that a reduction in turnover will make a market more stable and less volatile (this was James Tobin’s point about “throwing sand in the wheels”), but it is the less likely outcome; more likely the opposite is true.

If we want our financial markets to work better, we should be looking at the causes of the volatility and misalignments.  It is not the number of speculators, or the number of transactions in which they engage, but rather the incentives they face. Asymmetric bonuses which reward gains but do not punish losses encourage risk taking and short-termism.  Institutions that are too big to fail will take bigger risks than they would without the implicit guarantee of a bail out. Insufficient competition between financial firms allows rent-seeking by monopolists.   The privatisation of gains but socialisation of losses creates perverse incentives.  If we want to tackle financial instability and misallocation of resources we need to address the root causes, not reach for a tax on transactions which is likely to hinder, rather than help, the ability of markets to correct themselves.

Raising money for good causes

So by now you think I’m being prissy.  So what if a new tax does not redistribute money from the rich or make financial markets work better?  It will raise a shed-load of money by taxing transactions in a way that nobody will notice, and we can use that to do good things on poverty and climate change. If taxation is the art of plucking the goose with the minimum of hissing, surely this is a sure fire way to get some money out of the system to spend on development which is woefully underfunded?

Well, not really.  Good taxes are not just taxes that nobody notices, but taxes that tend to discourage people from doing bad things and encourage people to do good things; which add to rather than subtract from economic efficiency.   There are lots of taxes that citizens don’t pay directly – such as corporation tax and employer national insurance contributions – which nonetheless add to the burden on ordinary taxpayers and the size of which is a matter of political debate.  Adding a new tax is not going to make citizens more willing to see an increase in the overall tax burden.

Aid spending is pitifully small relative to need.  As a nation we are spending much less than we should if we want to live up to our commitment to spare no effort to ensure that poverty is reduced, that mothers do not die while pregnant, that children go to school and that everyone has access to the water and health care that they need.

The amounts in question are tiny relative to total government revenues. Aid is a small fraction of overall spending and could easily be increased without any new taxes.   The limit to aid is not lack of available money, but the lack of agreement that this is a priority for spending more of the nation’s money.  Too many people believe – wrongly, in my view – that aid is not effective; that it transfers money from poor people in rich countries to rich people in poor countries; that much of it is lost in corruption or waste; and that it does as much to hinder as to help countries to grow and lift themselves out of poverty.  Those attitudes are not going to change because we have introduced a new tax.

The development industry is right to say we should spend more on aid, but we are losing the argument.  Instead of addressing the criticisms by demonstrating how aid is effective (and taking steps to make it more effective where it isn’t) we are turning to a Robin Hood tax apparently in the hope of bypassing public opinion.   Because the chattering classes (which clearly includes me) have failed to persuade enough men and women that it is a good idea to spend more money on aid as well as on the National Health Service and schools, we are apparently hoping to go over their heads, by setting up a source of funding over which ordinary people will have no control

But that is not how the system works, nor should it be.  The nation’s willingness to give money for development will be decided by whether we demonstrate the results, and whether we can really convince people that their money is being properly used.  Introducing a new tax dedicated to what we think are good causes may give aid a temporary boost, but if people are not convinced that they want their money to go on aid they will quickly demand that budgets elsewhere are reduced accordingly.   In the long run, this will have the opposite effect: a tax part of which is dedicated automatically to development will engender even more complacency in the development industry about the need to demonstrate to taxpayers how their money is being used.

Building support for development is not merely a communications challenge, as is often implied by the hand-wringing of the big aid agencies: it is a reality challenge.  Not only do we have to show people how their aid is used, we actually have to make aid more effective, more transparent and more accountable, so that we drive up performance.

Dambisa Moyo is right that bad aid does not work; but she is wrong to claim that all aid is bad aid.  She is wrong to claim that aid does more harm than good. There is a lot of hugely effective aid which transforms people’s lives every day.  But the aid industry lacks sufficient mechanisms to drive bad aid out of the system, to spend more money well, and to be able to demonstrate conclusively its results.  This, rather than a Robin Hood tax, should be the agenda for genuine progressives who want to see more money being spent on international development.

