PSD Blog - World Bank Group

A (LED) light at the end of the tunnel

Close to 75 percent of Sub-Saharan Africans, about 550 million people do not have access to electricity. Lighting Africa, an ongoing conference in Ghana ending today, is tackling how to mobilize the private sector to supply modern off-grid lighting such as Light Emitting Diodes (LEDs) to over more 250 million people living in Sub-Saharan Africa by 2030. A timely effort with given surging oil prices and the fact that Africa spends about $17 billion on inefficient lighting fuels such as kerosene lamps and paraffin yearly.

Credit crunch: Wall Street only, not Queens

Just a few months after opening for business, Grameen Bank America has loaned anything between $500 and $3000 to about 175 borrowers.  About a month ago The New York Times published an article asking weather Muhummad Yunus's  scheme would work in the United States as well as it worked in countries like Bangladesh. The paper may have answered its own question recently on its City Room blog. The answer seems to be yes it may work, thanks to low income immigrants. To reach the immigrant market Grameen America just opened its new headquarters to Jackson Heights, a neighborhood flourishing with new immigrants.

Small Business Finance - What Works, What Doesn't?

May 5 and 6 will see an interesting conference on small business finance here in Washington DC, covering topics from lending techniques, innovations, the impact of market structure, government interventions and alternatives to bank finance.

Goodbye Aceh

Ulaanbaatar, Mongolia. Early March, Saturday afternoon. Outside temperature: -15 degrees celsius. I am sitting in my hotel room studying a manual on rescue diving. I am confident that I am the only person in all of Mongolia doing this. You can't get much further from an ocean than this.

I'm a bit fuzzy on the chain of events that led to this. But the result is clear - in a few days I will leave Aceh and move to Ulaanbaatar, the coldest capital city in the world, where I will support IFC's work in Mongolia. The thought of leaving Indonesia is actually painful. But the good news is that I'll be able to get my family back together. Because this was not a family post, we have lived apart for nearly two years. My daughter, now four, has become a native Russian speaker. And my son, now seven, has learned to read and write and Skypes me almost every day. I have missed a lot.

There are many things I had planned to write about but never did: camping with former GAM rebels, illegal logging, the delights of cycling among motorbikes, an Acehnese wedding, camping on a haunted, uninhabited island. And there were many things I never got around to doing. I suppose these will have to wait.

Gates opens market doors for farmers

The Bill and Melinda Gates Foundation recently announced that it will increase its budget for farming projects by 50 percent this year as food prices soar around the globe.  According to its website the foundation will inject  the additional funds into existing projects designed to help farmers cultivate more resilient crops, and helping producers gain better access to markets for their products. The Foundation, created in 1994, focused initially on health and education. In May 2006 it launched a call for a "Green Revolution" in Africa.

No nets, no soccer

Today is World Malaria Day, a few articles have caught my eye lately on the subject. The disease is one of the most deadly in the world, claiming the lives of over one million people annually. In Africa, a child dies every 30 seconds from malaria.

The American professional soccer league, MLS, has partnered with “Nothing But Nets,” a UN Foundation campaign to fight malaria. MLS followed the path of the NBA and other organizations that have joined the campaign. Anyone can donate and with each $10 Nothing But Nets is able to provided one anti-malarial insecticide-treated net.

In another piece of news, Novartis decided cut the price of its anti-malarial drug Coartem by 20 percent starting today. The company said the price reduction was made possible through efficiency gains after expanding its operations - makes one wonder how long Novartis has been waiting for Malaria Day.

To learn more about the disease and even to take quiz on the subject you can visit the World Bank’s Web site on malaria.

Sweeter than sugar?

Nicholas Negroponte’s longtime MIT colleague Walter Bender has recently left the One Laptop per Child program. Bender was responsible for software and content for "XO" laptops including its innovative Sugar operating system. This all happened amidst OLPC’s move to change its open-source approach as it welcomes Microsoft’s Windows operating system. Bender will now try to further the development of the XOs' Sugar, and get it to run on Linux computers other than XOs.

Bender's departure is the second big executive loss to be added to OLPC's setbacks and reportedly Negroponte wants OLPC to operate more efficiently. An executive-search firm has been trying to hire a chief executive for the group for more than a year – anyone needs a job?

Earth Day celebration ideas

To celebrate Earth Day some people join protest rallies, some others disappear into the wild, but here is a list of more conventional ideas. Feel free to send your own.

• Calculate your carbon footprint (and preferably try to reduce it).
• Plant a three to offset 730kg of carbon emissions (if not one cuts it down).
• Bike to and from work.
• Recycle (even if no one is looking).
• Avoid plastic bags.

Sustainable banking awards: who's winning what?

