Archive for the ‘International Development’ Category

6
Aug

James Mwangi grew up on the slopes of the Aberdare Mountains in central Kenya. His father lost his life during the Mau Mau uprising against the colonial authorities. His mother raised seven children, making sure both the girls and the boys were well educated. Everybody in the family worked at a series of street businesses to pay the bills.

He made it to the University of Nairobi and became an accountant. The big Western banks were getting out of retail banking, figuring there was no money to be made catering to the poor. But, in 1993, Mwangi helped lead a small mutual aid organization, called Equity Building Society, into the vacuum.

The enterprise that became Equity Bank would give poor Kenyans access to bank accounts. Mwangi would cater to street vendors and small-scale farmers. At the time, according to a profile by Anver Versi in African Business Magazine, the firm had 27 employees and was losing about $58,000 a year.

Mwangi told the staff to emphasize customer care. He switched the firm’s emphasis from mortgage loans to small, targeted loans.

Kenyans got richer, the middle class boomed and Equity Bank surged. By 2011, Equity had 450 branches and a customer base of 8 million — nearly half of all bank accounts in the country. From 2000 to 2012, Equity’s pretax profit grew at an annual rate of 65 percent. In 2012, Mwangi was named the Ernst & Young World Entrepreneur of the Year.

Mwangi’s story is a rags-to-riches Horatio Alger tale. Mwangi has also become a celebrated representative of the new African entrepreneurial class, who now define the continent as much as famine, malaria and the old scourges.

But Mwangi’s story is something else. It’s a salvo in an ideological war. With Equity, Mwangi demonstrated that democratic capitalism really can serve the masses. Decentralized, bottom-up capitalism can be the basis of widespread growth, even in emerging markets.

That theory is under threat. Over the past few months, we’ve seen the beginning of a global battle of regimes, an intellectual contest between centralized authoritarian capitalism and decentralized liberal democratic capitalism.

On July 26, for example, Prime Minister Viktor Orban of Hungary gave a morbidly fascinating speech in which he argued that liberal capitalism’s day is done. The 2008 financial crisis revealed that decentralized liberal democracy leads to inequality, oligarchy, corruption and moral decline. When individuals are given maximum freedom, the strong end up stepping on the weak.

The future, he continued, belongs to illiberal regimes like China’s and Singapore’s — autocratic systems that put the interests of the community ahead of individual freedom; regimes that are organized for broad growth, not inequality.

Orban’s speech comes at a time when democracy is suffering a crisis of morale. Only 31 percent of Americans are “very satisfied” with their country’s direction, according to a 2013 Pew survey. Autocratic regimes — which feature populist economics, traditional social values, concentrated authority and hyped-up nationalism — are feeling confident and on the rise. Eighty-five percent of Chinese are very satisfied with their country’s course, according to the Pew survey.

It comes at a time when the battle of the regimes is playing out with special force in Africa. After the end of the Cold War, the number of African democracies shot upward. But many of those countries are now struggling politically (South Africa) or economically (Ghana). Meanwhile, authoritarian Rwanda is famously well managed.

China’s aggressive role in Africa is helping to support authoritarian tendencies across the continent, at least among the governing elites. Total Chinese trade with Africa has increased twentyfold since 2001. When Uganda was looking to hire a firm for an $8 billion rail expansion, only Chinese firms were invited to apply. Under Jacob Zuma, South Africa is trying to copy some Chinese features.

As Howard French, the author of “China’s Second Continent,” points out, China gives African authoritarians an investor who doesn’t ask too many questions. The centralized model represses unhappy minority groups. It gives local elites the illusion that if they concentrate power in their own hands they’ll be able to move decisively to lift their whole nation. (Every dictator thinks he’s Lee Kuan Yew.)

French notes that popular support for representative democracy runs deep in most African countries. But there have to be successful examples of capitalism for the masses. There have to be more Mwangis, a new style of emerging market hero, to renew faith in the system that makes such people possible.