I have explained here before another reason why a Tobin Tax is a bad way of raising money for aid.  Financial markets tend to be highly cyclical – there is a lot of turnover in rising markets in economic booms, and the markets tend to go quiet in recessions.  So the revenues of such a tax would be highly cyclical – more money for development in global economic booms, less in global downturns.  Yet aid should be the opposite. It is needed most of all to protect the weak and vulnerable from economic downturns.  Aid is already too cyclical, exacerbating the impact of global economic fluctuations on developing countries, reinforcing the effects of changes in revenues from commodities, investment and remittances.  The last thing developing countries need is for aid to become even more cyclical than it is today.

Conclusion

The backers of the Robin Hood tax are on the side of good and there is no denying their commitment to social justice, nor their genius for communications and popular engagement.  We certainly need what the tax seems to offer: more redistributive taxation, a curb on financial market excesses, and more money for aid.

My reservation is not that the Robin Hood tax is too ambitious or that it cannot be negotiated. It is that it is the wrong way to address these problems.   Each of the three objectives is better addressed directly than through the blunt instrument of a tax on financial transactions.  We need to build a consensus that there are minimum standards of living below which no person anywhere in the world should be allowed to fall, and that those of us who are fortunate to live comfortably should all make a modest contribution to that.  This should be part of the social contract in a democratic society, and it should be part of the mainstream system of taxing and spending.   Robin Hood stole from the rich and gave to the poor at a time when we lacked institutions to tackle poverty and redistribute income.   A Robin Hood tax is no more a lasting solution to financing poverty reduction than was the approach of Robin Hood himself.

Update:  Duncan Green from Oxfam has responded here.  We agree that this is not a good way to curb the excesses of the financial services industry.  Duncan reckons “the banks” will pay a good part of the tax: presumably he means the shareholders.  If so, why not just levy an additional profit tax on banks?  I think his strongest argument is that in a world of second best, this is the best available option for raising more money.   I think that is a mistake. We can and should make the case for aid to be financed properly; and I do not believe that raising money this way will add additional funding to development in anything but the very short tem unless we address rather than try to sidestep people’s concerns.

Paul Collier’s last book, The Bottom Billion, proposed that there are four “traps” in which the poorest countries can become enmeshed (a conflict trap, resource trap, geography trap and governance trap).   He vividly explains why he thinks that “business as usual” will not lift these countries out of poverty, creating the prospect that 58 countries, home to the poorest billion people, will fall further and further behind the standards of living of the rest of the world.

At a conference at Wilton Park this week a number of people gathered together to review progress since the Africa Commission and Gleneagles Summit in 2005, and to discuss the prospects for a transformation in Africa over the coming years.  One participant (one of the authors of the Africa Commission report) argued that the Commission set out a comprehensive action plan which, if implemented across the range of its recommendations, could address these traps and lead to real progress.

I am not so sure. I think there is a fifth trap facing Africa which is more chronic and pervasive than any of the four traps identified by Paul Collier. It is the “unfair rules” trap, and I think it makes it very hard for Africa to make much progress on the other four.

Development and an improved standard of living for people in developing countries will come not from aid but from industrialisation and economic growth.  We do not know exactly how to ensure that these economic transformations occur, though there is much we can do to create the conditions in which it is more likely.  (Aid can help create the conditions for growth, and can help people to live better lives while the process is under way).  But as the world economy becomes more integrated and more globalised, many (though by no means all) of the determinants of a country’s opportunities for economic development are determined by international institutions, systems, rules and agreements.

The “unfair rules” trap is that the rules of the game are determined by the rich for the rich.  And the consequence for the poorest countries is that they are having to fight uphill to create conditions for their development; so they continue to fall behind the rest of the world economically.  Their relative lack of economic power reinforces their lack of political influence internationally and so makes it harder for them to influence the institutions and rules which contribute to their continued economic marginalisation.

This “unfair rules” trap takes many forms.  There is a myriad of complicated rules and institutions that affect a huge swathe of economic and political life.  These international agreements range from highly political – such as the global allocation of the right to emit greenhouse gases under the post Kyoto framework for climate change – to the deeply technical such as phyto-sanitary standards which unnecessarily limit exports of groundnuts from Africa to Europe.

