The crusade for women's rights

The issue of women's rights is one that doesn't appear frequently here at China in Africa, but rest assured that such a lack is not for want of concern or interest. My undergraduate thesis centered on women's land rights in Africa - particularly Kenya and Botswana - and examined especially the conflict between customary and statutory laws, and the entitlements women enjoy under each. Somewhere between trying to understand Chinese foreign policy, parsing out the do's and don'ts of foreign aid, and attempting to decipher a U.S. policy towards Africa (a recent undertaking, to be sure), however, I seem to have placed the issue on the back burner.

A recent NYTimes article by Kristof and WuDunn has seemingly lead me back to the cause. As the piece aptly notes, focusing on women and girls may well be the most effective way of combating global poverty and extremism. For instance:

A series of studies has found that when women hold assets or gain incomes, family money is more likely to be spent on nutrition, medicine and housing, and consequently children are healthier.

This, as opposed to circumstances under which men control the assets. It has been found that men often engage in unwise spending, with the poorest families in the world spending approximately 20% of their incomes on a combination of alcohol, prostitution, candy (candy!!), sugary drinks and lavish feasts - and only 2% on the education of their children. For this reason among others, we are seeing a growing number of microfinance projects directed specifically at women. Additionally:

It has long been known that a risk factor for turbulence and violence is the share of a country’s population made up of young people. Now it is emerging that male domination of society is also a risk factor; the reasons aren’t fully understood, but it may be that when women are marginalized the nation takes on the testosterone-laden culture of a military camp or a high-school boys’ locker room.

Indeed, some scholars believe that the reason Muslim countries have been disproportionately affected by terrorism has little to do with Islamic teachings about infidels or violence, and more to do with low levels of female education and participation in the labor force. I haven't yet had the chance to gather my thoughts on the matter, but a cursory glance at global terrorist hubs and their corresponding women's rights (to the extent that we can even call them that), seemingly lends much credence to the claim.

Kristof and WuDunn ultimately argue that women's rights must be brought to the forefront of the international development agenda, as it is women who perhaps represent our best hope in the fight against global poverty. Fight on, sister, fight on.

[Image: BBC]

In the land of the blind, the one-eyed man is king

Business Action for Africa recently released a new report on what businesses can do to sustain the Millennium Development Goals (MDGS) in Africa. The report brings together insights from various business leaders and NGOs, as well as from the likes of Paul Collier, Kofi Annan and Lord Malloch-Brown, among others. Many of the contributions seemingly follow the standard protocol of touting transparency, governance, business environment reforms, effective public-private partnerships, investments in the private sector, and other well-known policy prescriptions. As Richard Laing, Chief Executive of CDC aptly notes:

Much has already been said about the impact of the global downturn on Africa, but a great deal of the talk about solutions has been empty rhetoric full of generalisms that regard Africa as one homogenous place. Any simple prognosis for the continent’s economic future ignores the fact that there are 48 countries in sub-Saharan Africa with differing economies and at varying stages of development. It is action, not talk, that is required.

That said, there is one particularly worthwhile analysis, written by Dr. Peter Eigen, Chairman of the Extractive Industries Transparency Initiative. Eigen writes:

In the land of the blind, the one-eyed man is king. When it comes to knowing how the global financial crisis will affect Africa we are all living in the land of the blind. Usually we can rely on the IMF to be the one-eyed man, but the IMF’s growth predictions for 2009 give such a mixture of signals that it is impossible to form a clear overall picture. We do know, however, that 2009 will see a series of difficult social and political changes in Africa: elections, strikes, civil unrest, rising fuel and food prices, and a more challenging environment for exports. Because of Africa’s unique finance and liquidity circumstances, and due to volatile exchange rates and commodities prices, it is safe to assume that the financial crisis will be felt differently in Africa than elsewhere.

Eigen's acknowledgment of the uncertain is quite refreshing; for as much as we think we may know about Africa's future trajectory and development needs, there is indeed that much more than we don't. Eigen is also particularly prudent in his discussions of EITI - the very organization of which he is Chairman: "The Extractive Industries Transparency Initiative (EITI) has long been held up as a shining example of how multi-stakeholder initiatives can address these kinds of challenges. But much of this praise has been premature. The initiative is still young." Such rhetoric comes in stark contrast to others in the development field who proclaim with overwhelming conclusiveness the merits of their formulaic approaches to poverty alleviation/aid/whatever, embryonic though these approaches may still be. Every now and again it's nice to be reminded that there are people in the field who are guided not by grandiose visions but by practical, thought-out solutions to given problems. Thank you, Mr. Eigen

In any event, do read the report; it will surely be worth your while.