President Obama is holding a summit meeting of African leaders in Washington this week. But U.S. influence on the continent is now pathetically small compared with the Chinese and Europeans. The joke among the attendees is that China invests money; America holds receptions.

But what happens in Africa will have global consequences in the battle of regimes. If African nations succumb to the delusion of autocracy, we’ll have Putins to deal with for decades to come.

Published on Aug. 4 in the http://www.nytimes.com by David Brooks

10
Mar

venezuela

As Venezuela passed the one-year anniversary of the death of strongman Hugo Chavez today, his successor Nicolás Maduro continued his crackdown against protestors demanding an end to corruption, rampant crime, and economic mismanagement. Since nationwide demonstrations began a month ago, clashes between Venezuelan security forces and protestors have resulted so far in at least 18 deaths and over 250 injuries.

Chavez’s socialist experiment has left Venezuela’s economy and society in shambles. A Gallup poll recently reported that the dire economic situation “pushed Venezuelan pessimism about the nation’s economy in 2013 to an all-time high-62% of Venezuelan adults said the economy is getting worse, while a record-low 12% said it was getting better.” Even official Venezuelan government figures show that one in four basic household goods, such as milk or toilet paper, is in short supply. What’s more, growth in violent crime has accompanied the oil-rich country’s economic slide. The Venezuelan Violence Observatory, a non-governmental group that tracks trends in crime, estimated that the country’s homicide rate had quadrupled since 1998.

As many thousands of Venezuelans across the country have taken to the streets to demonstrate against their deteriorating economic and social conditions, Maduro has used increasingly heavy-handed tactics to silence critics, control the flow of information, and violently suppress political dissent. Regime security forces have banned street protests, fired tear gas and pellets into crowds, and raided offices of opposition members, while also temporarily blocking users from sending or receiving Twitter images, taking a Colombian television station off the air, and threatening CNN and other international media stations covering the protests. News reports indicate the Maduro government has also utilized pro-regime gangs known as colectivos to crack down violently on protestors. As opposition deputy leader María Corina Machado-a member of Venezuela’s National Assembly whom pro-regime lawmakers physically attacked on the legislature’s floor last year-recently warned: “We live under ruthless repression not only by State security bodies, but also by colectivos, and armed paramilitary groups protected by the Government.”

The Maduro government’s resort to violence and intimidation reflects, in no small part, the regime’s growing fragility. Although Chavez used massive state oil revenues to buy public support, years of mismanagement at the state-owned Petroleos de Venezuela have brought the Maduro government’s foreign exchange reserves to a ten-year low. Moreover, Maduro’s failed currency reform has resulted in rampant, 56% inflation. For Maduro, the Wilson Center’s Eric Olson recently noted, “[p]ast strategies for navigating economic hardship with oil largesse are no longer viable given that oil production is falling, some unexploited oil has already been monetized, and the dual currency program is proving economically costly and increasingly untenable.” Read more…

Patrick Christy is a senior analyst at the Foreign Policy Initiative. Published on Mar. 6, 2014 in http://www.realclearworld.com

22
Jan

Three Myths About Global Poverty

Written on January 22, 2014 by Waya Quiviger in International Development, News, Op Ed

By Bill & Melinda Gates

By almost any measure the world is better off now than ever before, in part thanks to foreign aid. By 2035, they predict there will be almost no poor countries.So why do so many people seem to think things are getting worse?Much of the reason is that all too many people are in the grip of three deeply damaging myths about global poverty and development. Don’t get taken in by them.

MYTH ONE: Poor countries are doomed to stay poor.

They’re really not. Incomes and other measures of human welfare are rising almost everywhere – including Africa.Take Mexico City, for instance. In 1987, when we first visited, most homes lacked running water, and we often saw people trekking on foot to fill up water jugs. It reminded us of rural Africa. The guy who ran Microsoft’s Mexico City office would send his kids back to the US for check-ups to make sure the smog wasn’t making them sick.Today, Mexico City is mind-blowingly different, boasting high-rise buildings, cleaner air, new roads and modern bridges. You still find pockets of poverty, but when we visit now, we think, “Wow – most people here are middle-class. What a miracle”. You can see a similar transformation in Nairobi, New Delhi, Shanghai and many more cities around the world.