On BBC World this weekend there is a debate among a group of African leaders in which Linah Mohohlo, the Central Bank Governor of Botswana, points out that new global rules are currently being devised to promote financial stability – an issue that affects every country in the world – without any participation by Africans.

Consider our attitude to property rights.  Rich countries have attached considerable importance to the establishment and global enforcement of intellectual property rights, which enable their firms to secure revenues from the use of their intellectual property. They have, for example, pursued this through the WTO.  Whatever you think about intellectual property rights, there is no doubt that they can be expensive for developing countries, both because of the huge revenues that flow from Soweto to Seattle and because of the restrictions imposed on access to vital knowledge rich products such as pharmaceuticals, software and business practices.    But consider a parallel property right: the right to emit greenhouse gases.  Like intellectual property rights, emission rights are an institutional construct designed to bring about an improvement in economic efficiency (by rewarding innovation in the case of IPRs, and by taxing polluters in the case of emissions rights).   Emissions rights, if properly designed, fairly allocated and enforced around the world, would entail a reallocation of wealth from rich countries to poor countries.  But while the rich world is happy to insist on the importance of intellectual property rights (of which it is a seller) it is unwilling to consider the establishment of property rights over assets for which it would be a buyer.  In the run-up to the summit in Copenhagen, there was no serious discussion of the idea that every citizen should be entitled to an equal share of the atmosphere, and that anyone wanting to occupy more than their fair share should pay compensation to those who are using less. The discourse is limited to the realpolitik of what rich countries are likely to accept.

Of course, it was ever thus.  Nobody should be surprised to hear that the rich and powerful set the rules, and that these are not always to the benefit of the poor.  But within nation states this dilemma is partly addressed through the political process.  Universal suffrage has made it impossible for national institutions, laws and regulations completely to ignore the interests of the poor; though of course there is still a long way to go before the interests of the poor are given the attention they deserve.

But the international system does not benefit from the equal representation implied by universal suffrage within nations.  In some international institutions, power is formally one-dollar-one-vote.  In many others  this is not the formal position, but it is true in practice.  The global political system does not rebalance economic power between nations in the way that political processes can within nations.

To address Paul Collier’s four traps will require concerted international action – for example, to take steps to prevent the corruption and patronage that is associated with extraction of natural resources, to limit the sale of arms which fuel conflict, or change trade rules in ways that improve Africa’s prospects of trading with the rest of the world.  That is why the trap of “unfair rules” is so profound: for as long as Africa remains politically weak in the international system, it is hard to envisage how the international cooperation is required will be brought about.

I find it hard to see how a transformation can be brought about unless we find a way to address the problem “unfair rules”.  For as long as Africa remains economically disadvantaged, it is marginalised in the setting of rules and governance of global institutions.   This in turn profoundly affects its ability to escape Collier’s four traps, and so limits its prospects for development, and thus locks in the growing divergence from the rest of the world.   Africa seems to be likely to be caught in the jaws of this trap for as long as there is no political process that allows African countries to obtain more power and influence within these international institutions than their relative economic weaknesses entails.

Jeff Marlow writes in the New York Times about Koraro, a Millennium Village Project village in Northern Ethiopia:

As the project’s first five years wind down, its ultimate goals remain elusive, and the five-year initiative has swelled to 10. The extension, naturally, will require more spending: The financial injections to date—over $5 million per year in a mix of cash and non-cash contributions—have not abolished poverty. Improvements in the five sectors targeted by the MVP are readily apparent, but their sustainability is still up in the air.

There are many people in the development set who are sceptical about the utility of the Millennium Village Project, for good reasons and for bad.  Village-level interventions have had a chequered past, and the conventional wisdom today is that development assistance should help to build capable and accountable states which can deliver services, from agriculture and education to security and health, and not provide these separately from the systems that are being established.

I don’t know as much about Koraro as Jeff, but G and I did visit the town, unannounced, one day when we happened to be driving past.  We struck up a conversation with a local shopkeeper which went like this:

O&G:                 What is it like being a Millennium Village?

Shopkeeper:    Very good. We have lots of things.