The Financial Times and IFC announced shortlists of potential winners for the 2008 Sustainable Banking Awards. The awards recognize financial institutions that have led the way in integating their policies with social, environmental, and corporate governance objectives. Below is a sample the categories and the shortlisted candidates, the full list is available here.

Sustainable Bank of the Year

• Banco Real, Brazil
• Citi, US
• HSBC, UK
• Rabobank, Netherlands
• Standard Chartered, UK

Sustainable Deal of the Year

• BlueOrchard Finance, Switzerland/Morgan Stanley, US (microfinance loans)
• Calyon, France (solar thermal power plants)
• Citi, US (financing for rural housing)
• Glitnir Bank, Iceland (geothermal power generation)
• Merrill Lynch, US (carbon finance to reduce deforestation)

Banking at the Bottom of the Pyramid

• ASA, Bangladesh
• Banco Bradesco, Brazil
• ICICI Group, India
• Opportunity International, UK
• Wizzit, South Africa

Futarchy: buzzword or viable option?

There's been a lot of buzz about prediction markets recently:

• A McKinsey & Co. report on prediction markets quotes James Surowiecki: "I wouldn’t be surprised to see prediction markets used in many more companies than today, not least as a tool to forecast sales. Consumer-facing companies should be particularly interested."
• Knowledge Management gurus Tom Davenport and Dave Snowden jumped into the fray to cool easy enthusiasm.
• An article in the New York Times introduces the concept of futarchy. According to Robin D. Hanson, an economist at George Mason University and a fan of alternative institutions, futarchy is "a form of government enhanced by prediction markets. Voters would decide broad goals of national welfare, but betting in speculative markets would determine the policy steps to achieve those goals."

Is "futarchy" a viable option for enhancing bottom-up participation in setting development policies? So, far, to my knowledge, Globalgiving has been the only entity to experiment with decision markets in a development context. I look forward to learn about the results of its pilot.

PS: After this post was published the Financial Times  published an article with a number of intersting examples of applications of predictions market to the non-profit sector. 

Locally-grown food in the middle of New York City

New York Magazine asked four architects to design whatever they would like for a full city block of space with no clients to worry about. One design offered was a vertical farm, complete with water tanks and each floor would be used for the cultivation of a different crop. Amale Andraos, of Work AC, the firm responsible for the intriguing idea, said in the article that they “are interested in urban farming and the notion of trying to make our cities more sustainable by cutting the miles [food travels].”

Ok, maybe that’s taking sustainable design to an extreme; does anyone have more eco-friendly (and preferably profitable) ideas?

Reducing carbon emissions but keeping a healthy economy

On a day that media reports were dominated by talks on carbon emissions, one particular McKinsey & Co. report came to mind. It talks about Germany's goal to cut its carbon emissions without compromising its economy. Germany has a goal to reduce greenhouse gas emissions by up to 40 percent of its 1990 numbers during the next 12 years. "By 2020, Germany could eliminate 30 percent of its 1990 level of greenhouse gas emissions, without curbing economic growth," says the report.

You can find the full report here, which contains a set of interactive features that explore the costs and opportunities of several carbon abatement measures.

Richard Posner on food prices

"The demand for agricultural products has grown, though not as a result of population growth; instead as a result of increased demand for ethanol and other biofuels, and for food that requires more agricultural acreage to produce. Today, besides people and pigs eating corn, our motor vehicles "eat" corn that has been converted into ethanol."

Read the entire piece here.

Online microfinance: Kiva vs. MicroPlace

The Microfinance Gateway has just released a good and quick comparison between two major players in microfinance: Kiva and MicroPlace. The Microfinance Gateway piece is a good synopsis of the work these two organizations are doing; it talks about the differences between the two as well as their roots and how to invest in microfinance projects through them. 

A hungry man is an angry man

Food prices have increased by an estimated 40 percent globally since 2007. This increase has had a disproportionate effect on many developing nations, where families often spend more than half their income on food. The situation is particularly troublesome in countries such as Nigeria, Vietnam and Indonesia, where the percentage of income spent on food is respectively 73, 65 and 50 percent, as reported recently by the New York Times. As a result riots have taken place in several countries as people protest the rising food prices.

The IMF published a brief analysis last month predicting that the social implications in Sub-Saharan Africa may be severe. It also points to long term and temporary factors – including rising biofuels production and droughts – contributing to the current increase in food prices as well as guiding policy responses.

Oh, the Bob Marley tune that inspired the title of this blog post goes on to say that a "hungry mob is an angry mob." How is that for a policy-guiding principle?

Here's your diploma, now go pump some oil

In times of off-the charts oil prices and environmental concerns, it may be surprising to find out that thousands of people graduate every year to go work in the oil industry. The Wall Street Journal published an article analyzing where these graduates are coming from. During the 70s and 80s, most petroleum graduates came from Texas A&M and other top U.S. and European institutions, says the article.