Beyond the romance of microfinance

Via Kenyan Pundit I stumbled across an excellent piece by Magatte Wade on the pitfalls of microfinance and the need to develop Africa's manufacturing sector. Wade writes:

Yes, microfinance is a good thing, especially in those parts of the world that lack industry. And yes, industries that pollute and that violate human rights, as take place all too often in China, are a bad thing. That said, as an African it is important to me that Africa develops a manufacturing base that allows Africans to become respected members of the global community who can live comfortable lives and engage in the co-creation of global culture as peers rather than as objects of pity.

A vision of Africa that is limited to tribal villages and rural agriculture is not inspiring to me, even if the tribal villages are "assisted" by the millions of dollars worth of scientific expertise that Jeff Sachs is providing them. Quite aside from the presumption of well-funded scientific experts teaching rural Africans how to farm, I am offended by the implicit notion that Sachs and company have as their highest aspiration for us that we remain cute little tribal peoples growing our crops and producing our crafts. Africa: the eternal land of National Geographic articles complete with charming natives. Why is it that black Africans are not allowed to be full participants in global society?

To be perfectly honest, I never thought of it this way. Excited by the prospect of providing impoverished entrepreneurs with the capital necessary to run their respective businesses, I failed to realize that doing so inadvertently confines these individuals to the (very limiting) roles they hold: wheat grower; cow herder; etc. While providing capital is indubitably quite valuable and, as Wade rightly notes, necessary in regions without industry, overemphasis on microfinance at the expense of the continent's manufacturing industries is quite damaging. Perhaps the emphasis should be on manufacturing first, microfinance, second. This begins to make all the more sense in light of recent findings that suggest that microfinance comes up short in many areas of human development.

Morning grumbles on sensationalized aid

As though reading my mind this morning (I appear to be on an anti-celebrities who want to save the world/Collier's "headless hearts" kick today), Ryan Hahn, writing in the World Bank's PSD blog, notes the following:

In her book Dead Aid, aid critic Dambisa Moyo proclaims that the 2000s were the era of glamor aid. (Think Bono and Bob Geldof.) So what will the 2010s be? I think we already have an idea. This morning I received a newsletter from Kiva, the well-known P2P microfinance lender, and the title proclaimed proudly that "Brad Pitt Twitters about Kiva." (You can even follow a link to get a screenshot of Brad Pitt's twitter message.) I happen to be a fan of Kiva, but I have to wonder - am I the only one whose stomach turns at the prospect of aid flows being determined by the whims of celebrities through their Twitter feeds?

No, Ryan, you're absolutely not. I am right there with you... stomach churning and all.

Hey buddy, can you spare another yuan?: More on microfinance in China

Last Friday I found myself mulling over the prospects for microfinance in China, citing especially the promising work of an organization called Wokai, which engages in on-the-ground microfinance projects there, particularly in Inner Mongolia. Shortly after posting these reflections, I received a message from Wokai's Marketing Director who, after a lovely brief introduction, writes the following: 

[...] To answer your question about how well microfinance can work in China, I'd like to refer you to this recent article from China International Business magazine: http://www.cibmagazine.com.cn/Features/Economy.asp?id=782&giant_steps.html  On an individual level, microfinance in China has increased incomes and improved the status of women.  However, its impact on a national scale has been limited by legal regulations.

The article she cites is actually quite brilliant, and goes a long way in addressing the regulatory and legal hurdles faced by the microfinance industry in China (indeed, the logic underpinning my hesitation to wholly embrace the potential success of this industry).  While the Chinese government granted official status to microcredit and microfinance companies in 2008, this has seemingly done little to ameliorate the challenges faced by microfinance NGOs (sneaky, sneaky), who must now transform themselves into regulated financial institutions. Microfinance in China is permitted to operate, then - and by the look of things, succeed - so long as it falls under the auspices of the state. 

Particularly prominent in China are "village banks,"  which provide individuals with microcredit loans and other microfinance services. While it's too early to gauge the actual effectiveness of these institutions, the prospects do appear promising. To answer my own question, then, it would appear that microfinance might actually work quite well in China; that is, of course, so long as the industry has a cooperative state by its side.