O&G:                 Does everything work well?

Shopkeeper:    No, not all of it.  But we are much better off now.

O&G:                 Who decides what to change? Do you have a village council, or is there an Elder who decides?

Shopkeeper:   It is all decided by a Professor in New York.

O&G:                 Really? Do you know his name?

Shopkeeper:   No. But he is a very famous man

I don’t have the same ideological objections to Potemkin Villages the Millennium Villages Project as some other people. As both Jeff Sachs and Nick Stern have arged, it seems plausible that there may be significant complementarities between interventions which mean that programmes work better if there are other successful programmes at the same time.  For example, there may be little value in increasing agricultural productivity to generate surpluses if there is no way to get those surpluses to market, which requires infrastructure.  That suggests that each community may need a big heave:  ensuring that all these things come in together may be more effective than a series of uncoordinated interventions spread thinly.

For me the most disappointing aspect of the Millennium Villages Project has been the steadfast refusal to subject it to rigorous evaluation.  (Their evaluation programme is described here.)  The most detailed study so far has been conducted by the Overseas Develoment Institute.  The problem is lack of a proper basis of comparison.  Ethiopia is changing quite rapidly, and Korkora would have changed with or without the Millennium Village Project. For example, there has been a 51 percent reduction in malaria cases in Koraro, Ethiopia. This has been touted as a success by the supporters of the project; and it sounds impressive until you find out that malaria cases have been more than halved across the whole country, not just in Koraro.  The improvement in the Millennium Village is apparently no greater than anywhere else in the country.

To evaluate the project, Millennium Villages need to be compared with some suitable control group, ideally through randomised controlled trials.   Ideally, the individual components of the project would also be randomised to test the hypothesis that the effects of interventions are complementary.  (It follows that I don’t agree with Chris Blattman’s view that it would be too hard.)

It would, as Chris says, be pretty surprising if the Millennium Villages Project does not make a difference. After all, it is spending money roughly equivalent to 100% of the villagers’ income. Furthermore, it has benefited from close personal attention from the Prime Minister, other ministers and officials, researchers and academics (and, of course, a famous Professor from New York).  A rigorous evaluation would help us to know how big that improvement is, and and what cost.  It might also give us insights into whether any particular parts of the progamme are particularly important.

The 6" Kindle, with a Bishoftu lake in the background, January 2010

I’ve had a Kindle here in Ethiopia for a few weeks now, and I’m lovin’ it.

I bought the international edition, with a 6 inch display (the Kindle DX with the larger 9.7 inch display is expected to be available in an international edition some time in 2010).

Update (6th January): coincidentally, the international edition of the DX has just been announced, and it will be shipping from 19 January.

Because it is an international edition, it works wirelessly in the UK and many other countries, using the mobile phone network.  There is no additional charge for this.  It means, for example, that you can subscribe to the Financial Times or the New York Times, and the latest edition is automatically delivered to your Kindle each day.  You can also browse for books and periodicals on your Kindle, and there is limited web browsing.

In Ethiopia the wireless does not work (presumably Amazon does not have an agreement with the Ethiopian mobile phone company, ETC).  So periodicals do not arrive automatically, and you cannot browse for new books on the Kindle itself.  But it is very easy and quick to download the latest edition of a newspaper or to get a new book from Amazon on a computer connected to the internet (it takes about 30 seconds to download today’s edition of the FT) and then to transfer it via USB cable to the Kindle.

I was able to update my Kindle to the latest version of the software by downloading it to my computer and installing it over a USB cable.  That worked fine. (If it were in an area with wireless coverage, the software would update automatically.)  The new software allows the Kindle to display .PDF files natively (i.e. without converting them to Kindle format) and apparently improves the battery life when wireless is turned on (I’ve not tested this last point, because my wireless is turned off.)

The 6″ version is a very good size for carrying around, especially when on the road or for plane journeys. It can store a thousand books, so you can be sure you won’t run out of reading material.  The screen only uses power when the page changes (it doesn’t use power simply to display) so power consumption is low – a couple of weeks with the wireless turned off.