The tables have turned. Today, schools in Azerbaijan, Brazil and other nations with state energy firms that manage vast hydrocarbon resources are expected to produce more than 12,000 petroleum-engineering and geoscience graduates in 2008, double the roughly 6,000 in the U.S., Canada and Europe, according to recent data from Schlumberger Ltd., the world's biggest oil-services firm by revenue.

Ethanol production and access to finance

What does the U.S. Energy Policy Act of 2005 and its mandatory doubling of renewable fuel additives by 2012 have to do with access to finance? A recent paper uses the sudden increase in demand for U.S. corn, the primary input for ethanol production, as an external shock to see how access to finance affected corn producers in the U.S. It shows that productivity increased after 2005 in corn production as opposed to soybean production and more in counties with better access to finance. Now, just imagine the effect in developing countries!

The big green monster in the closet

The word is out that Wal-Mart, the giant U.S. retailer, will hold talks with hundreds of its Chinese suppliers to discuss significant reductions of the environmental impact of its entire supply chain.

Given the magnitude of Wal-Mart’s activities – according to the Financial Times, Wal-Mart alone is responsible for about 30 percent of foreign purchases in China and close to 10 percent of all US imports from there – this may be a more significant step toward minimizing its ecological foot print than its previous attempts.

Going green as an strategic risk

A new report by Ernst & Yong ranks a growing "greening" concern as one of the top 10 strategic risks businesses face. The top three risks are: regulatory and compliance risk, global financial shocks, and aging consumers and workforce.

The report calls this increasing concern about the enviroment "radical greening" and states that going green is expensive at first, but it could be worthwhile if consumer tastes and the regulatory enviroment start to demand it; ok, perhaps that wasn't a jaw-dropping discovery, but the entire report still makes for a good reading.

Ranking state weakness in the developing world

A new report by the Brookings Institution ranks and evaluates 141 developing nations based on their relative performance in four critical areas: economic, political, security and social welfare.

The methodology includes using 20 sub-indicators to give a snapshot in time of a country’s relative performance when compared to the other countries on the index. Probably not surprisingly, the report finds that there is a very strong correlation between poverty and overall weakness of a state.

More mobile banking, this time in the US. So what?

Word today that Western Union, the global money transfer service, is increasing its profile in the United States when it comes to selling new ways to send and receive money. This is just the latest in a series of steps Western Union has taken to get more involved in mobile services, which have grown exponentially in places like the Philippines and Kenya but have been less quick to catch on in markets where banking services are well-developed, such as the United States. The service will initially seek to reach Latino immigrants who are among the 40 million people in the US who lack access to basic banking services. How will it work? The Wall Street Journal explains:

To use the service, people go to one of RadioShack's more than 4,000 stores and sign up for a Trumpet prepaid phone, which is required under the program. Customers can then load up to $200 onto their phones for cash transfer via Western Union's network either within the U.S. or internationally.

Not so simple, Mr. Watson

For the more theoretically minded and for the critics of the logical framework approach - a recent ODI paper attempts to articulate the implications of complexity science for the development sector.

From Robert Chamber's preface:

"Much development and humanitarian thinking and practice is still trapped in a paradigm of predictable, linear causality and maintained by mindsets that seek accountability through top-down command and control. Recent years have seen more emphasis on the mechanistic approaches of this paradigm and the kinds of procedures which are increasingly questioned by successful private sector organizations." Food for thought.

The subprime mess - what's the cost?

Accurate estimates of the fall-out are certainly a moving target , but a recent paper estimates the financial and economic cost of the crisis, predicting total loan losses of $400 billion and a 1.3 percent lower GDP growth this year. This paper also contains a nice explanation of how the subprime crisis infected other financial markets and the channels through which it affects overall lending standards and economic activity.

Aids in Asia: alarming numbers

A new United Nations report, Redefining Aids in Asia: Crafting an Effective Response, was just released and makes an astonishing prediction: 500,000 peaple could die each year people due to AIDS-related illnesses by 2020.

The report released Wednesday also contends that the number of infected people could potentially double to 10 million by 2020 if prevention work is not undertaken. The cost of such an increase in infected people would be great in all levels, including economic cost, since Aids is one of the major causes of death among working-age adults in Asia. According to the chairman of the Commission on AIDS in Asia, Dr Chakravarthi Rangarajan, the cost could be up to $2 billion annually until 2020.

The subprime mess - how did we get here?

A recent IMF paper tries to understand what caused the recent deterioration of lending standards in the U.S. and shows that many parties have to take some blame. Lending standards in the subprime market deteriorated in markets with more competition, faster rising house prices and better opportunities to securitize loans once they're originated.

The relaxation of lending standards was stronger during times of lax monetary policy. While loan decisions in the prime market still seemed to follow fundamentals such as borrower characteristics, this certainly did not hold for the subprime market.