In our lifetime, the global picture of poverty has been completely redrawn. Per-person incomes inTurkey and Chile are where the US was in 1960. Malaysia is nearly there. So is Gabon. Since 1960,China‘s real income per person has gone up eightfold. India‘s has quadrupled, Brazil‘s has almost quintupled, and tiny Botswana, with shrewd management of its mineral resources, has seen a 30-fold increase. A new class of middle-income nations that barely existed 50 years ago now includes more than half the world’s population. Read more…

This is an edited text from the forthcoming annual letter of the Bill & Melinda Gates Foundation, of which the authors are co-chairs. Mr. Gates is the chairman of Microsoft. To receive the annual letter go to gatesfoundation.org. http://www.realclearworld.com/articles/2014/01/21/three_myths_about_global_poverty.html

 

6
Jan

The Mint countries: Next economic giants?

Written on January 6, 2014 by Waya Quiviger in International Development, News, Regions

In 2001 the world began talking about the Bric countries – Brazil, Russia, India and China – as potential powerhouses of the world economy. The term was coined by economist Jim O’Neill, who has now identified the “Mint” countries – Mexico, Indonesia, Nigeria and Turkey – as emerging economic giants. Here he explains why.

 

So what is it about the so-called Mint countries that makes them so special? Why these four countries?

 

A friend who has followed the Bric story noted sardonically that they are probably “fresher” than the Brics. What they really share beyond having a lot of people, is that at least for the next 20 years, they have really good “inner” demographics – they are all going to see a rise in the number of people eligible to work relative to those not working. This is the envy of many developed countries but also two of the Bric countries, China and Russia. So, if Mexico, Indonesia, Nigeria and Turkey get their act together, some of them could match Chinese-style double-digit rates between 2003 and 2008.

 

GDP in 2012 and 2050

 

Something else three of them share, which Mexican Foreign Minister Jose Antonio Meade Kuribrena pointed out to me, is that they all have geographical positions that should be an advantage as patterns of world trade change.  For example, Mexico is next door to the US, but also Latin America. Indonesia is in the heart of South-east Asia but also has deep connections with China. And as we all know, Turkey is in both the West and East. Nigeria is not really similar in this regard for now, partly because of Africa’s lack of development, but it could be in the future if African countries stop fighting and trade with each other.  Read more…

Published on January 6th, 2014 in the BBC Magazine, http://www.bbc.co.uk/news/magazine

 

 

2
Jan

2014: Is This Latin America’s Big Year?

Written on January 2, 2014 by Waya Quiviger in Americas, International Development, News

The 1980s were unkind to Latin America. Surging drug violence, economic turmoil, and a staggering debt crisis all led to our southern neighbors’ “lost decade”. Yet since the 2000s, things have been looking—and going—up. In fact, thanks to its strong economic growth and growing international influence, 2014 has the potential to be Latin America’s best year yet.

Latin America’s economic growth will only increase in its upward trajectory in 2014, driven by countries such as Brazil, Chile and particularly Mexico. According to theU.N., “Based on promising signs of private consumption and manufacturing, the region will see [expected] growth rates of 3.6 in 2014 and 4.1 percent in 2015, according to World Economic Situation and Prospects 2014, a report that launches in January.” The U.N. Economic Commission on Latin America forecasts that Latin-American Economic development will be the highest of all global regions for 2014. Brazil is slowing down compared to its explosive performance in recent years, but still very strong. Brazilian finance minister Guido Mantega said in December that foreign direct investment continues to be robust and, according to the Wall Street Journal, “pointed to $8.3 billion in foreign direct investment posted in November as a strong signal investors continued to favor the country. In October, the figure was $5.4 billion.” Read more…

As published in the National Interest on December 30, 2013 http://nationalinterest.org/blog/the-buzz

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