I find the screen easy to read, even for long periods. It works well in bright sunlight.  The font size is adjustable (which is apparently one reason for very high sales among older people, some of whom like being able to increase the size of the text).  The slight drawback is that there is not very much on a single page, so you have to change the page often (especially if you read quite quickly).  Some people have commented unfavourably on the screen flicker as the page changes; I don’t find it a problem.

When the Kindle DX has an international edition, I think I may buy that as well.  (I had a chance to look at the US version of the Kindle DX when Chris Blattman was visiting Addis Ababa but I failed to take a side-by-side photograph).   Why would I want both?  The larger screen looks good for reading PDFs of academic journal articles and especially for newspapers.  But the smaller format is very good for having your books with you in your shoulder bag and when travelling.   I gather you can put the same content on both machines provided they are both registered to the same account.

So I think the advantages of a Kindle for people who work internationally, even in places where the wireless doesn’t work, are:

• Being able to carry a good collection of reading material with you while travelling – so you can travel light and you still won’t run out of things to read when stuck in an airport or at the border on a bus
• Getting today’s newspaper (e.g. New York Times, FT, Economist) delivered electronically (via a PC)
• Being able to buy the latest books without having to rely on the post (especially useful if you are in a book club!)

I’ve not tried the Sony eReader, and of course Apple may yet produce a tablet that blows the Kindle out of the water.

I know it is fashionable to denounce celebrities who get in involved in international development, but I admire both Bono and Bob Geldof.   They are smart enough to take advice from smart people, and they put serious amounts of time and effort into visiting developing countries and getting to know the people and understand the issues.  Indeed, they have both probably spent more time visiting in developing countries than the armchair critics who mock them.  They have stuck with the issues for more than a quarter of a century – much longer than the fleeting interest of many journalists and politicians. Neither of them needs the publicity: their willingness to use the platform of their fame to speak out for the poor has helped to keep development on the political agenda.

Bono made two very good points in the New York Times on Monday:

An Equal Right to Pollute (and the Polluter-Pays Principle)
In the recent climate talks in Copenhagen, it was no surprise that developing countries objected to taking their feet off the pedal of their own carbon-paced growth; after all, they played little part in building the congested eight-lane highway of a problem that the world faces now. One smart suggestion I’ve heard, sort of a riff on cap-and-trade, is that each person has an equal right to pollute and that there might somehow be a way to monetize this. By this accounting, your average Ethiopian can sell her underpolluting ways (people in Ethiopia emit about 0.1 ton of carbon a year) to the average American (about 20 tons a year) and use the proceeds to deal with the effects of climate change (like drought), educate her kids and send them to university. (Trust in capitalism — we’ll find a way.) As a mild green, I like the idea, though it’s controversial in militant, khaki-green quarters. …

People Power and the Upside-Down Pyramid
A lot of us have seen or lived the organizational chart of the last century, in which power and influence (whether possessed by church, state or corporation) are concentrated in the uppermost point of the pyramid and pressure is exerted downward. But in this new century, and especially in some parts of the developing world, the pyramid is being inverted. Much has been written about the profits to be made at the bottom of the pyramid; less has been said about the political power there. Increasingly, the masses are sitting at the top, and their weight, via cellphones, the Web and the civil society and democracy these technologies can promote, is being felt by those who have traditionally held power. Today, the weight bears down harder when the few are corrupt or fail to deliver on the promises that earned them authority in the first place. The world is taking notice of this change. On her most recent trip to Africa, Secretary of State Hillary Rodham Clinton bypassed officials and met instead with representatives of independent, nongovernmental groups, which are quickly becoming more organized and more interconnected. For example, Twaweza, a citizen’s organization, is spreading across East Africa, helping people hold local officials accountable for managing budgets and delivering services. (Twaweza is Swahili for “we can make it happen.”)

(Disclosure: I am a member of the board of Twaweza, so it is not surprising that I agree with Bono that their work is good.)

Update: You should also read Alex Evans’s excellent piece at Global Dashboard on the importance of Bono’s support for contract and converge.