Hey buddy, can you spare a yuan?

Is microfinance en route to becoming China's next big thing? Does it make sense for China? Does it make sense in these difficult economic times? All important questions worthy of further investigation. 

Over the last few years, lending in China has gotten marginally better and, among other things, China has loosened up a bit in terms of allowing foreign entities to engage in microfinancing. In October 2008, New York-based Citigroup announced the opening of two micro-credit firms in China's Hubei province after regulators approved its application. London headquartered HSBC and Standard Chartered also entered the Chinese microfinance sector last year. According to a piece in Ethical Corporation, all is indeed hunky-dory in the world of Asian microfinance, broadly speaking:

Despite the trouble in global financial markets, investors continue to put money into Asian microfinance. A $40m fund aimed at financing start-ups in microfinance was launched in October by the India-based Institute for Financial Management & Research Trust, supported by a group of investors including India’s Icici Bank. In May, ASA International of Bangladesh, ranked number one on the Forbes list of top 50 microfinance institutions, raised $125m in funding – the largest ever by a microfinance institution – through private equity firm Catalyst Microfinance Investors. 

Abhijit Ray, vice-president at microfinance consulting firm Unitus, in India, says: “Large and well-managed microfinance institutions have not been affected much by the credit crisis.”

In China specifically, an organization called Wokai seems to be making great strides. What makes Wokai particularly interesting is that it has set up an internet interface between the lenders (people like you and me) and the borrowers (generally entrepreneurs in rural China). So, for example, there's a herdswoman in Chifeng, Inner Mongolia, who is seeking $600 for cattle feed, and a butcher also seeking $600 to expand her inventory. Both have received some funding towards their goals, but still require more. For more on Wokai, see "Empowering the impoverished with Wokai."

I've always been a fan of microfinance, and it indeed appears to be working (see here and here). Given especially the global economic slowdown and the rising unemployment among China's migrant workers, this may be the perfect opportunity for microfinance agencies to significantly impact the lives of many Chinese. Yet a part of me remains skeptical: how well can microfinance actually work in China?

New challenges in the world food crisis

Escalating hunger in African cities is forcing aid agencies accustomed to tackling food shortages in rural areas to scramble for strategies to address the more complex hunger problems in sprawling slums.

The United Nations World Food Program, the world's largest food-aid group, has plenty of experience trucking food into rural Africa, responding to shortages sparked by drought, famine and war. But in urban areas -- where, despite widespread poverty, hunger wasn't a significant issue until recently -- the hurdles are different.

In the vast and crowded slums, with many unnamed streets and dwellings without running water or electricity, it is difficult to identify who's most in need of help. Simply handing out food can disrupt cities' informal markets, cutting into the livelihoods of those who earn a few dollars each day selling peanuts or fresh fish, or of small farmers who haul their produce to the city.

The WFP, which usually takes the lead on aid in coordination with smaller organizations, began considering new tactics last year when it saw an urban hunger crisis developing in Africa.

For the full story, see the WSJ

Microfinance appears to be working

Tim Hartford had an exceptionally good piece in Saturday's FT on just how: 

Karlan and Zinman wanted to know what value there might be in expanding access to credit. ZaFinCo was no dewy-eyed social business, but a hard-nosed, profit-minded company, charging 11.75 per cent per month on a four-month loan, or 200 per cent APR, much more than Compartamos was generally judged to have been charging.

Despite the high rates, the results were astonishing. "We expected to see some good effects and some bad," explained Karlan, who checked in with the experiment's participants six to 12 months after they had filed their initial loan applications. "But we basically only saw good effects."

Most strikingly, those "treated" by the experiment - that is, those for whom the computer requested a second chance at a loan - were much more likely to have kept their jobs than the control group. They were also much less likely to have dropped below the poverty line or to have gone hungry. All these outcomes were recorded well after the loan had been taken out and (usually) repaid, so this was not measuring a temporary debt-funded binge.

This seems mysterious. How can a loan at 200 per cent APR help people to stay out of poverty? One answer is that most people turned down for a 200 per cent APR loan would be able to get one at 300, 500 or over 1,000 per cent from an informal moneylender. More important is that these loans were not used to start businesses but to help people keep jobs that they already had. If a smart new blouse or a spare part for the family moped is what it takes to stay in work, then who is to say that an expensive loan isn't a wise investment?