In Business Day, Adekeye Adebajo, the executive director of the Centre for Conflict Resolution, Cape Town, takes the gloves off in criticising Dambisa Moyo’s book, Dead Aid:

… This is a work of self-flagellating simplicity, totally devoid of any thinking by leading African research centres or scholars, making the book often read like a Harvard Masters syllabus or a World Bank report. Moyo reveals her ignorance by incredibly charging that “scarcely does one see Africa’s … officials … offer an opinion on what should be done”. …

Moyo employs crude stereotypes of “tribal conflict” to depict African wars, and recklessly suggests that aid is “an underlying cause of social unrest, and possibly civil war”. Such an absurd link would, of course, involve a huge leap of logic, and the author’s ignorant blaming of Somalia’s civil war on competition for food aid completely ignores the decade-long homicidal campaign of US-backed autocrat, Siad Barre, which eventually led to rebellion in 1991.

Read the rest here.

My own review is here (pdf) – also critical, but less vituperative.

More reviews (including some which are less negative) of Dead Aid here.

My sister was sent this card. I thought it was funny.

Please do send a goat to Africa this Christmas. It will change somebody’s life, and it will make you feel all warm and fuzzy inside.

Or you can send cow.

I promise you that either will add more happiness to the world than a High School Musical Dance Mat.

My article on OpenDemocracy today discusses whether aid works.

Some supporters of aid have made what seem to me to be extravagant claims that aid should aim to bring about economic and social transformation of developing countries, so accelerating economic growth and industrialisation.  But this is a very high bar to set.  Aid may well help to increase the probability of economic take-off but there are lots of other conditions that need to be in place for the transition to an industrialised market economy to happen, and aid is not a sufficient condition (nor, probably, a necessary condition) for it to occur.   Even if aid does play an important contributory role, it would be statistically very hard to demonstrate a link between aid and economic growth.

Although the effect of aid on economic growth is uncertain, there can be no doubt that aid makes a huge difference to people’s lives.  Aid provides food, health care, education, clean water, financial services, and modest incomes which transform the lives of the people who receive them.   You can see this both in individual families – like the girl I met in northern Amhara, pictured here, who has health care and education because of aid – and in the overall statistics, which show that there has been a vast improvement in the quality of life on almost every measure other than income.

Aid may not always transform societies, but it does enable people to live much better lives while those transformations are taking place.  And that represents a huge increase in the sum of human welfare.

I believe aid could and should work much better.  Living in a developing country, I see all kinds of waste and inefficiency in the aid system that makes me angry. But it makes me angry because I also see how much difference aid makes when it is used well.  I would like to see aid becoming much more transparent and accountable, so that it becomes subject to evolutionary pressures to improve.

This means, by the way, that I do not subscribe to the view that the aid system should be regarded as temporary.  In the UK we hope that people will be on unemployment benefit temporarily before they are able to get back to work, but we don’t expect the system as a whole to come to an end.  So I think that we should expect that at least for our lifetimes, it will be right and necessary that we transfer income from the richest people in the world to the poorest people in the world.  I do not know which countries will be rich, on average, in fifty years time, and which will be poor; but I expect that the world will still need, and I hope it will still have, a permanent system to help those temporarily in need wherever they happen to be.

Aid would work better in future if we accept that we will need a permanent system to provide temporary help to those who need it, and set about designing a better system to do that.

Read the full article here.

Related reading:

• Phil Vernon at openDemocracy (to which my article was a reply)
• Roger Riddell at openDemocracy
• Ranil at AidThoughts
• Chris Blattman – Could Aid Slow Growth

The Independent reports Bob Geldof’s recent trip to Ethiopia:

Though 35 per cent of Ethiopian children are malnourished, and 40 per cent are stunted when they start school, the number who die below the age of 5 is down 40 per cent on what it was 15 years ago. A shocking 381,000 children died from preventable causes last year but there is clear progress. Cases of malaria have been reduced by two-third since 2006, with the number of deaths halved thanks to the government spraying a million houses and the Global Fund and the Gates Foundation distributing a massive 20 million bednets.

“Who says aid doesn’t work,” spluttered Geldof as he leaves the clinic.

George Osborne told the Conservative Party Conference eight times:

we are all in this together.

This is a powerful message.

When 15 million people  face starvation in East Africa this Christmas, let us say:

we are all in this together.

When twenty thousand children die tomorrow from easily preventable and treatable diseases, purely because they don’t have enough money to buy drugs that cost cents to produce but for which we charge rich world prices, let us say:

we are all in this together.

When the developing world demands proper compensation for their part of the atmosphere, which we have filled up with carbon emissions far beyond our share, resulting in the risk of destruction to entire nations, let us say:

we are all in this together.

When the people of the Niger Delta demand a share of the wealth lying beneath their ground, and an end to the environmental destruction caused by our oil companies so that we can drive our cars and cool our houses, let us say:

we are all in this together.

When we complain about corruption in the developing world, forgetting that all the money that pays for those bribes comes from us, and then choose not to prosecute our own companies that pay the bribes, let us say:

we are all in this together.

When we continue to be one of the largest manufacturers and exporters of arms in the world, fuelling conflict all around the world, but are more concerned about a hundred jobs on the Isle of Wight, let us say:

we are all in this together.

When people are forced to leave their homes, their family and their country because they lack freedom or face persecution, or because they cannot find work that pays them enough to support their family, and they look for a new beginning in rich countries, and we decide how we will treat asylum seekers and immigrants, let us say:

we are all in this together.

When the world’s poor demand fair payment for their coffee, cocoa, and minerals, and for their labour which provides us with the cheap clothes and electronics which we take for granted, let us say:

we are all in this together.

When the world economy recovers, companies of the rich world begin to prosper, when bankers get their bonuses again and the rich start to become richer, and we decide how to share the proceeds of that growth within and between nations, let us say:

we are all in this together.

Have a look at this video produced by the International Budget Partnership.

The video is about the way that a civil society organisation in Kenya, MUHURI, has enabled a local community in Mombassa to hold their government to account.

(Disclosure: I work on aidinfo – a small research team which promotes the adoption of open standards for the publication of detailed information about foreign aid, to enable people in developing countries to hold governments and donors to account.)

The Ethiopian Government has been running posters in the southern part of Ethiopia to warn farmers about the risk of tsetse fly (which kill cattle and cause sleeping sickness).

To reinforce the message, and to make sure that farmers know exactly what they are looking for, they have been using posters with huge images of the tsetse fly itself.*

This has, however, not had the intended effect.

Two farmers were overheard talking to each other in a local dialect in the south, having come in to town on market day and seeing the new poster:

“Thank God we don’t have huge flies like that here.”

* I don’t have a photo of the actual poster – if anyone does, I’d love to have a copy of it.

This is an amazing graphic:

You can buy the poster here.

Scarlett Lion has this list.  Her main advice is to keep it to a minimum.

Here is our list, intended for visitors to Ethiopia.

So apparently zip off safari shorts/trousers make you look stupid. I guess I don’t care – I think they are quite a good way to travel light in a country that is hot during the day but cool at night and there are mosquitoes in the evening.

My father was a diplomat.  When he left his last post in Africa (as High Commissioner to Nigeria) to become High Commissioner to Australia, he sent a message to the then Foreign Secretary reflecting on a career spent mainly in Africa. (These messages from Ambassadors are known in Foreign-Office-speak as a despatch).

Thanks to the Freedom of Information Act, he has been able to obtain a copy of this despatch, and he has published it online. At the time, it was regarded as controversial and radical.  Circulation within the Foreign Office was limited.

Perhaps my judgement is clouded by filial loyalty, but today it strikes me as forward-looking and far sighted.  He wrote:

Such grotesque disparities in the human condition are an inevitable source of conflict and instability. It is a century since British people ceased to be willing to tolerate massive inequality of wealth and income within their own society.  The time has surely come when we should tackle an even more offensive situation in the global village.

My father made a compelling case in 1991 for doing more to ensure that Africa shares in the benefits of globalisation and rising prosperity. As he predicted, the need has become greater the longer we have neglected the challenge.

I’m proud to follow in his footsteps in demanding change; but dismayed that I have to do so. If only they had listened then we might not have to be making the same case today.

The New York Times describes what happens if women do not have access to safe abortions:

Worldwide, there are 19 million unsafe abortions a year, and they kill 70,000 women (accounting for 13 percent of maternal deaths), mostly in poor countries like Tanzania where abortion is illegal, according to the World Health Organization. More than two million women a year suffer serious complications. …

Here in Ethiopia around a third of maternal deaths are the result of unsafe abortions.

Well done to the New York Times for addressing this. Too often this problem is swept under the carpet.

In the FT debate on aid, Dambisa Moyo, author of Dead Aid, seems to be adjusting her position:

To focus on the five-year aid-reduction example that my book offered as an illustration of an exit strategy deliberately misses the point, which is that Africa desperately needs to wean off aid. Obviously, a blanket five-year plan imposed on countries with different challenges and different circumstances would be ridiculous!

One can only interpret the fact that my detractors took the five-year example at face value as wilful blindness or a complete unwillingness to see Africa in any other light than a basket case. An aid exit might take 10 years, it might take 15, but after 60 years of the aid-regime (with no concomitant job creation) surely it is better to start the conversation (and the strategy) of aid exits than not.

Indeed, cutting off aid in five years would be ridiculous.  On that we are agreed.  I don’t know anybody involved in aid who does not fervently wish for the day when countries are rich enough to do without aid, and who wants to give aid in ways that bring that day forward.  If Dambisa Moyo is simply saying that we should all work towards removing the need for aid, then I am not sure why there is such a fuss.

So what made us think that Dr Moyo was advocating a five year plan to reduce aid? Perhaps it was remarks like these in just about every known newspaper:

In the book I actually prescribe that they should, with immediate effect or in the very near foreseeable future, implement a five-year plan where they systematically reduce aid to these countries.

Or perhaps it is because she says this in Dead Aid (p144):

What if, one by one, African countries each received a phone call (agreed upon by all their major aid donors – the World Bank, Western countries etc), telling them that in exactly five years the aid taps would be shut off, permanently? Although exceptions would be made for isolated emergency relief such as famine and natural disasters, aid would no longer attempt to address Africa’s generic economic plight.

You can see why some people got the impression that Dr Moyo was proposing that aid should be shut off after 5 years.  But it is reassuring to know that this was not her position, or at any rate it is no longer her position.

Even with her new cuddlier policy of turning off the taps more gently, there is still a lot of wild and unsubstantiated garbage in her book – for example, this:

The problem is that aid is not benign – it’s malignant. No longer part of the potential solution, it’s part of the problem – in fact, aid is the problem.

Here is my review of Dead Aid. Here are some other reviews.  Andrew Pickering at Global Dashboard has a good summary of the debate so far.

Here in Ethiopia it is common for little children to shout ferenj when they see a white face.  I am told that this comes from the Amharic word for a French person, ፈረንሳዊ (pronounced färänsawi), because French people were among the first white people Ethiopians had seen.

Today G and I were running down a dirt track through a small village and a small girl, about 4 years old, saw us running past.   She shouted,

China! China!

I heard the other day that there were two old men sitting on a hillside in north Wello, watching the Chinese labourers building a new road.   They were old-timers, who had fought against the Italians in 1935, and then watched the Italians build the first roads across the Blue Nile gorge and up to Eritrea. (“What have the Romans ever done for us?”)  As these men watched the Chinese roll out the tarmac, one of them said to the other:

The Italians are back. Only now they have narrower eyes.

Says Fr Joe Komakoma:

… I lost my young sister. She died of HIV-related complications. She should still be alive today since she was on ARVs.

But ARVs go hand in hand with good nutrition. My sister could not afford proper daily meals since she was looking after a large extended family. Besides her three children, she was looking after six double orphans that our elder brother left behind.

Her story is commonplace in Zambia. The HIV and AIDS pandemic can be mitigated by people having proper access to medicines and food. Both have become bigger problems in the current world economic crisis.

It is such situations that prompt those of us in civil society to redouble our efforts to do more advocacy work, asking our governments, in Africa, not only to be accountable to the people, but to prioritise issues of poverty and unemployment in their economic policy frameworks.

Our governments, though, are also limited in their capacity to cope with the severe effects of the global economic crisis. This is where the rich countries come in. They should remain committed to their aid promises.